SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to____________
Commission file number 0-4028
TRANSMEDIA NETWORK INC.
----------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 84-6028875
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
11900 Biscayne Boulevard, Miami, Florida 33181
-----------------------------------------------------------
(Address of principal executive offices) (zip code)
305-892-3300
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Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS Name of each exchange
------------------- on which registered
---------------------
None None
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, PAR VALUE $.02 PER SHARE
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(Title of Class)
Indicate by (X) whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Aggregate market value of voting stock held by non-affiliates of the Registrant
as of December 9, 1996 $44,361,461.00.
Items 6, 7 and 8 hereof are omitted in accordance with Rule 12b-25(d).
<PAGE>
Number of shares outstanding of Registrant's Common Stock, as of December 30,
1996: 10,126,926.
DOCUMENTS INCORPORATED BY REFERENCE:
Location in Form 10-K in which
DOCUMENT DOCUMENT IS INCORPORATED
-------- ------------------------
Registrant's Proxy Statement Part III
relating to the 1997
Annual Meeting of Stockholders
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Transmedia Network Inc., through its operating subsidiaries (collectively,
the "Company"), owns and markets a charge card ("The Transmedia Card")
offering savings to the Company's cardmembers on dining costs for
restaurants both within and outside the United States from which the
Company, its franchisees and its licensees have purchased food and
beverage credits. The Company also offers to holders of The Transmedia
Card savings on lodging costs at selected hotels, resorts, golf courses
and ski lifts around the country and on purchases of merchandise from
selected retailers. The Company's cardholders also have access to discount
long distance telephone services through a program the Company operates
jointly with a subsidiary of General Electric Company. The Company derives
its income principally from retaining the difference between the amounts
paid in advance by the Company to restaurants and amounts paid by
cardmembers to the Company (through their credit card companies) for the
related meals and from cardmember membership fees. The Company also enters
into contracts with companies which own hotels, golf courses and ski lifts
as well as merchandise retailers. In exchange for listing in the Company's
directory, the Company receives commissions when Transmedia cardholders
frequent these establishments. The Company also receives commissions when
cardholders use their Transmedia/GE Capital telephone cards. The Company
derives income from franchising and licensing The Transmedia Card and
related proprietary rights and know-how, including rights to solicit
restaurants, hotels, resorts and motels and acquire food, beverage and
lodging credits, in the United States. The Company also receives revenue
from licensing The Transmedia Card and related proprietary rights and
know-how outside the United States.
CORPORATE STRUCTURE
The Company commenced operations in 1984 and was reincorporated as a
Delaware corporation in 1987. Currently, it has the following principal
operating subsidiaries:
/bullet/ Transmedia Service Company Inc. which is responsible
for soliciting and servicing all cardmembers in the United States
and for all domestic franchising of The Transmedia Card and
related property rights and know- how.
/bullet/ Transmedia Restaurant Company Inc. which is
responsible for obtaining and servicing restaurants and obtaining
other locations
<PAGE>
such as hotels, golf courses and ski lifts and retailers where
the Transmedia Card may be used.
/bullet/ TMNI International Incorporated which licenses the
Transmedia Card, service marks, proprietary software and know-how
outside the United States and has licensed rights to Europe,
Turkey, the countries comprising the former Union of Soviet
Socialist Republics, Australia, New Zealand and the Asia-Pacific
region to date.
DESCRIPTION OF RIGHTS TO RECEIVE AND THE TRANSMEDIA CARD
The Company's primary business is the acquisition of Rights to Receive
from participating establishments which are then sold for cash to holders
of The Transmedia Card. "Rights to Receive" are rights to receive goods
and services, principally food and beverages, which are acquired and
purchased from participating restaurants, for an amount equal to
approximately fifty percent (50%) of the food and beverage credits or by
financing the purchase of other goods or services as well as for having
provided advertising and media placement services to the participating
establishments. Approximately ninety percent (90%) of Rights to Receive
are purchased for cash. The Company typically purchases that amount of
food and beverage credits which will be consumed in a period of no more
than six months; however, it has not always been possible for the Company
to predict with accuracy the amount of time in which such credits will be
consumed, especially when the Company begins operating in new areas, as
evidenced by the 1996 turn on Rights to Receive of 1.42 times, or 257
days.
The Transmedia Card is only issued to applicants who are determined to be
creditworthy by virtue of their having a current, valid MasterCard, Visa,
Discover or American Express credit card or who are otherwise deemed
creditworthy by Company management. The Transmedia Cardmembers have a
choice of programs, including a "Free for Life" Transmedia Card which
affords them 20% savings at participating establishments, an account which
offers mileage credits with Continental Airlines, Delta Airlines and
United Airlines of 10 miles for each dollar spent on food and beverage at
participating establishments for a one-time fee of $9.95, and a card which
offers a 25% savings at participating establishments, for which there is a
$50 annual fee. Each account may have more than one user and, accordingly,
more than one cardmember.
In presenting The Transmedia Card, cardmembers sign for the goods or
services rendered, as well as for the taxes and tips as they would with
any other charge card. The Company, upon obtaining the receipt (directly
or via electronic point of sale transmission) from the appropriate
establishment, gives the establishment credit against Rights to Receive
which are owned by the Company. The Company then (i) processes the receipt
through the cardmember's MasterCard, Visa, Discover or American Express
card
<PAGE>
account, which remits to the Company the full amount of the bill, and (ii)
credits to the cardmember's MasterCard, Visa, Discover or American Express
account the appropriate discount or credits to the cardmember's airline
account the appropriate mileage. Taxes and tips are not discounted and
such sums are remitted to the various establishments.
DOMESTIC FRANCHISING
In 1990, the Company commenced franchising The Transmedia Card (then known as
The Restaurant Card) and related proprietary rights and know-how, including
rights to solicit restaurants and acquire Rights to Receive, in the United
States. At September 30, 1996, the Company had franchises in the following
territories: a large part of New Jersey, California, the Washington,
D.C./Baltimore, Maryland Metropolitan area, Dallas, Ft. Worth and Houston,
Texas, the States of Virginia, North Carolina, South Carolina, Washington and
Oregon and Atlanta, Georgia, eastern Tennessee, Reno, Nevada and the Nevada side
of Lake Tahoe. The Company has also granted a certain third party an option to
acquire a franchise for the State of Hawaii. The Company has determined that it
will no longer offer franchises at various locations throughout the United
States. In November 1996, the Company entered into an agreement to terminate the
franchise and to purchase certain of the assets of The Western Transmedia
Company, Inc., the Company's franchisee in the States of California, Nevada,
Oregon and Washington. After the completion of this transaction (which is
expected to occur in January 1997), the Company will operate in these States
directly.
Each franchise sold by the Company is operated under a ten year franchise
agreement that is renewable for one additional ten-year term for all locations.
Each agreement provides that the Company will assist the franchisee with
marketing, advertising, training and other administrative support; relates to a
territory that contains 625 or more full-service restaurants that accept
MasterCard, Visa, Discover or American Express credit cards; and licenses the
franchisee to use the Company's trademarks in connection with the solicitation
of new cardmembers (which is not restricted to the franchisee's territory) and
the purchase of Rights to Receive from restaurants in the territory granted to
the franchisee. The franchisee is responsible for, among other things,
soliciting cardmembers and participating establishments, purchasing Rights to
Receive from participating establishments in its territory, and maintaining
adequate insurance. In consideration for the grant of the franchise, the
franchisee (i) paid to the Company a franchise fee which varies based upon the
number of full-service restaurants located within the territory granted to the
franchisee, and (ii) pays the following continuing fees during the term of the
franchise agreement: (A) 7 1/2% of the total meal credits used within the
franchisee's territory; (B) 2 1/2% of the total meal credits sold within the
franchisee's territory into the Company's advertising and development fund; (C)
a processing fee of $.20 per sales transaction from the franchisee's territory;
and (D) a monthly service charge of $1.00 per participating establishment in the
<PAGE>
franchisee's territory. The franchisee receives a commission from the Company
equal to forty percent (40%) of the membership fees paid by all new cardmembers
solicited by the franchisee, with a minimum of $5.00 per account.
U.S. LICENSING
In November, 1995, the Company entered into a license arrangement under
which the licensee was authorized to solicit Rights to Receive from various
types of resorts, hotels and other entities. The territory covered by the
license agreement is the continental United States, excluding the State of
Minnesota. The term of this arrangement is ten years, with a potential renewal
period of ten years. Under this arrangement, the Company compensates the
licensee through a commission.
NON-U.S. LICENSING
In 1993, the Company commenced licensing The Transmedia Card and related
proprietary rights and know-how outside the United States. The Company's
non-U.S. operations are conducted by its subsidiary, TMNI International
Incorporated. In 1993, the Company granted an exclusive, perpetual license to
Transmedia Europe, Inc. to establish the Company's business in Europe, Turkey
and the countries that formerly comprised the Union of Soviet Socialist
Republics. The license is governed by a Master License Agreement which provides
that, among other things, (i) the licensee has the right to sublicense the
rights granted under the Master License Agreement to others within the
territory, provided that each such sublicense is approved by the Company, (ii)
the Company will assist the licensee with training relating to sales,
administration, technical and operations of the business, and (iii) the licensee
is solely responsible for developing its own market, paying its own expenses for
advertising and soliciting cardmembers and participating establishments in its
territory. In consideration for the license, the licensee (i) paid the Company a
non-refundable purchase price of One Million One Hundred Twenty-Five Thousand
($1,125,000) Dollars, (ii) will pay to the Company two percent (2%) of the gross
volume with respect to the United Kingdom sublicense, (iii) will pay to the
Company twenty-five percent (25%) of initial sublicense fees (with a minimum of
$250,000) paid for each country licensed in the territory, (iv) will pay to the
Company twenty-five percent (25%) of royalties paid by sublicensees to the
licensee, and (v) granted to the Company a five percent (5%) equity interest in
the licenses. Melvin Chasen, the Chairman and Chief Executive Officer of the
Company, served as a director of the licensee until March 1, 1995. In December
1996, Transmedia Europe Inc. amended the sublicense it had granted for France
and expanded the sublicensee's territory to include Belgium and Luxemborg,
Italy, Spain and Switzerland (other than the German speaking area).
<PAGE>
In 1994, the Company granted an exclusive perpetual license to Transmedia Asia
Pacific Inc. to establish the Company's business in Australia, New Zealand and
the Asia-Pacific region (such region covering approximately 16 major countries
and areas including, among others, Japan, Hong Kong, Taiwan, Korea, the
Philippines and India). The licensee also took an option to purchase a franchise
for the State of Hawaii. The license granted by the Company is governed by a
Master License Agreement which provides, among other things, that (i) the
Company will assist the licensee with training relating to sales,
administration, technical and operations of the business, and (ii) the licensee
is solely responsible for developing its own market, paying its own expenses for
advertising and soliciting cardmembers and restaurants in its territory. In
consideration for the license, the licensee paid the Company $1,250,000, and
(ii) granted to the Company a five percent (5%) equity interest in the licensee.
The license also provides for the following payments to the Company: (i) With
respect to sublicenses granted in all territories other than Australia and New
Zealand, the licensee will pay to the Company twenty-five percent (25%) of all
initial sublicense fees (in no event less than $500,000 in the People's Republic
of China and Japan, and not less than $250,000 in all other territories), as
well as twenty-five percent (25%) of all royalties, transfer fee payments and
any other monies received; and (ii) with respect to sublicenses granted in
Australia and New Zealand, the licensee will pay to the Company two percent (2%)
of gross sales within such territories. Mr. Chasen served as a director of
Transmedia Asia Pacific Inc. until March 1, 1995.
In December 1996, the Company entered into an agreement with Transmedia Europe,
Inc. and Transmedia Asia Pacific Inc. amending both of the licenses, among other
things, to permit the companies to be reorganized under one entity and to allow
them to acquire and operate worldwide the business of Countdown plc., which
conducts a restaurant discount program in Europe and, to a lesser extent, in the
United States.
AREAS OF OPERATION
The Company's principal areas of operation, through its subsidiaries and its
domestic franchising operations, include the New York Metropolitan area
(consisting of New York City and the counties of Nassau, Suffolk, Westchester,
Rockland, Putnam and Orange in New York State, Northern New Jersey and
Connecticut); Central, Southwest and Southeast Florida; Massachusetts; the
Chicago, Illinois Metropolitan area; Rhode Island; New Hampshire; Maine;
Vermont; Philadelphia, Pennsylvania; Phoenix, Arizona; Denver, Colorado;
Milwaukee, Wisconsin; Indianapolis, Indiana; California; Delaware; Georgia; the
Washington, D.C. Metropolitan area; the Baltimore, Maryland Metropolitan area;
North and South Carolina; the Dallas,/Ft. Worth and Houston, Texas Metropolitan
areas; Atlanta, Georgia, eastern Tennessee; and Virginia.
PARTICIPATING RESTAURANTS AND CARDMEMBERS
<PAGE>
As of September 30, 1996, directories published by the Company, which are
distributed to cardmembers six times a year, listed 6,974 restaurants available
to cardmembers, and The Transmedia Card was held by an aggregate of 924,418
cardmembers, comprised of 634,761 accounts with an average of 1.46 cardmembers
per account. The following table sets forth (i) the number of restaurants listed
in directories published by the Company and (ii) the number of cardmembers, as
of the fiscal years ended September 30, 1992 though 1996:
1996 1995 1994 1993 1992
---------- ---------- --------- --------- --------
Restaurants 6,974 5,330 3,628 2,328 1,449
- ------------------------ ---------- --------- --------- --------
Cardmembers 924,418 593,161 395,968 197,166 112,029
As the table indicates, the number of restaurants listed in directories
published by the Company has risen nearly three hundred eighty-one percent
(381%) during the fiscal years ended September 30, 1992 through September 30,
1996, and the number of cardmembers has risen nearly seven hundred twenty-five
percent (725%) for the same period. In fiscal 1996, between fifty-five and sixty
percent (55-60%) of all cardmembers renewed their memberships, and approximately
ninety percent (90%) of all restaurants listed in the directories published by
the Company whose initial amount of Rights to Receive were expended in 1996
renewed their contracts with the Company. In addition, eighty percent (80%) of
all restaurants eligible for their second year of renewals in fiscal 1996
renewed their contracts. The Company generally experiences a sharp decline in
renewals among restaurants eligible for a third year of renewals. It has been
the Company's experience, however, that the addition of new restaurants
generally offsets the drop-off in renewing restaurants, and the Company believes
that its service areas are not close to cardmember saturation.
MARKETING
The Company markets The Transmedia Card through the use of advertising, direct
mail and through promotion with co-marketing partners such as banks and affinity
groups.
EMPLOYEES
As of December 20, 1996, the Company employed 145 persons. The Company believes
that its relationships with its employees are good.
COMPETITION
The charge card business is highly competitive and the Company competes for both
cardmembers and participating restaurants, hotels and other applicable services.
Competitors include discount programs offered by major credit card companies,
such as American Express, Visa, MasterCard and Diners Club and
<PAGE>
other companies that offer different kinds of discount marketing programs and
numerous small companies which offer services which may compete with the
services offered or to be offered by the Company. Certain of the Company's
competitors may have substantially greater financial resources and expend
considerably larger sums than does the Company for new product development and
marketing. Further, the Company must compete with many larger and better
established companies for the hiring and retaining of qualified marketing
personnel. The Company believes that the unique features of its program -- that
The Transmedia Card can be used by cardmembers at participating establishments
with very few restrictions, that The Transmedia Card provides substantial
savings without the need for a cardmember to present discount coupons when
paying for a meal, and that participating establishments are provided with cash
in advance of customer charges -- contribute to the Company's competitiveness
and allow the Company to offer better value and service to its cardmembers.
ITEM 2. PROPERTIES
The Company's present executive office consists of 8,303 square feet, located in
Miami, Florida, which the Company occupies pursuant to a lease expiring on
February 28, 1997 and which provides for an annual base rental of $148,860. The
Company's Miami office also houses the Company's cardmember service center. The
Company has entered into a new lease, which commences on March 1, 1997, for
13,096 square feet, thus adding an additional 4,793 square feet of contiguous
space to its current office. The lease will expire on February 28, 2002 and
provides for an annual base rent of $270,825. The Company leases offices in New
York City for 5,710 square feet of office space pursuant to a lease entered into
in May 1996. The lease, which expires on June 30, 2001, provides for minimum
annual rentals of $199,850. In addition, the Company has a four and one-half
year office lease in Philadelphia, Pennsylvania for approximately 1,641 square
feet, which commenced April 1, 1994. The lease provides for a base annual rental
of approximately $24,500 in the first year, which will increase by approximately
$800 each year thereafter. In Boston, Massachusetts, the Company has a
sixty-four month lease for approximately 1,500 square feet, which commenced May
1, 1995. The lease provides for base annual rentals of $29,400. The Company has
an option for one three-year renewal. In Chicago, the Company has a thirty-nine
month lease for approximately 1,183 square feet, which commenced October 1,
1995. The lease provides for an initial annual lease rental of $26,730
increasing by approximately $600 each year thereafter. In Detroit, the Company
leases an executive office for a twelve-month period which began on May 1, 1995
at an annual fee of $6,840. In Tampa, the Company leases an executive office for
a thirteen-month period which began on June 1, 1995. The total rental for the
thirteen month period is $9,795. In Phoenix, the Company leases an executive
office for a thirteen-month period which began on March 6, 1996 for a total rent
of $9,620 for the thirteen months. In Denver, the Company leases on a
month-to-month basis, an executive office for $450 per month.
<PAGE>
In connection with the termination of the franchise granted to The Western
Transmedia Company Inc. and the acquisition of certain of its assets, the
Company will be assuming ongoing leases for two office properties in San
Francisco, California and Los Angeles, California. In San Francisco, California,
the Company would be assuming a lease for approximately 3,000 square feet, at an
annual rent of $54,686.04 from August 1, 1996 to July 31, 1997, $57,642.00 from
August 1, 1997 to July 31, 1998 and $60,597.96 from August 1, 1998 to August 31,
1999. The lease expires on August 31, 1999. In Los Angeles, California, the
Company would be assuming a lease for approximately 2,000 square feet at a
monthly base rent of approximately $4,200. The lease expires on January 31,
1997, however, the Company intends to exercise an option to extend the lease for
two years at a rental equal to market value.
ITEM 3. LEGAL PROCEEDINGS
As of September 30, 1996, there were no material legal proceedings pending
involving the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 1996, no matters were submitted to a vote
of the security holders.
EXECUTIVE OFFICERS OF THE REGISTRANT
NAME POSITION AGE
- ---- -------- ---
Melvin Chasen Director, Chairman of the 68
Board, President and Chief
Executive Officer
James M. Callaghan Director and Vice President; 57
President of Transmedia
Restaurant
Company Inc.
Barry S. Kaplan Director and Vice President;
President of Transmedia
Service Company Inc. 38
David L. Weinberg Vice President and Chief 51
Financial Officer;
President of TMNI
International Inc.
Paul A. Ficalora Executive Vice President 45
of Transmedia Restaurant
Company Inc.
Gregory Borges Treasurer 60
Kathryn Ferara Secretary 40
<PAGE>
Mr. Chasen has been a director and the Chairman of the Board, President and
Chief Executive Officer of the Company since 1983. From 1984 through 1987, he
was a director, Chairman of the Board, President and Chief Executive Officer of
Transmedia Network Inc., a Colorado corporation, which was the predecessor of
the Company.
Mr. Callaghan, a director of the Company since 1991, was elected Vice President
of the Company and President of Transmedia Restaurant Company Inc., a
subsidiary, in 1994. He joined the Company in 1989 and served as its Executive
Vice President, Vice President, Sales and Marketing and Treasurer.
Mr. Kaplan was elected a Vice President of the Company and President of
Transmedia Service Company Inc., a subsidiary, in September 1995 and was elected
a Director of the Company in March 1996. From 1986 until joining the Company, he
served in various positions including Executive Vice President, Chief Operating
Officer of Liberty Travel, Inc., a chain of full-service travel agencies.
Mr. Weinberg was elected Vice President and Chief Financial Officer of the
Company in 1992 and in 1994 was also elected President of TMNI International
Incorporated, a subsidiary. He joined the Company as Vice President Finance in
1991. From 1987 to 1991, Mr. Weinberg served as Vice President Finance and
Administration, Chief Financial Officer, Treasurer and Secretary of Columbia
Laboratories, Inc., a health care products company.
Mr. Ficalora was elected Executive Vice President of the Restaurant Company in
1994, having served as Vice President, Operations of the Company from 1992 until
1994, and Director of Franchise Sales from 1991 to 1992.
Mr. Borges was elected Treasurer of the Company in 1992. He joined the Company
in 1985 as Controller.
Mrs. Ferara was elected Secretary of the Company in 1992. She joined the Company
in 1989 as Office Manager and Assistant Secretary.
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange
under the symbol "TMN". Prior to June 28, 1995, the Company's Common Stock was
included in the Nasdaq National Market . The following table sets forth the high
and low sale prices for the common stock for each fiscal quarter ended from
December 31, 1994 (adjusted for the three-for-two stock split effected on April
22, 1994 and applied retroactively where appropriate) as reported on the New
York Stock Exchange or the Nasdaq National Market, as well as the dividends paid
during each such fiscal quarter.
The payment of dividends, if any, in the future, will depend upon,
among other things, the Company's earnings and financial requirements, as well
as general business conditions.
QUARTER ENDED LOW HIGH DIVIDENDS PAID
- ------------- --- ---- --------------
December 31, 1994 $8.313 $13.750 $.02
March 31, 1995 8.500 13.250 --
June 30, 1995 8.000 13.250 .02
September 30, 1995 8.375 11.375 --
December 31, 1995 8.750 11.000 .02
March 31, 1996 7.125 9.750 --
June 30, 1996 7.125 9.000 .02
September 30, 1996 5.500 8.625 --
The aggregate number of holders of record of the Company's Common Stock
on December 20, 1996 was approximately 2,400.
The payment of dividends, if any, in the future, will depend upon,
among other things, the Company's earnings and financial requirements, as well
as general and business conditions.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Omitted in accordance with Rule 12b-25(d).
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Omitted in accordance with Rule 12b-25(d).
<PAGE>
ITEM 8. FINANCIAL STATEMENTS
Omitted in accordance with Rule 12b-25(d).
<PAGE>
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
* None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information called for by Item 10 is set forth under the heading
"Executive Officers of the Registrant" in Part I hereof and in
"Election of Directors" in the Company's 1997 Proxy Statement, which is
incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
Information called for by Item 11 is set forth under the heading
"Executive Compensation" in the Company's 1997 Proxy Statement, which
is incorporated herein by this reference.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information called for in Item 12 is set forth under the heading
"Security Ownership of Certain Beneficial Owners and Management" in the
Company's 1997 Proxy Statement, which is incorporated herein by this
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information called for in Item 13 is set forth under the heading
"Certain Relationships and Related Transactions" in the Company's 1997
Proxy Statement, which is incorporated herein by this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are being filed as part of this Report:
(a)(1) Financial Statements:
Transmedia Network Inc.
See "Index to Financial Statements" contained in Part II,
Item 8.
(a)(2) Financial Statement Schedules
No schedules have been included because they are not applicable or the
required information is shown in the Financial Statements or the Notes
thereto.
(a)(3) Exhibits
DESIGNATION DESCRIPTION
- ----------- -----------
2.1 Assignment and Assumption of Franchise Agreements dated September 30,
1994 between Transmedia Network Inc. and the Service Company.(1)
2.2 Capital Contribution dated September 30, 1994 by Transmedia Network
Inc. to the Service Company.(1)
2.3 Trademark Contribution dated September 30, 1994 from Transmedia Network
to the Service Company.(1)
2.4 Capital Contribution dated September 30, 1994 from Transmedia Network
Inc. to the Restaurant Company.(1)
<PAGE>
2.5 Administrative Services Agreement dated as of September 30, 1994
between Transmedia Service Company Inc. and Transmedia Restaurant
Company Inc.(1)
2.6 Franchise Agreement dated September 30, 1994 between Transmedia Service
Company Inc. and Transmedia Restaurant Company Inc.(1)
3.1 Certificate of Incorporation of the Company, as amended.(2)
3.2 Certificate of Amendment to the Certificate of Incorporation of the
Company.(9)
3.3 Certificate of Amendment to the Certificate of Incorporation of the
Company, as filed with the Delaware Secretary of State on March 22,
1994.(1)
3.4 By-Laws of the Company.(3)
10.2 1987 Stock Option and Rights Plan, as amended.(1)(10)
10.3 Form of Stock Option Agreement (as modified) between the Company and
certain Directors and Schedule of Options granted and outstanding (as
of September 30, 1995) to such Directors pursuant to the respective
Stock Option Agreements with such Directors.(10) (11)
10.4 Amended and Restated Employment Agreement dated as of November 15, 1996
between the Company and Melvin Chasen.(12)
10.5 Amended and Restated Consulting Agreement dated as of November 15, 1996
between the Company and Melvin Chasen.(12)
10.6 Employment Agreement effective April 1, 1992 between the Company and
James Callaghan.(9) (10)
10.7 Amendment dated October 1, 1994, to Employment Agreement between the
Company and James Callaghan.(1)(10)
10.8 Employment Agreement dated as of October 1, 1995 between the
Company and Barry Kaplan. (10)(12)
10.9 Master License Agreement dated December 14, 1992 between the Company
and Conestoga Partners, Inc.(8)
10.10 First Amendment to Master License Agreement dated April 12, 1993,
between the Company and Conestoga Partners, Inc.(9)
<PAGE>
10.11 Second Amendment to Master License Agreement -- Assignment and
Assumption Agreement dated August 11, 1993 among the Company, TMNI
International Incorporated and Transmedia Europe, Inc.(9)
10.12 Master License Agreement Amendment No. 3 dated November 22, 1993
between TMNI International Incorporated and Transmedia Europe, Inc.(9)
10.13 Master License Agreement dated March 21, 1994 between TMNI
International Incorporated and Conestoga Partners II, Inc. licensing
rights in the Asia Pacific region.(1)
10.14 Agreement, dated as of December 6, 1996, among the Company, TMNI
International Incorporated, Transmedia Europe Inc. and Transmedia Asia
Pacific Inc.(12)
10.15 Agreement, dated as of November 15, 1996 between the Company and The
Western Transmedia Company Inc.(12)
21.1 Subsidiaries of Transmedia Network Inc.(1)
23.1 Consent of Independent Auditors.(13)
99.1 Prospectus of the Company dated July 10, 1992 filed pursuant to the
Securities Act of 1933.(5)
99.2 Prospectus of the Company dated August 12, 1992 filed pursuant to the
Securities Act of 1933.(6)
99.3 Form of Subscription Agreement.(7)
99.4 Agency Agreement dated April 9, 1992 between the Company and Janney
Montgomery Scott Inc.(8)
99.5 Warrant Purchase Agreement dated June 15, 1992 between the Company and
Janney Montgomery Scott.(8)
(1) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1994 and
incorporated by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1988, and
incorporated by reference thereto.
<PAGE>
(3) Filed as an exhibit to the Post Effective Amendment to the
Registration Statement on Form S-1 (Registration No. 33-5036),
and incorporated by reference thereto.
(4) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1990, and
incorporated by reference thereto.
(5) Filed as an exhibit to the Company's Registration Statement on
Form S-8 (Registration No. 33-494460), and incorporated by
reference thereto.
(6) Filed as an exhibit to the Company's Registration Statement on
Form S-3 (Registration No. 33-49374), and incorporated by
reference thereto.
(7) Filed as an exhibit to the Company's Form 8-K Current Report
dated June 15, 1992, and incorporated by reference thereto.
(8) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1992, and
incorporated by reference thereto.
(9) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1993, and
incorporated by reference thereto.
(10) Management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Annual Report on
Form 10-K pursuant to Item 14(c) hereof.
(11) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995 and
incorporated by reference.
(12) Filed as an exhibit hereto.
(13) To be filed by amendment.
(b) The Company did not file any Form 8-K Current Reports during
the fiscal year ended September 30, 1995.
(c) Exhibits:
See paragraph (a) (3) above for items filed as exhibits to
this Annual Report on Form 10-K as required by Item 601 of
Regulation S-K.
<PAGE>
(d) Financial Statement Schedules:
See paragraphs (a)(1) and (a)(2) above for financial statement
schedules and supplemental financial statements filed as part
of this Annual Report on Form 10-K.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TRANSMEDIA NETWORK INC.
By: /S/MELVIN CHASEN
------------------------
Melvin Chasen, President
Dated: December 30, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
NAME TITLE DATE
---- ----- ----
/S/MELVIN CHASEN Director, Chairman December 30, 1996
- ----------------------- of the Board, President
Melvin Chasen and Chief Executive
Officer
/S/JAMES M. CALLAGHAN Director, December 30, 1996
- -----------------------
James M. Callaghan Vice President
/S/JACK AFRICK Director December 30, 1996
- -----------------------
Jack Africk
/S/HERBERT M. GARDNER Director December 30, 1996
- -----------------------
Herbert M. Gardner
/S/IRWIN HOCHBERG Director December 30, 1996
- -----------------------
Irwin Hochberg
/S/A. BARRY MERKIN Director
- -----------------------
A. Barry Merkin
<PAGE>
/S/HENRY SEIDEN Director December 30, 1996
- -----------------------
Henry Seiden
/S/BARRY S. KAPLAN Director Vice President
- -----------------------
Barry S. Kaplan
/S/DAVID L. WEINBERG Vice President and December 30, 1996
- -----------------------
David L. Weinberg Chief Financial
Officer (Principal
Financial and
Accounting Officer)
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION OF DOCUMENT NUMBERED
PAGE ----------------------- ------------
- ----
<S> <C> <C>
2.1 Assignment and Assumption of Franchise Agreements dated
September 30, 1994 between Transmedia Network Inc. and the
Service Company.(1) P
2.2 Capital Contribution dated September 30, 1994 by Transmedia
Network Inc. to the Service Company.(1) P
2.3 Trademark Contribution dated September 30, 1994 from
Transmedia Network to the Service Company.(1) P
2.4 Capital Contribution dated September 30, 1994 from
Transmedia Network Inc. to the Restaurant Company.(1) P
2.5 Administrative Services Agreement dated as of September 30,
1994 between Transmedia Service Company Inc. and Transmedia
Restaurant Company Inc.(1) P
2.6 Franchise Agreement dated September 30, 1994 between
Transmedia Service Company Inc. and Transmedia Restaurant
Company Inc.(1) P
3.1 Certificate of Incorporation of the Company, as amended.(2) P
3.2 Certificate of Amendment to the Certificate of
Incorporation of the Company.(9) P
3.3 Certificate of Amendment to the Certificate of Incorporation
of the Company, as filed with the Delaware Secretary of State
on March 22, 1994.(1) P
3.4 By-Laws of the Company.(3) P
10.2 1987 Stock Option and Rights Plan, as amended.(1)(10) P
10.3 Form of Stock Option Agreement (as modified) between the Company and
certain Directors and Schedule of Options
<PAGE>
granted and outstanding (as of September 30, 1995) to such Directors
pursuant to the respective Stock Option Agreements with such
Directors.(10)(11)
10.4 Amended and Restated Employment Agreement dated as of
November 15, 1996 between the Company and Melvin Chasen.(12) P
10.5 Amended and Restated Consulting Agreement dated as of November 15,
1996 between the Company and Melvin Chasen.(12) P
10.6 Employment Agreement effective October 1, 1995 between the
Company and James Callaghan.(9) (10) P
10.7 Amendment dated October 1, 1994, to Employment Agreement
between the Company and James Callaghan. P
10.8 Employment Agreement dated as of October 1, 1995 between
the Company and Barry Kaplan.(10)(12) P
10.9 Master License Agreement dated December 14, 1992 between the
Company and Conestoga Partners, Inc.(8) P
10.10 First Amendment to Master License Agreement dated April 12, 1993,
between the Company and Conestoga Partners, Inc.(9) P
10.11 Second Amendment to Master License Agreement -- Assignment
and Assumption Agreement dated August 11, 1993 among the
Company, TMNI International Incorporated and Transmedia
Europe, Inc.(9) P
10.12 Master License Agreement Amendment No. 3 dated
November 22, 1993 between TMNI International Incorporated and
Transmedia Europe, Inc.(9) P
10.13 Master License Agreement dated March 21, 1994 between TMNI
International Incorporated and Conestoga Partners II, Inc. licensing
rights in the Asia Pacific region.(1) P
10.14 Agreement, dated as of December 6, 1996, among the Company,
TMNI International Incorporated, Transmedia Europe Inc. and
Transmedia Asia Pacific Inc.(12) P
10.15 Agreement, dated as of November 15, 1996 between the Company
and The Western Transmedia Company Inc.(12) P
<PAGE>
21.1 Subsidiaries of Transmedia Network Inc.(1) P
23.1 Consent of Independent Auditors.(13)
99.1 Prospectus of the Company dated July 10, 1992 filed pursuant
to the Securities Act of 1933.(5) P
99.2 Prospectus of the Company dated August 12, 1992 filed
pursuant to the Securities Act of 1933.(6) P
99.3 Form of Subscription Agreement.(7) P
99.4 Agency Agreement dated April 9, 1992 between the Company
and Janney Montgomery Scott Inc.(8) P
99.5 Warrant Purchase Agreement dated June 15, 1992 between the
Company and Janney Montgomery Scott.(8) P
</TABLE>
(1) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1994 and
incorporated by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1988, and
incorporated by reference thereto.
(3) Filed as an exhibit to the Post Effective Amendment to the
Registration Statement on Form S-1 (Registration No. 33-5036),
and incorporated by reference thereto.
(4) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1990, and
incorporated by reference thereto.
(5) Filed as an exhibit to the Company's Registration Statement on
Form S-8 (Registration No. 33-494460), and incorporated by
reference thereto.
(6) Filed as an exhibit to the Company's Registration Statement on
Form S-3 (Registration No. 33-49374), and incorporated by
reference thereto.
<PAGE>
(7) Filed as an exhibit to the Company's Form 8-K Current Report
dated June 15, 1992, and incorporated by reference thereto.
(8) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1992, and
incorporated by reference thereto.
(9) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1993, and
incorporated by reference thereto.
(10) Management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Annual Report on
Form 10-K pursuant to Item 14(c) hereof.
(11) Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995 and
incorporated by reference.
(12) Filed as an exhibit hereto.
(13) To be filed by amendment.
Exhibit 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of the 15th day of
November, 1996, by and between TRANSMEDIA NETWORK INC., a Colorado corporation
("TRANSMEDIA"), and MELVIN CHASEN (the "EXECUTIVE").
WHEREAS, Transmedia and the Executive entered into an Employment
Agreement, dated as of January 1, 1987, and subsequently entered into
Amendments, dated as of July 11, 1988, October 1, 1990, October 1, 1992 and
October 1, 1994 to such Employment Agreement; and
WHEREAS, Transmedia and the Executive wish to further amend and extend
the Employment Agreement and to restate the terms thereof in one instrument;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
do mutually agree as follows:
/bullet/ EMPLOYMENT. Transmedia agrees to and does hereby employ the
Executive, and the Executive accepts such employment, upon the terms and
conditions hereinafter set forth. The Executive represents and warrants that he
is free to enter into this Agreement and that entering into this Agreement is
not in violation of any obligations that he has to any other person, firm or
corporation.
/bullet/ TERM. The term of this Agreement shall be for the period commencing
October 1, 1994 and ending on September 30,
<PAGE>
1999 (the "TERM"), unless earlier terminated as provided herein.
OFFICE AND DUTIES. The Executive shall perform such executive services
in the operation of the business of Transmedia and its subsidiaries as
Transmedia's Board of Directors may from time to time reasonably assign to the
Executive. The Executive shall hold the positions of President and Chief
Executive Officer of Transmedia, and shall report directly to Transmedia's Board
of Directors. In addition, in connection with any meeting or action of
stockholders for the election of Transmedia's Board of Directors, Transmedia
shall nominate the Executive for election to Transmedia's Board of Directors and
shall use its best efforts to cause the Executive to be elected thereto. During
the term of this Agreement, the Executive shall: (a) work for Transmedia and its
subsidiaries on a full-time, exclusive basis; (b) use his best efforts to apply
on a full-time basis all of his skill and experience to the performance of his
duties in such employment; and (c) not engage in any other business activities,
other than personal investments in corporations and other entities which do not
compete directly or indirectly with Transmedia and its subsidiaries.
Notwithstanding the provisions of the preceding sentence, the Executive shall be
entitled, on an occasional basis, to serve as a consultant to, or on the board
of directors of, other corporations during the term of this Agreement and to
receive and retain all compensation paid to him in such capacities, so long as
such other corporations do not compete directly or indirectly with Transmedia
and its subsidiaries. The Executive shall be entitled to a private office
commensurate with his position with Transmedia and to a secretary assigned
<PAGE>
exclusively to the Executive. The provisions of this Section 3 are subject to
modification as set forth in Section 10.
/bullet/ COMPENSATION AND BENEFITS. (a) For services rendered by the
Executive under this Agreement, the Executive shall be paid a base salary (the
"SALARY") at the rate of Two Hundred Seventy-Five Thousand Dollars ($275,000)
per annum during the first year of the Term, Three Hundred Thousand Dollars
($300,000) per annum during the second year of the Term, Three Hundred Fifty
Thousand Dollars ($350,000) during the third year of the Term, Three Hundred
Seventy-Five Thousand Dollars ($375,000) during the fourth year of the Term, and
Four Hundred Thousand Dollars ($400,000) during the fifth year of the Term. The
Salary shall be payable in equal weekly installments.
(b) As additional compensation, Transmedia shall pay the Executive an
annual bonus (the "BONUS") equal to Five Percent (5%) of Pre-Tax Income (as
defined below) for each fiscal year of Transmedia or portion thereof occurring
during the Term following the fiscal year ended September 30, 1994; provided,
however, the amount of the Bonus shall not exceed $600,000, $600,000 and
$700,000 for the fiscal years (or portions thereof occurring during the Term) of
Transmedia ending September 30, 1995, 1996 and 1997, respectively, and $700,000
thereafter. "Pre-Tax Income" shall mean the pre-tax income of Transmedia for the
applicable period before computation of the Bonus, as determined by Transmedia's
independent certified public accountants on the basis of generally accepted
accounting principles consistently applied. The Bonus shall be payable on an
annual basis within
<PAGE>
120 days after the end of each fiscal year, commencing with the fiscal year
ending September 30, 1995. If the Term includes less than all of any fiscal
year, then the Bonus, if any, payable for such fiscal year shall be determined
on a pro rata basis of the Pre-Tax Income for the portion of such fiscal year
that this Agreement is in effect except as provided in sub-paragraph 4(d)
hereof.
(c) Transmedia shall, during the term of this Agreement, pay
all premiums on the existing whole-life insurance policy issued by Executive
Life Insurance Company on the life of the Executive in the face amount of
$500,000. Upon the expiration of the term of this Agreement, Transmedia shall
transfer the ownership of such policy to the Executive without any payment by
the Executive. In the event of the death of the Executive during the term of
this Agreement, Transmedia will segregate proceeds thereof sufficient to
purchase an annuity that will pay to the estate of the Executive a death benefit
of $50,000 per year for a period of ten years, with the first such benefit
payable six months after such death. The balance of such proceeds after purchase
of the annuity shall be retained by Transmedia.
(d) At all times during the term of this Agreement, the
Executive shall be included in any life, medical, health, and hospitalization
insurance, pension, stock option, stock ownership, incentive compensation, and
other benefit programs maintained by or for Transmedia at the date hereof. If
Transmedia hereafter establishes any other programs, the Executive shall be
included therein at least the same level as
<PAGE>
the other senior executives of Transmedia. In addition, in the event of the
Executive's Disability (as defined below), Transmedia will pay to the Executive
the following: (i) during the first six months of Disability, 100% of the Salary
that would be payable to the Executive but for such Disability; (ii) thereafter,
and until the end of the Term, 75% of such Salary; and (iii) the Bonus for the
period(s) provided in the next sentence. The Executive shall receive a Bonus for
the entire fiscal year ending on any applicable September 30th, if said
September 30th occurs during the first six months of Disability; in all other
instances, the Executive shall receive a portion of the Bonus for an entire year
determined by multiplying the Bonus for the entire fiscal year by a fraction,
the numerator of which is the total number of months starting with October 1st
and ending upon the conclusion of said six months of Disability and the
denominator of which is 12. For purposes of this sub-paragraph (d), all
calculations shall be made on the basis of full and not partial months. For the
purposes hereof "Disability" shall mean a physical or mental impairment of such
duration and degree that the Executive is determined by the Board of Directors
of Transmedia to be substantially unable because of the impairment to perform
the services described in Section 3.
(e) [RESERVED]
(f) Transmedia may provide to the Executive such additional
compensation, bonuses, and benefits as its Board of Directors deems appropriate,
but nothing herein shall obligate Transmedia to do so.
<PAGE>
(g) In consideration of services rendered on behalf of
Transmedia by the Executive in the fiscal year ending September 30, 1990,
Transmedia shall pay the Executive, on the date chosen by the Executive in his
sole discretion, as additional compensation, a bonus of Twenty Five Thousand
Dollars ($25,000); provided, however, that such bonus shall not be payable
unless Transmedia shall achieve Pre-Tax Income for the fiscal year ending
September 30, 1990 of at least Two Hundred Thousand Dollars ($200,000).
/bullet/ VACATION. The Executive shall be entitled to take four (4) weeks'
paid vacation during each twelve-month period of his employment hereunder on a
basis consistent with the requirements of the business of Transmedia and its
subsidiaries and in accordance with Transmedia's customary practice for senior
executives. Unused accrued vacation may be carried forward and taken during any
subsequent twelve-month period; PROVIDED, HOWEVER, that the Executive may not
take more than four weeks' vacation during any three-month period. In lieu of
carrying forward unused accrued vacation, the Executive may elect to be paid for
all or any part of unused accrued vacation from any prior twelve-month period.
The amount of any such payment shall be based on the Executive's Salary in
effect at the time of payment. At the expiration of this Agreement after its
stated term or upon the earlier termination hereof by Transmedia without "cause"
(as defined in Section 9 hereof), Transmedia shall pay the Executive for any
unused vacation time which accrued prior to expiration or termination at the
rate set forth in the preceding sentence.
<PAGE>
/bullet/ REIMBURSEMENT OF EXPENSES. During the term of this Agreement, the
Executive shall be reimbursed for reasonable travel, entertainment and other
expenses incident to the rendering of services hereunder, upon presentation of
expense statements or vouchers or such other supporting information as
Transmedia may customarily require of its senior executives.
/bullet/ RESTRICTIONS. (a) The Executive acknowledges that the business of
Transmedia is potentially nationwide in scope, and that it expects to be
marketing its products and services throughout a wider geographical area than
that in which it presently operates. Accordingly, during the Restricted Period
(as defined below), the Executive shall not, unless acting with Transmedia's
prior written consent: (i) directly or indirectly own, manage, operate, join, or
control, or participate in the ownership, management, operations or control of,
or be connected as a director, officer, employee, partner, stockholder,
consultant or otherwise with, any business or organization located in or doing
business in the Restricted Area (as defined below) which (A) is engaged in
financing restaurant advertising or equipment or providing restaurant discounts
to members of its programs or (B) directly or indirectly competes with any other
business of Transmedia or any of its subsidiaries conducted at any time during
the term hereof; or (ii) interfere with, or divert or attempt to divert the
benefits of, any relationship with employees, agents, suppliers, restaurant
clients, membership card holders or other customers maintained by Transmedia and
its subsidiaries at any time during the Restricted Period. However,
<PAGE>
if the Executive's employment hereunder is terminated without "cause" (as
defined in Section 9 hereof), then the provisions of this Section 7(a) shall
cease upon such termination. For the purposes of this Agreement, (i) "RESTRICTED
PERIOD" means the twenty-four-month period commencing upon the earlier of (x)
the termination of the Executive's employment with Transmedia prior to the
expiration hereof, either voluntarily by the Executive or by Transmedia for
"cause"; and (y) the expiration of this Agreement after its stated term,; and
(ii) "RESTRICTED Area" means any geographical market in or with respect to which
Transmedia, within twelve months prior to the commencement of the Restricted
Period, is then operating or has taken significant affirmative steps to commence
operations. Nothing in this Section 7(a) shall be construed to prevent the
Executive from owning or dealing in any stock actively traded over-the-counter
or on any recognized exchange and issued by a corporation which may compete
directly or indirectly with Transmedia and its subsidiaries so long as the
Executive does not participate in the management, control, or operations of any
such corporation and the Executive's holdings do not at any time exceed five
percent (5%) of the outstanding shares of any class of stock of such
corporation.
(b) The Executive agrees that all confidential and proprietary
matters which he may now have or may obtain during the term of his employment
hereunder relating in any way to the business of Transmedia and its subsidiaries
shall not be disclosed to any other person, either during or after the
termination of his employment, unless Transmedia has given its
<PAGE>
prior consent to such disclosure or such disclosure is a necessary incident to
transactions with the Executive is pursuing in accordance with duties delegated
to him by Transmedia's Board of Directors. The Executive shall promptly return
all tangible evidence of such confidential and proprietary matters to Transmedia
at the termination of his employment or upon Transmedia's earlier request.
(c) The Executive acknowledges that the remedy at law for his
breach of the covenants contained in this Section 7 is inadequate, and that
therefore Transmedia and its subsidiaries shall be entitled, in addition to any
other right or remedy available to them, to injunctive relief and the remedy of
specific performance to restrain the Executive from committing or continuing any
such breach and to enforce the Executive's obligations hereunder.
(d) If any court or tribunal of competent jurisdiction shall
refuse to enforce any or all of the provisions of this Section 7, because
individually or taken together, they are deemed unreasonable, then the parties
hereto understand and agree that any such provision or provisions shall not be
void but for the purpose of such proceedings, shall be revised to the extent
necessary to permit the enforcement of such provisions.
/bullet/ OWNERSHIP OF WORK PRODUCT. The Executive acknowledges that during
the term of his employment hereunder he may conceive of, discover, invent, or
create inventions, improvements, new contributions, literary property, material,
ideas and discoveries, whether or not patentable or copyrightable, which
<PAGE>
relate to the business of Transmedia and its subsidiaries (all of the foregoing
being collectively referred to herein as "Work Product"), and that various
business opportunities appropriate for Transmedia and its subsidiaries may be
presented to him by reason of his employment. The Executive acknowledges that,
unless Transmedia otherwise agrees in writing, all of the foregoing shall be
owned by and belong exclusively to Transmedia, and he shall have no personal
interest therein. The Executive, at Transmedia's expense, shall further: (a)
promptly disclose any such Work Product and business opportunities to
Transmedia; (b) assign to Transmedia, upon request and without additional
compensation, the entire rights to such Work Product and business opportunities;
(c) sign all papers necessary to carry out the foregoing; and (d) give testimony
in support of his discovery, invention, or creation in any appropriate case.
/bullet/ TERMINATION. (a) Notwithstanding anything contained herein to the
contrary, the Executive's employment hereunder: (i) shall automatically
terminate upon the Executive's death; and (ii) may be terminated by Transmedia's
Board of Directors for "cause" (as hereinafter defined) upon 60 days' prior
written notice of termination, subject to the Executive's right to cure certain
breaches constituting "cause", as provided below. For the purposes of this
Agreement, termination shall be deemed to be "for cause" if: (i) the Executive
is convicted of a felony; (ii) the Executive declares personal bankruptcy
pursuant to any applicable law; (iii) the Executive commits an act of fraud with
respect to Transmedia or any subsidiary, franchisee or licensee of Transmedia or
misappropriates any of its funds; or (iv) the
<PAGE>
Executive refuses to perform his duties pursuant to this Agreement, or directly
and repeatedly breaches any covenants contained herein. The written notice of
termination shall set forth with specificity the reason for such termination. If
the reason for such termination is the Executive's direct and repeated refusal
to perform his duties hereunder or his direct and repeated breach of any
covenants contained herein, the Executive shall have the right, within 30 days
of his receipt of such notice, to notify the Board of Directors of his intention
to cure such breach. On or within 10 days before the effective date of
termination, the Board of Directors shall meet to determine whether such breach
has been effectively cured and, upon the majority vote of the directors (not
including the Executive) that it has been cured, the notice of termination shall
be deemed ineffective. The Executive shall be entitled to be represented at such
meeting by counsel. On the effective date of termination, except for the
reimbursement of expenses incurred to such date, the Executive shall cease to
have any further rights hereunder but shall be subject to all restrictions set
forth elsewhere herein.
(b) Except where the Executive has exercised his right to
attempt to cure pursuant to the preceding subsection, the Executive may, within
15 days following delivery of a notice of termination for "cause", by written
notice to the Board of Directors of Transmedia, cause the matter of termination
for "cause" by Transmedia to be discussed at the next regularly scheduled
meeting of the Board of Directors or at a special
<PAGE>
meeting of the Board of Directors requested by a majority of its members. The
Executive shall be entitled to be represented at such meeting by counsel. Such
meeting shall be conducted according to procedures deemed equitable by a
majority of the directors present. If, at such meeting, it shall be determined
that this Agreement has been terminated without "cause," or that such "cause"
shall be waived, the provisions of this Agreement shall be reinstated with the
same force and effect as if the notice of termination has not been given; and
the Executive shall be entitled to receive the compensation and other benefits
provided herein for the period from the effective date of the notice of
termination through the date of such reinstatement, plus all reasonable costs of
his counsel as approved by the Board of Directors of Transmedia. Except as
provided in the first sentence of this subsection (b), neither the Executive's
election to pursue or forego the procedures set forth in this subsection (b),
nor a determination by the Board of Directors, at any meeting pursuant to this
subsection, that the Executive's employment hereunder was terminated for
"cause", shall prejudice or preclude the exercise of any other right or remedy
which the Executive may have at law or otherwise as a result of the termination
of his employment hereunder.
/bullet/ SALE OF TRANSMEDIA; CONSULTING ARRANGEMENT. The sale of all or
substantially all of the assets of Transmedia, or the sale of a "control block"
(as hereafter defined) of its shares to any person during the Term shall be made
subject to the Executive's right to either 1) continue his employment under the
terms of this Agreement or 2) within one (1) year after such
<PAGE>
sale, elect to resign from his positions with Transmedia. In the event the
Executive chooses to resign from his positions with Transmedia, he shall
receive, without the necessity of performing consulting or other services for
Transmedia, a payment in lump sum of One Million Dollars ($1,000,000). Such lump
sum payment shall be made by Transmedia to the Executive within seven (7) days
of Transmedia's receipt of the Executive's notice of resignation. In addition,
the Executive shall receive the benefits with respect to the life insurance
policy, and payment of death benefits, as set forth in Section 4(c). For the
purposes hereof, "control block" means any block of shares the possession of
which, when added to any shares already owned, directly or indirectly, gives the
power in any form to direct or cause the direction of the management and
policies of Transmedia.
/bullet/ NOTICES Any notices to be given hereunder shall be
deemed to have been given if delivered personally against receipt, if sent by
nationally recognized overnight delivery service, or if mailed by registered or
certified mail, return receipt requested, to the following address: if to
Transmedia, at 11900 Biscayne Blvd, Miami, Florida 33181, with a copy to Morgan,
Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178, to the attention
of Stephen P. Farrell, Esq.; and if to the Executive, at 2085 N.E. 120th Road,
North Miami, Florida 33181. Either party may change his or her address set forth
above by giving written notice to the other party in accordance with this
Section.
<PAGE>
/bullet/ GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
/bullet/ CAPTIONS. The captions of the sections of this Agreement are for
the purpose of convenience only, are not intended to be part of this Agreement
and shall not be deemed to modify, explain, enlarge or restrict any of its
provisions.
/bullet/ SEVERABILITY. If any clause or provision of this Agreement shall
be held invalid or unenforceable, in whole or in part, in any jurisdiction, such
invalidity or unenforceability shall attach only to such clause or provision, or
part thereof, in such jurisdiction, and shall not in any manner affect any other
clause or provision hereof in any jurisdiction.
/bullet/ BINDING EFFECT; ASSIGNMENT. This Agreement shall bind and inure to
the benefit of the respective heirs, representatives, successors, and permitted
assignees of Transmedia and the Executive. Transmedia may assign this Agreement
or any of its rights and obligations hereunder to (i) any transferee of or
successor to all or substantially all of the assets or business of Transmedia
and its subsidiaries or (ii) any subsidiary or affiliate of Transmedia;
PROVIDED, HOWEVER, that no such assignment shall release Transmedia from its
obligations hereunder. The Executive may not assign this Agreement or any of his
rights and obligations hereunder under any circumstances.
/bullet/ MISCELLANEOUS. This Agreement embodies the entire understanding
between Transmedia and the Executive with respect to its subject matter, and
there is no extrinsic agreement of any kind affecting it. This Agreement also
supersedes and replaces
<PAGE>
any prior agreement with respect to the subject matter of this Agreement. This
Agreement may not be changed or terminated orally, and no change, termination or
waiver of this Agreement or of any of the provisions herein contained shall be
binding unless made in writing and signed by the party against whom the same is
sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
TRANSMEDIA NETWORK INC.
By: /S/JAMES M. CALLAGHAN
-------------------------
James M. Callaghan
Vice President
/S/MELVIN CHASEN
--------------------------
Melvin Chasen
Exhibit 10.5
AMENDMENT AND RESTATEMENT OF THE CONSULTING AGREEMENT
AMENDMENT AND RESTATEMENT OF THE CONSULTING AGREEMENT (the
"Agreement"), dated as of November 15, 1996, by and between TRANSMEDIA NETWORK
INC., a Delaware corporation with its principal office at 11900 Biscayne
Boulevard, North Miami, Florida, 33181 (the "Company"), and MELVIN CHASEN
residing at 2800 Island Boulevard, Apartment 1401, Williams Island, Florida,
33160 (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the Consultant to
provide certain advisory services in respect of marketing, advertising,
development and general financial matters, and the Consultant desires to be so
retained by the Company, upon the terms and conditions hereinafter set forth;
and
WHEREAS, the Company and the Consultant extend into a
Consulting Agent dated as of November 24, 1993, which they wish to extend and
restate;
NOW, THEREFORE, the parties hereto hereby covenant and agree
as follows:
1. CONSULTING SERVICES. (a) The Company hereby retains the Consultant
to provide, and the Consultant hereby agrees to provide, certain advisory
services (the "Consulting Services") to the Company in respect of marketing,
advertising, development and general financial matters. Nothing contained herein
shall imply or confer upon the consultant the status of an employee of the
Company. The Consultant shall be required to devote five business days each
month to the performance of the Consulting Services, but may devote additional
amounts of time as the Consultant may desire at no additional expense to the
Company. The Consulting Services shall be performed at such times as shall be
mutually agreed upon by the Company and the Consultant.
(b) The Consultant represents and warrants to the Company that the
execution, delivery and performance by the Consultant of this Agreement shall
not constitute a violation of the terms of any agreement to which the Consultant
is a party or by which he is bound.
2. Term. The term (the "Term") of this Agreement shall commence on the
date of termination (the "Effective Date") of the employment agreement, dated as
of January 1, 1987, between the Company and the Consultant, as amended or
renewed (the "Employment Agreement"), and shall terminate on the tenth
anniversary of the Effective Date, but in no event later than January 1, 2005,
unless sooner terminated as provided herein.
3. FEES AND EXPENSES. In consideration of the performance of the
Consulting Services, the Company shall pay to the Consultant, and the Consultant
shall accept from the Company for his services rendered hereunder, for any year
during the Term, an annual amount
<PAGE>
equal to fifty (50) percent of the sum of the highest base salary and bonus
received by the Consultant in any year under the Employment Agreement not to
exceed in any one year during the Term ten (10) percent of the Company's prior
year's Pre-Tax Income (as defined below), but in any event an amount not less
than $100,000 ("Consulting Fee"). The Consulting Fee shall be payable monthly in
advance. The Company shall not withhold any wage or employment taxes in respect
of such Consulting Fees and shall issue to the Consultant such information
reports relating thereto as are required by applicable laws and regulations.
"Pre-Tax Income" shall mean the pre-tax income of the Company for the applicable
period, as determined by the Company's independent certified public accountants
on the basis of generally accepted accounting principles consistently applied.
(b) The Company hereby agrees, from time to time upon request, to
reimburse the Consultant for all out-of-pocket expenses incurred by the
Consultant in the performance of the Consulting Services, including but not
limited to, reasonable travel, entertainment and other expenses incident to the
rendering of services hereunder, upon receipt of proper documentation therefor.
In addition, the Company hereby agrees to provide the Consultant with office
services, including, but not limited to, secretarial and other office support
staff and office space, furnishings and supplies.
4. FRINGE BENEFITS At all times during the Term, the Consultant shall
be included in any life, medical, health, and hospitalization insurance,
pension, stock option, stock ownership, incentive compensation and other benefit
programs maintained by or for the Company as of the date hereof, or in the
future. In the event that the Company does not maintain or does not provide any
life, medical, health, hospitalization or insurance benefits, the Company hereby
agrees to provide the Consultant with funds in an amount sufficient for the
Consultant to obtain such benefits independently.
5. SALE OF THE COMPANY. The sale of all or substantially all of the
assets of the Company, or the sale of a "control block" (as hereinafter defined)
of its shares to any person during the Term shall be made subject to the
Consultant's right to receive ten (10) days prior notice of such sale and to
either (1) continue this Agreement or (2) within 90 days after such sale,
terminate this Agreement. In the event that the Consultant chooses to terminate
this Agreement, he shall receive, without the necessity of performing any other
services for the Company, a payment of a lump sum of all Consulting Fees due and
owing to Consultant for the entire Term under this Agreement. For the purposes
hereof, "control block" means any block of shares the possession of which, when
added to any shares already owned, directly or indirectly, gives the power in
any form to direct or cause the direction of the management and policies of the
Company.
6. DISABILITY. In the event of the Consultant's Disability (as defined
below), the Company shall pay the Consultant the Consulting Fee that would be
payable to the Consultant but for the Disability, as follows: (i) one hundred
(100) percent of the Consulting Fee during the first six (6) months of
Disability and (ii) seventy-five (75) percent of the Consulting Fee during the
subsequent 18 months of Disability. For purposes hereof, "Disability" shall mean
a physical or mental impairment of such duration and degree that the Consultant
is determined by the Board of Directors to be substantially unable because of
the impairment to perform the services described in Section 1 hereof. The
Company hereby agrees to provide ten (10) days prior notice of a
<PAGE>
determination by the Board of Directors that the Consultant is Disabled in the
event that the Board of Directors makes such a determination.
7. CHAIRMANSHIP. The Consultant hereby agrees that he will serve as
Chairman of the Board of Directors upon the request of the Board of Directors.
In the event that the Consultant serves as Chairman of the Board of Directors,
the Consultant is entitled to receive all benefits and protections to which all
of the other members of the Board of Directors are entitled, including, but not
limited to, fees for service as a Director, indemnification and stock options.
8. RESTRICTIONS. (a) The Consultant agrees, to the extent permitted by
law, that he shall not during the Term and for a period of two (2) years
following the termination of this Agreement for any reason ("Restricted
Period"), without the Company's consent, (i) directly or indirectly, own,
manage, operate, join or control, or participate in the ownership, management,
operation or control of, or be a director, officer, partner, stockholder or
employee of, or a consultant to, any business, firm, organization or corporation
located or doing business in the Restricted Area (as defined below) which (A) is
engaging in financing restaurant advertising or equipment or providing
restaurant discounts to members of its programs or (B) directly or indirectly
competes with any other business of the Company or any of its subsidiaries
conducted at any time during the term hereof; or (ii) interfere with, or divert
or attempt to divert the benefits of, any relationship with employees, agents,
suppliers, restaurant clients, membership card holders or other customers
maintained by the Company and its subsidiaries at any time during the Restricted
Period. For purposes hereof, "Restricted Area" means any geographical market in
or with respect to which the Company, within twelve months prior to the
commencement of the Restricted Period, is then operating or has taken
significant affirmative steps to commence operations. Nothing in this Section 8
shall prevent the Consultant from owning or dealing in any stock actively traded
over-the-counter or on any recognized exchange and issued by a corporation which
may compete directly or indirectly with the Company and its subsidiaries so long
as the Consultant does not participate in the management, control, operations of
any such corporation and the Consultant's holdings do not at any time exceed
five percent (5%) of the outstanding shares of any class of stock of such
corporation.
(b) The Consultant agrees that all confidential and proprietary matters
which he may now have or may obtain during the Term relating in any way to the
business of the Company and its subsidiaries shall not be disclosed to any other
person, either during or after the termination of this Agreement, unless the
Company has given its prior consent to such disclosure or such disclosure is a
necessary incident to transactions which the Consultant is pursuing in
accordance with duties delegated to him by the Board of Directors.
(c) If any court shall determine that any of the provisions of this
Section 8 is unenforceable, because individually or taken together, they are
deemed unreasonable, it is the intention and understanding of the parties hereto
that the restrictive covenant set forth herein shall not be rendered entirely
unenforceable but shall be amended to the extent required to render the same
valid and enforceable.
(d) The Consultant acknowledges that the remedy at law for his breach
of the covenants contained in this Section 8 is inadequate, and that therefore
the Company and its
<PAGE>
subsidiaries shall be entitled, in addition to any other right or remedy
available to them, to injunctive relief and the remedy of specific performance
to restrain the Consultant from committing or continuing any such breach and to
enforce the Consultant's obligations hereunder.
9. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Consultant from and against, and to reimburse the Consultant on demand, with
respect to any and all losses, damages, liabilities, claims, costs and expenses,
including reasonable attorneys' fees (collectively, "Losses") incurred by the
Consultant, by reason of or arising out of or in connection with the performance
of the Consulting Services hereunder by the Consultant other than for Losses
incurred as a result of acts constituting willful misconduct or gros negligence.
10. TERMINATION. Notwithstanding anything contained herein to the
contrary, this Agreement shall terminate immediately upon the death of the
Consultant.
11. MISCELLANEOUS.
11.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
no waiver or modification of the terms hereof shall be valid unless in writing
signed by the party to be charged and only to the extent therein set forth.
11.2 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed wholly within such State.
11.3 SUCCESSORS AND ASSIGNS; ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the Consultant, his successors,
assigns, heirs and legal representatives and the Company and its successors and
assigns. However, neither party may assign its rights hereunder without the
prior written consent of the other party, and any such attempted assignment
without such consent shall be null and void and without effect.
11.4 NOTICES. All notices hereunder shall be in writing and shall be
given when personally delivered or sent by registered or certified mail, postage
prepaid, or by telegram, telex, cable or facsimile. Such notices, if intended
for the Company, shall be addressed to it at 11900 Biscayne Boulevard, North
Miami, Florida, 33181 Attention: President; and, if intended for the Consultant,
shall be sent to him at 2800 Island Boulevard Apartment 1401, Williams Island,
Florida, 33160, or any other address which such party may have subsequently
communicated to the other party in writing.
11.5 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as the date first above written.
<PAGE>
TRANSMEDIA NETWORK INC.
By: /S/JAMES M. CALLAGHAN
------------------------
James M. Callaghan
Executive Vice President
/S/MELVIN CHASEN
------------------------
Melvin Chasen
Exhibit 10.6
RESTATED AND AMENDED
EMPLOYMENT AGREEMENT
RESTATED AND AMENDED EMPLOYMENT AGREEMENT, dated as of the 9th
day of December 1996, by and between TRANSMEDIA NETWORK INC., a Delaware
corporation ("TRANSMEDIA"), and JAMES M. CALLAGHAN (the "EXECUTIVE").
WHEREAS, Transmedia and the Executive wish to amend and
restate the Employment Agreement dated as of April 1, 1992, and amended as of
October 1, 1994, which they previously executed;
NOW, THEREFORE, In consideration of the mutual promises and
covenants herein contained, and intending to be legally bound hereby, the
parties hereto do mutually agree as follows:
/bullet/ EMPLOYMENT. Transmedia agrees to and does hereby
employ the Executive, and the Executive accepts such employment, upon the terms
and conditions hereinafter set forth. The Executive represents and warrants that
he is free to enter into this Agreement and that entering into this Agreement is
not in violation of any obligations that he has to any other person, firm or
corporation.
/bullet/ TERM. The term of this Agreement shall be for the
period commencing April 1, 1992 and ending on September 30, 1999 (the "TERM"),
unless earlier terminated as provided herein.
/bullet/ OFFICE AND DUTIES. The Executive shall perform such
executive services in the operation of the business of Transmedia and its
subsidiaries as Transmedia's Board of Directors may from time to time reasonably
assign to the Executive. The Executive shall hold the position of Vice President
of Transmedia and President of Transmedia Restaurant Company Inc., and shall
report directly to Transmedia's President. During the term of this Agreement,
the Executive shall: (a) work for Transmedia and its subsidiaries on a full-
time, exclusive basis;
<PAGE>
(b) use his best efforts to apply on a full-time
basis all of his skill and experience to the performance of his duties in such
employment; and
(c) not engage in any other business activities,
other than personal investments in corporations and other entities which do not
compete directly or indirectly with Transmedia and its subsidiaries.
Notwithstanding the provisions of the preceding sentence, the Executive shall be
entitled, on an occasional basis, to serve as a consultant to, or on the Board
of Directors of, other corporations during the term of this Agreement and to
receive and retain all compensation paid to him in such capacities, so long as
such other corporations do not compete directly or indirectly with Transmedia
and its subsidiaries. The provisions of this Section 3 are subject to
modification as set forth in Section 10.
/bullet/ COMPENSATION AND BENEFITS.
(a) For services rendered by the Executive under this
Agreement, the Executive shall be paid a base salary (the "Salary") at the rate
of One Hundred Eighty Thousand Dollars ($180,000) per annum during the first
year of the Term, Two Hundred Fifty Thousand Dollars ($250,000) per annum during
the second year of the Term, and Three Hundred Thousand Dollars ($300,000) per
annum during the third year of the Term, Three Hundred Fifteen Thousand Dollars
($315,000) per annum during the fourth year of the Term, and Three Hundred
Thirty-Five Thousand Dollars ($335,000) during the fifty year of the Term. The
Salary shall be payable in equal weekly installments.
(b) As additional compensation, the Executive shall
be eligible to receive annually, a bonus of up to one-half (1/2) of his salary
during each year of the Term. The Bonus shall be payable on an annual basis
within 120 days after the end of each fiscal year, commencing with the fiscal
year ending September 30, 1996.
(c) Transmedia shall, during the term of this
Agreement, procure, maintain in force, and pay all premiums on an insurance
policy to be issued on the life of the Executive, with his estate as
beneficiary, in the face amount of Five Hundred Thousand ($500,000) Dollars.
Upon the expiration of the term of this Agreement, Transmedia shall transfer
<PAGE>
the ownership of such policy to the Executive without any payment by the
Executive whether or not he becomes disabled during the employment Term.
(d) At all times during the term of this Agreement,
the Executive shall be included in any life, medical, health and hospitalization
insurance, pension, stock option, stock ownership, incentive compensation and
other benefit programs maintained by or for Transmedia at the date hereof. If
Transmedia hereafter establishes any other programs, the Executive shall be
included therein at least at the same level as the other senior executives of
Transmedia. In addition, in the event of the Executive's Disability (as defined
below), Transmedia will pay to the Executive the following: (i) during the first
six months of Disability, 100% of the Salary that would be payable to the
Executive but for such Disability; (ii) thereafter, and until the end of the
Term, 75% of such Salary; and (iii) the Bonus for the period(s) provided in the
next sentence. The Executive shall receive a Bonus for the entire fiscal year
ending on any applicable September 30, if said September 30 occurs during the
first six months of Disability; in all other instances, the Executive shall
receive a portion of the Bonus for an entire year determined by multiplying the
Bonus for the entire fiscal year by a fraction, the numerator of which is the
total number of months starting with October lst and ending upon the conclusion
of said six months of Disability and the denominator of which is 12. For
purposes of this sub-paragraph (d), all calculations shall be made on the basis
of full and not partial months. For the purposes hereof "Disability" shall mean
a physical or mental impairment of such duration and degree that the Executive
is determined by the Board of Directors of Transmedia to be substantially unable
because of the impairment to perform the services described in Section 3.
(e) Transmedia agrees to provide the Executive with a
One Thousand ($1,000) Dollar monthly automobile allowance.
(f) Transmedia may provide to the Executive such
additional compensation, bonuses, and benefits as its Board of Directors deems
appropriate, but nothing herein shall obligate Transmedia to do so.
/bullet/ VACATION. The Executive shall be entitled to take
four (4) weeks paid vacation during each twelve-month period this employment
hereunder on a basis consistent with
<PAGE>
the requirements of the business Transmedia and its subsidiaries and in
accordance with Transmedia's customary practice for senior executives.
/bullet/ REIMBURSEMENT OF EXPENSES. During the term of this
Agreement, the Executive shall be reimbursed for reasonable travel,
entertainment and other expenses incident to the rendering, of services
hereunder, upon presentation of expense statements or vouchers or such other
supporting information as Transmedia may customarily require of its senior
executives.
/bullet/ RESTRICTIONS
(a) The Executive acknowledges that the business of
Transmedia is potentially nationwide in scope, and that it expects to be
marketing its products and services throughout a wider geographical area than
that in which it presently operates. Accordingly, during the Restricted Period
(as defined below), the Executive shall not, unless acting with Transmedia's
prior written consent: (i) directly or indirectly own, manage, operate, join, or
control, or participate in the ownership, management, operations or control of,
or be connected as a director, officer, employee, partner, stockholder,
consultant or otherwise with, any business or organization located in or doing
business in the Restricted Area (as defined below) which (A) is engaged in
financing restaurant advertising or equipment or providing restaurant discounts
to members of its programs or (B) directly or indirectly competes with any other
business of Transmedia or any of its subsidiaries conducted at any time during
the term hereof; or (ii) interfere with, or divert or attempt to divert the
benefits of, any relationship with employees, agents, suppliers, restaurant
clients, membership card holders or other customers maintained by Transmedia and
its subsidiaries at any time during the Restricted Period. However, if the
Executive's employment hereunder is terminated without "cause" (as defined in
Section 9 hereof), then the provisions of this Section 7(a) shall cease, upon
such termination. For the purposes of this Agreement, (i) "RESTRICTED PERIOD"
means the twenty-four-month period commencing upon the earlier of (x) the
termination of the Executive's employment with Transmedia prior to the
expiration hereof, either voluntarily by the Executive or by Transmedia for
"cause"; or (y) the expiration of this Agreement after its stated term; and (ii)
"RESTRICTED AREA" means any
<PAGE>
geographical market in or with respect to which Transmedia, within twelve months
prior to the commencement of the Restricted Period, is then operating or has
taken significant affirmative steps to commence operations. Nothing in this
Section 7(a) shall be construed to prevent the Executive from owning or dealing
in any stock actively traded over-the-counter or on any recognized exchange and
issued by a corporation which may compete directly or indirectly with Transmedia
and its subsidiaries so long as the Executive does not participate in the
management, control, or operations of any such corporation and the Executive's
holdings do not at any time exceed Five Percent (5%) of the outstanding shares
of any class of stock of such corporation.
(b) The Executive agrees that all confidential and
proprietary matters which he may now have or may obtain during the Term of his
employment hereunder relating in any way to the business of Transmedia and its
subsidiaries shall not be disclosed to any other person, either during or after
the termination of his employment, unless Transmedia has given its prior consent
to such disclosure or such disclosure is a necessary incident to transactions
which the Executive is pursuing in accordance with duties delegated to him by
Transmedia's Board of Directors. The Executive shall promptly return all
tangible evidence of such confidential and proprietary matters to Transmedia at
the termination of his employment or upon Transmedia's earlier request.
(c) The Executive acknowledges that the remedy at law
for his breach of the covenants contained in this Section 7 is inadequate, and
that therefore Transmedia and its subsidiaries shall be entitled, in addition to
any other right or remedy available to them, to injunctive relief and the remedy
of specific performance to restrain the Executive from committing or continuing
any such breach and to enforce the Executive's obligations hereunder.
(d) If any court of tribunal of competent
jurisdiction shall refuse to enforce any or all of the provisions of this
Section 7, because individually or taken together, they are deemed unreasonable,
then the parties hereto understand and agree that any such provision or
provisions shall not be void but for the purpose of such proceedings, shall be
revised to the extent necessary to permit the enforcement of such provisions.
/bullet/ OWNERSHIP OF WORK PRODUCT. The Executive acknowledges
that
<PAGE>
during the term of his employment hereunder, he may conceive of, discover,
invent or create inventions, improvements, new contributions, literary property,
material, ideas and discoveries, whether or not patentable or copyrightable,
which relate to the business of Transmedia and its subsidiaries (all of the
foregoing being collectively referred to herein as "Work Product"), and that
various business opportunities appropriate for Transmedia and its subsidiaries
may be presented to him by reason of his employment. The Executive acknowledges
that, unless Transmedia otherwise agrees in writing, all of the foregoing shall
be owned by and belong exclusively to Transmedia, and he shall have no personal
interest therein. The Executive, at Transmedia's expense, shall further: (a)
promptly disclose any such Work Product and business opportunities to
Transmedia; (b) assign to Transmedia, upon request and without additional
compensation, the entire rights to such Work Product and business opportunities;
(c) sign all papers necessary to carry out the foregoing; and (d) give testimony
in support of his discovery invention, or creation in any appropriate case.
/bullet/ TERMINATION.
(a) Notwithstanding anything contained herein to the
contrary, the Executive's employment hereunder: (i) shall automatically
terminate upon the Executive's death; and (ii) may be terminated by Transmedia's
Board of Directors for "cause" (as hereinafter defined) upon 60 days prior
written notice of termination, subject to the Executive's right to cure certain
breaches constituting "cause", as provided below. For the purposes of this
Agreement, termination shall be deemed to be "for cause" if: (i) the Executive
is convicted of a felony; (ii) the Executive declares personal bankruptcy
pursuant to any applicable law; (iii) the Executive commits an act of fraud with
respect to Transmedia or misappropriates any of its funds; or (iv) the Executive
directly and repeatedly refuses to perform his duties pursuant to this
Agreement, or directly and repeatedly breaches any covenants contained herein.
The written notice of termination shall set forth with specificity the reason
for such termination. If the reason for such termination is the Executive's
direct and repeated refusal to perform his duties hereunder or his direct and
repeated breach of any covenants contained herein, the Executive shall have the
right,
<PAGE>
within 30 days of his receipt of such notice, to notify the Board of Directors
of his intention to cure such breach. On or within 10 days before the effective
date of termination, the Board of Directors shall meet to determine whether such
breach has been effectively cured and, upon the majority vote of the Directors
(not including the Executive) that it has been cured, the notice of termination
shall be deemed ineffective. The Executive shall be entitled to be represented
at such meeting by counsel. On the effective date of termination, except for the
reimbursement of expenses incurred to such date, the Executive shall cease to
have any further rights hereunder but shall be subject to all restrictions set
forth elsewhere herein.
(b) Except where the Executive has exercised his
right to attempt to cure pursuant to the preceding subsection, the Executive
may, within 15 days following delivery of a notice of termination for "cause",
by written notice to the Board of Directors of Transmedia, cause the matter of
termination for "cause" by Transmedia to be discussed at the next regularly
scheduled meeting of the Board of Directors or at a special meeting of the Board
of Directors requested by majority of its members. The Executive shall be
entitled to be represented at such meeting by counsel. Such meeting shall be
conducted according to procedures deemed equitable by a majority of the
Directors present. If at such meeting, it shall be determined that this
Agreement has been terminated without "cause", or that such "cause" shall be
waived, the provisions of this Agreement shall be reinstated with the same force
and effect as if the notice of termination had not been given; and the Executive
shall be entitled to receive the compensation and other benefits provided herein
for the period from the effective date of the notice of termination through the
date of such reinstatement, plus all reasonable costs of his counsel, as
approved by the Board of Directors of Transmedia. Except as provided in the
first sentence of this subsection (b), neither the Executive's election to
pursue or forego the procedures set forth in this subsection (b), nor a
determination by the Board of Directors, at any meeting pursuant to this
subsection, that the Executive's employment hereunder was terminated for
"cause", shall prejudice or preclude the exercise any other right or remedy
which the Executive may have at law or otherwise as a result of the termination
of his employment hereunder.
<PAGE>
/bullet/ NOTICES. Any Notices to be given hereunder shall be
deemed to have been given if delivered personally against receipt, if sent by
nationally recognized overnight delivery service, of if mailed by registered or
certified mail, return receipt requested, to the following address: if to
Transmedia, at 750 Lexington Avenue, New York, New York 10022, with a copy to
Morgan, Lewis & Bockius LLP, at 101 Park Avenue, New York, New York 10178, to
the attention of Stephen P. Farrell, Esq.; and if to the Executive, at 750
Lexington Avenue, New York, New York 10022. Either party may change his or its
address set forth above by giving written notice to the other party in
accordance with this Section.
/bullet/ GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York.
/bullet/ OPTIONS. The captions of the sections of this
Agreement are for the purpose of convenience only, are not intended to be part
of this Agreement and shall not be deemed to modify, explain, enlarge or
restrict any of its provisions.
/bullet/ SEVERABILITY. If any clause or provision of this
Agreement shall be held invalid or unenforceable, in whole or in part, in any
jurisdiction, such invalidity or unenforceability shall attach only to such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect any other clause or provision hereof in any jurisdiction.
/bullet/ BINDING EFFECT; ASSIGNMENT. This Agreement shall bind
and inure to the benefit of the respective heirs, representatives, successors
and permitted assignees of Transmedia and the Executive. Transmedia may assign
this Agreement or any of its rights and obligations hereunder to (i) any
transferee of or successor to all or substantially all of the assets of business
of Transmedia and its subsidiaries or (ii) any subsidiary or affiliate of
Transmedia; PROVIDED, HOWEVER, that no such assignment shall release Transmedia
from its obligations hereunder. The Executive may not assign this Agreement or
any of his rights and obligations hereunder under any circumstances.
/bullet/ MISCELLANEOUS. This Agreement embodies the entire
understanding between Transmedia and the Executive with respect to its subject
matter, and there is no extrinsic
<PAGE>
agreement of any kind affecting it. This Agreement also supersedes and replaces
any prior agreement with respect to the subject matter of this Agreement. This
Agreement may not be changed or terminated orally, and no change, termination or
waiver of this Agreement or of any of the provisions herein contained shall be
binding unless made in writing and signed by the party against whom the same is
sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
TRANSMEDIA NETWORK INC.
By: /S/MELVIN CHASEN
---------------------------
Melvin Chasen, President
/S/JAMES M. CALLAGHAN
---------------------------
James M. Callaghan
Exhibit 10.8
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 1st day of October,
1995, by and between TRANSMEDIA NETWORK INC., a Delaware corporation
("Transmedia"), and BARRY S. KAPLAN (the "Executive").
<PAGE>
In consideration of the mutual promises and covenants herein
contained, and intending to be legally bound hereby, the parties hereto do
mutually agree as follows:
/bullet/ EMPLOYMENT. Transmedia agrees to and does hereby
employ the Executive and the Executive accepts such employment, upon the terms
and conditions hereinafter set forth. The Executive represents and warrants that
he is free to enter into this Agreement and that his entering into this
Agreement is not in violation of any obligations that he has to any other
person, firm or corporation.
/bullet/ TERM. The term of this Agreement shall be for the
period commencing October 1, 1995, and ending on September 30, 1997 (the
"TERM"), unless earlier terminated as provided herein.
/bullet/ OFFICE AND DUTIES. The Executive shall perform such
executive services in the operation of the business of Transmedia and its
subsidiaries as Transmedia's Board of Directors or its President may from time
to time reasonably assign to the Executive. Initially, the Executive shall hold
the position of Vice President of Transmedia and President of Transmedia Service
Company Inc., and shall report directly to Transmedia's President. During the
term of this Agreement, the Executive shall:
() work for Transmedia and its subsidiaries on a full-time,
exclusive basis;
() use his best efforts to apply on a full-time basis all of
his skill and experience to the performance of his duties in such employment;
and
() not engage in any other business activities, other than
personal investments in corporations and other entities which do not compete
directly or indirectly with Transmedia and its subsidiaries. Notwithstanding the
provisions of the preceding sentence, the Executive shall be entitled, on an
occasional basis, to serve as a consultant to, or on the Board of Directors of,
other public or private corporations (with the approval of Transmedia's
President) during the term of this Agreement and to receive and retain all
compensation paid to him in such capacities, so long as such other corporations
do not compete directly or indirectly with Transmedia and its subsidiaries. The
provisions of this Section 3 are subject to modification as set forth in Section
10.
/bullet/ COMPENSATION AND BENEFITS.
() For services rendered by the Executive under this
Agreement, the Executive shall be paid an annual base salary (the "Salary") at
the rate of Two Hundred Twenty-Five Thousand ($225,000) Dollars from October 1,
1995 through September 30, 1996, and Two Hundred Fifty Thousand ($250,000)
Dollars from October 1, 1996 through September 30, 1997. The Salary shall be
payable in equal weekly installments.
<PAGE>
() As additional compensation, the Executive shall be
eligible to receive annually a bonus of up to one-third (1/3) of his Salary
during each fiscal year of Transmedia. The Bonus shall be payable on an annual
basis within 120 days after the end of each fiscal year of Transmedia,
commencing with the fiscal year ending September 30, 1996.
() Transmedia shall, during the Term, procure,
maintain in force, and pay all premiums on an insurance policy to be issued on
the life of the Executive, with his estate as beneficiary, in the face amount of
Five Hundred Thousand ($500,000) Dollars. Upon the expiration of the term of
this Agreement, Transmedia shall transfer the ownership of such policy to the
Executive without any payment by the Executive whether or not he becomes
disabled during the Term.
() At all times during the term of this Agreement,
the Executive shall be included in any life, medical, health and hospitalization
insurance, pension, stock option, stock ownership, incentive compensation and
other benefit programs maintained by or for Transmedia at the date hereof. If
Transmedia hereafter establishes any other programs, the Executive shall be
included therein at least at the same level as the other senior executives of
Transmedia. In addition, in the event of the Executive's Disability (as defined
below), Transmedia will pay to the Executive the following: (i) during the first
six months of Disability, 100% of the Salary that would be payable to the
Executive but for such Disability; (ii) thereafter, and until the end of the
Term, 75% of such Salary, and (iii) the Bonus for the period(s) provided in the
next sentence. The Executive shall receive a Bonus for the entire fiscal year
ending on any applicable September 30, if said September occurs during the first
six months of Disability; in all other instances, the Executive shall receive a
portion of the Bonus for an entire year determined by multiplying the Bonus for
the entire fiscal year by a fraction, the numerator of which is the total number
of months starting with October 1st and ending upon the conclusion of said six
months of Disability and the denominator of which is 12. For purposes of this
sub-paragraph (d), all calculations shall be made on the basis of full and not
partial months. For the purposes hereof "Disability" shall mean a physical or
mental impairment of such duration and degree that the Executive is determined
by the Board of Directors of Transmedia to be substantially unable because of
the impairment to perform the services described in Section 3. The Salary and
Bonus payable under this paragraph (d) shall be in lieu of any amounts of salary
and Bonus otherwise payable under this Employment Agreement.
() Transmedia agrees to provide the Executive with a
One Thousand ($1,000) Dollar monthly automobile allowance.
() Transmedia may provide to the Executive such
additional compensation, bonuses, and benefits as its Board of
<PAGE>
Directors deems appropriate, but nothing herein shall obligate Transmedia to do
so.
/bullet/ VACATION. The Executive shall be entitled to take
four (4) weeks paid vacation during each twelve-month period of this employment
hereunder on a basis consistent with the requirements of the business of
Transmedia and its subsidiaries and in accordance with Transmedia's customary
practice for senior executives.
/bullet/ REIMBURSEMENT OF EXPENSES. During the term of this
Agreement, the Executive shall be reimbursed for reasonable travel,
entertainment and other expenses incident to the rendering of services
hereunder, upon presentation of expense statements or vouchers or such other
supporting information as Transmedia may customarily require of its senior
executives.
/bullet/ RESTRICTIONS
() The Executive acknowledges that the business of
Transmedia is nationwide and international in scope, and that it expects to be
marketing its products and services throughout an ever wider geographical area
than that in which it presently operates. Accordingly, during the Restricted
Period (as defined below), the Executive shall not, unless acting with
Transmedia's prior written consent: (i) directly or indirectly own, manage,
operate, join, or control, or participate in the ownership, management,
operations or control of, or be connected as a director, officer, employee,
partner, stockholder, debtholder, consultant or otherwise with, or advise,
finance or assist, any business or organization located in or doing business in
the Restricted Area (as defined below) which (A) is engaged in financing
restaurant advertising or equipment or providing restaurant, lodging, or resort
discounts to members of its programs or (B) directly or indirectly competes with
any other business of Transmedia or any of its subsidiaries, licensees or
franchisees conducted at any time during the term hereof; or (ii) interfere
with, or divert or attempt to divert the benefits of, any relationship with
employees, agents, suppliers, restaurant, lodging or resort clients, membership
card holders or other customers maintained by Transmedia, its subsidiaries,
licensees or franchisees at any time during the Restricted Period. However, if
the Executive's employment hereunder is terminated without "cause" (as defined
in Section 9 hereof), then the provisions of this Section 7(a) shall cease upon
such termination. For the purposes of this Agreement, (i) "RESTRICTED PERIOD"
means the twenty-four-month period commencing upon the earlier of (x) the
termination of the Executive's employment with Transmedia prior to the
expiration hereof, either voluntarily by the Executive or by Transmedia for
"cause"; or (y) the expiration of this Agreement after its stated term; and (ii)
"RESTRICTED AREA" means any geographical market in or with respect to which
Transmedia or any subsidiary, franchisee or licensee of Transmedia, within
twelve months prior to the commencement of the Restricted Period, is then
operating or has taken significant affirmative steps to commence operations.
Nothing in this Section 7(a) shall be construed to prevent the Executive from
<PAGE>
owning or dealing in any stock actively traded over-the-counter or on any
recognized exchange and issued by a corporation which may compete directly or
indirectly with Transmedia and its subsidiaries so long as the Executive does
not participate in the management, control, or operations of any such
corporation and the Executive's holdings do not at any time exceed Five Percent
(5%) of the outstanding shares of any class of stock of such corporation.
() The Executive agrees that all confidential or
proprietary information and data which he may now have or may obtain during the
Term of his employment by, and relating in any way to the business of,
Transmedia, its subsidiaries, licensees or franchisees he shall, both during and
after his employment, hold in confidence and not disclose to any other person,
or use for any purpose other than in connection with his employment hereunder,
unless Transmedia has given its prior consent to such disclosure or use. The
Executive shall promptly return all tangible evidence of such confidential or
proprietary information and data to Transmedia at the termination of his
employment or upon Transmedia's earlier request.
() The Executive acknowledges that the remedy at law
for his breach of the covenants contained in this Section 7 may be inadequate,
and that therefore Transmedia and its subsidiaries shall be entitled, in
addition to any other right or remedy available to them, to injunctive relief
and the remedy of specific performance to restrain the Executive from committing
or continuing any such breach and to enforce the Executive's obligations
hereunder.
() If any court of tribunal of competent jurisdiction
shall refuse to enforce any or all of the provisions of this Section 7, because
individually or taken together, they are deemed unreasonable, then the parties
hereto understand and agree that any such provision or provisions shall not be
void but for the purpose of such proceedings, shall be revised to the extent
necessary to permit the enforcement of such provisions.
/bullet/ OWNERSHIP OF WORK PRODUCT. The Executive
acknowledges that during the term of his employment hereunder, he may conceive
of, discover, invent, or create inventions, improvements, new contributions,
literary property, material, ideas and discoveries, whether or not patentable or
copyrightable, which relate to the business of Transmedia and its subsidiaries
(all of the foregoing being collectively referred to herein as "Work Product"),
and that various business opportunities appropriate for Transmedia and its
subsidiaries may be presented to him by reasons of his employment. The Executive
acknowledges that, unless Transmedia otherwise agrees in writing, all of the
foregoing shall be owned by and belong exclusively to Transmedia, and he shall
have no personal interest therein. The Executive, at Transmedia's expense, shall
further: (a) promptly disclose any such Work Product and business opportunities
to Transmedia; (b) assign to Transmedia, upon request and without
<PAGE>
additional compensation, the entire rights to such Work Product and business
opportunities; (c) sign all papers necessary to carry out the foregoing; and (d)
give testimony in support of his discovery, invention, or creation in any
appropriate case.
/bullet/ TERMINATION. Notwithstanding anything contained
herein to the contrary, the Executive's employment hereunder: (i) shall
automatically terminate upon the Executive's death; and (ii) may be terminated
by Transmedia's Board of Directors for "cause" (as hereinafter defined) upon 60
days prior written notice of termination, subject to the Executive's right to
cure certain breaches constituting "cause", as provided below. For the purposes
of this Agreement, termination shall be deemed to be "for cause" if: (i) the
Executive is convicted of a felony; (ii) the Executive declares personal
bankruptcy pursuant to any applicable law; (iii) the Executive commits an act of
fraud with respect to Transmedia or any subsidiary, franchisee or licensee of
Transmedia or any subsidiary, franchisee or licensee of Transmedia or
misappropriates any of its or their funds; or (iv) the Executive refuses to
perform his duties pursuant to this Agreement, or directly and repeatedly
breaches any covenants contained herein. On the effective date of termination,
except for the reimbursement of expenses incurred to such date, the Executive
shall cease to have any further rights hereunder but shall be subject to all
restrictions set forth elsewhere herein.
/bullet/ SALE OF TRANSMEDIA. The sale of all or substantially
all of the assets of Transmedia, or the sale of a "control block" (as hereafter
defined) of its shares to any person during the Term shall be made subject to
the Executive's right to either 1) continue his employment under the terms of
this Agreement or 2) within 90 days after such sale, elect to resign from his
positions with Transmedia. In the event the Executive chooses to resign from his
positions with Transmedia, he shall receive, without the necessity of performing
consulting or other services for Transmedia, a payment in lump sum of Five
Hundred Thousand ($500,000) Dollars. Such lump sum payment shall be made by
Transmedia to the Executive within seven (7) days of Transmedia's receipt of the
Executive's notice of resignation. In addition, the Executive shall receive the
benefits with respect to the life insurance policy, payment of death benefits as
set forth in Section 4(c). For the purposes hereof "control block" means any
block of shares the possession of which, when added to any shares already owned,
directly or indirectly gives the power in an form to direct or cause the
direction of the management and policies of Transmedia.
/bullet/ NOTICES. Any Notices to be given hereunder shall be
deemed to have been given if delivered personally against receipt, if sent by
nationally recognized overnight delivery service, or if mailed by registered or
certified mail, return receipt requested, to the following address: if to
Transmedia, at 750 Lexington Avenue, New York, New York 10022, with a copy to
Morgan, Lewis & Bockius LLP at 101 Park Avenue, New York, New York 10178, to the
attention of Stephen P. Farrell, Esq.; and if to the Executive, at 11900
Biscayne Boulevard, North Miami, Florida 33181. Either party may change his or
its address set
<PAGE>
forth above by giving written notice to the other party in accordance with this
Section.
/bullet/ GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York.
/bullet/ CAPTIONS. The captions of the sections of this
Agreement are for the purpose of convenience only, are not intended to be part
of this Agreement and shall not be deemed to modify, explain, enlarge or
restrict any of its provisions.
/bullet/ SEVERABILITY. If any cause of provision of this
Agreement shall be held invalid or unenforceable, in whole or in part, in any
jurisdiction, such invalidity or unenforceability shall attach only to such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect any other cause or provision hereof in any jurisdiction.
/bullet/ BINDING EFFECT; ASSIGNMENT. This Assignment shall
bind and inure to the benefit of the respective heirs, representatives,
successors and permitted assignees of Transmedia and the Executive. Transmedia
may assign this Agreement or any of its rights and obligations hereunder to (i)
any transferee of or successor to all or substantially all of its assets of
business of Transmedia and its subsidiaries or (ii) any subsidiary or affiliate
of Transmedia; PROVIDED, HOWEVER, that no such assignment shall release
Transmedia from its obligations hereunder. The Executive may not assign this
Agreement or any of his rights and obligations hereunder any circumstances.
/bullet/ MISCELLANEOUS. This Agreement embodies the entire
understanding between Transmedia and the Executive with respect to its subject
matter, and there is no extrinsic agreement of any kind affecting it. This
Agreement also supersedes and replaces any prior agreement with respect to the
subject matter of this Agreement. This Agreement may not be changed or
terminated orally, and no change, termination or waiver of this Agreement or of
any of the provisions herein contained shall be binding unless made in writing
and signed by the party whom the same is sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
TRANSMEDIA NETWORK INC.
By: /S/MELVIN CHASEN
--------------------------
Melvin Chasen, President
/S/BARRY S. KAPLAN
--------------------------
Barry S. Kaplan
Exhibit 10.14
Agreement dated December 6, 1996, by and among Transmedia Network,
Inc., TMNI International Incorporated (Transmedia Network, Inc. and TMNI
International Incorporated are collectively referred to herein as "Network"),
Transmedia Europe, Inc. and Transmedia Asia Pacific, Inc. (Transmedia Europe
Inc. and Transmedia Asia Pacific, Inc. are individually referred to as "TMNE"
and "TMNA" respectively and are collectively referred to as the "Network
Licensees")
WHEREAS Network and TMNE are parties to a Master License Agreement
dated December 14, 1992 as amended (the "TMNE License");
WHEREAS Network and TMNA are parties to a Master License Agreement
dated March 21, 1994 (the "TMNA License").
WHEREAS the parties wish to enter into certain agreements set forth
herein which either directly or by operation of such agreements modify the terms
of the TMNE License and the TMNA License (collectively called the "Licenses").
NOW, THEREFORE the parties, intending to be legally bound, agree as
follows:
/bullet/ DEFINITIONS Except as otherwise specifically defined herein,
capitalized terms used herein shall have the same meanings ascribed to them in
the Licenses.
/bullet/ RESTRUCTURING. The Network Licensees and certain affiliates
of the Network Licensees intend to enter into a corporate restructuring (the
"Restructuring") pursuant to which a holding company (herein called "New Corp.")
will be established. The Network Licensees (which may be merged into one
entity), together with any other entity to which any rights under the Licenses
are granted (collectively with the Network Licensees, the "Network Business
Entities"), and other entities that are not engaged in the "Business" will
comprise direct or indirect subsidiaries of New Corp. (New Corp. and all such
subsidiaries being referred to collectively as the "New Corp. Group"). It is
likely that New Corp. will be a publicly traded company. Subject to the terms
and conditions set forth in this Agreement, Network agrees that the
Restructuring and the establishment of the New Corp. Group will not constitute a
breach of the Licenses. Upon the completion of the Restructuring, New Corp.
shall pay to Network the sum of U.S. $250,000 which payment shall be made by
wire transfer to a bank account designated by Network.
/bullet/ PERMITTED OPERATIONS OF THE NEW CORP. GROUP. The members of
the New Corp. Group, other than the Network Business Entities, may engage in any
business or activity of any nature whatsoever other than activities which are in
competition with the "Business" under the terms of the Licenses provided that
all such non-competitive businesses and activities shall not be conducted under
the Marks; no member of the New Corp. Group shall have any liability or
obligation to Network as a result of engaging in such non-competitive
activities.
<PAGE>
/bullet/ OPERATIONS OF THE NETWORK BUSINESS ENTITIES. The operations
of the Network Business Entities shall be conducted exclusively in one or more
separate corporations, none of which shall engage in any business or activity
except in connection with the Business. Nothing contained herein or in the
Licenses shall prohibit the Network Business Entities from being owned by one or
more other members of the New Corp. Group.
/bullet/ COUNTDOWN BUSINESSES. Notwithstanding the provisions of
paragraph 3 above, New Corp. or a subsidiary of New Corp shall have the right to
acquire and conduct on a worldwide basis the business of Countdown, plc, Holding
Corp. ("Countdown") in exchange for the payment to Network on the closing of
such acquisition of the sum of U.S. $750,000 which payment shall be made by wire
transfer to a bank account designated by Network. New Corp. and the Network
Licensees shall not permit Countdown to use the Network Business Entities' list
of Cardholders or their list of Member Restaurants in connection with any
activities of Countdown or any other member of the New Corp. Group which would
be competitive with the Business. The foregoing shall not prohibit an interest
owner of a Network Business Entity from at the same time also owning an interest
in Countdown, plc, provided that the limitation on use of the Cardholder and the
Member Restaurants list is maintained. The business of Countdown shall not be
conducted under the Marks and shall not use the system of operations described
under the term Business in Section 1.2 of the Licenses.
/bullet/ MODIFICATION OF LICENSES. In addition to modifications or
amendment to the Licenses resulting from the provisions or paragraphs 1 through
5 hereof, the Licenses shall be modified and amended as follows:
() The definition of the term "Licensees" shall be modified
to include all members of the New Corp. Group who succeed
to the interest of such Licenses by Transfer or operation
of law as permitted by the Licenses or this Agreement
() Solely to facilitate transfers among members of the New
Corp Group the Licenses shall be amended to eliminate any
requirement for prior Network approval of transfers of
Control of the Licensee from any member of the New Corp.
Group to any other member of the New Corp. Group as well
as to eliminate any other restriction on transferability
among members of the New Corp. Group. In addition, the
Licenses shall be amended by eliminating Section 22.5.
() (A) The first sentence of Section 1.3 of each License
Agreement shall be amended by inserting the words "direct
or indirect (as such term is used in Section 22.3(g)
hereof)" prior to the words "beneficial ownership" and
the words "other than a member of the New Corp. Group"
immediately after the words "beneficial ownership."
(B) Section 22.3 of each License Agreement shall be
amended by (i) deleting "or" at the end of each clause
(e) thereof, (ii) inserting "; or" in lieu of the period
at end of
<PAGE>
each clause (f) thereof, and (iii) inserting the
following clause (g) in each such Section 22.3:
"(g) any person or group other than a member of the New
Corp. Group shall acquire, directly or indirectly,
beneficial ownership of thirty percent or more of the equity
of the Licensee, without the prior written consent of the
Licensor. For purposes of Section 1.3 and this clause (g), a
person or group shall be deemed to acquire beneficial
ownership, indirectly, of a proportional percentage of the
equity of the Licensee by acquiring beneficial ownership,
directly or indirectly, of an equity interest in any other
person which itself beneficially owns, directly or
indirectly, an equity interest in the Licensee. The terms
"acquires," "group" "directly and indirectly" and
"beneficially own" shall have the respective meanings and
usages ascribed to them under Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation
13D-G thereunder."
() Section 21.1 shall be amended by deleting the first
sentence thereof and substituting the following:
"Licensee covenants that during the Term of this
Agreement, except as otherwise approved in writing by
Licensor, Licensee's designated manager, who shall be
approved in writing by Licensor, shall devote sufficient
time, energy and efforts necessary for the management and
operation of the Business.
() The New Corp. Group shall take all reasonable steps
to ensure that the Network Licensees shall maintain
sufficient working capital necessary to conduct the
Business in the ordinary course. In this regard, the
Licenses shall be amended by adding a new subsection (l)
to Section 22.2 as follows, "(l) failure to maintain
working capital adequate to conduct Licensee's Business
in the ordinary course".
/bullet/ PERMITTED OPERATIONS OF NETWORK. Network may engage in any
business or activity of any nature whatsoever other than activities which are in
competition with the "Business" under the terms of the Licenses in the
Territories under the Licenses. Network shall have no liability or obligation as
a result of engaging in such non-competitive activities. Such non-competitive
businesses shall not be conducted under the Marks. In addition, Network may
establish, acquire and operate in the Territories a competitive business similar
to that conducted by Countdown provided that such competitive business shall not
be conducted under the Marks and shall not use the system of operations
described under the term Business in Section 1.2 of the Licenses.
/bullet/ CONFLICTS: REAFFIRMATION OF LICENSES. In the event of any
explicit conflict between the terms and provisions of the Licenses and the terms
and provisions of this Agreement, the terms and provisions of this Agreement
shall govern. Except as modified and amended hereby, the Licenses shall remain
in full force and effect in accordance with their terms.
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed and delivered this Agreement the day and year
first above written.
TRANSMEDIA NETWORK INC.
ATTEST: By: /S/MELVIN CHASEN
------------------------------
Melvin Chasen
/S/BARRY KAPLAN Title: PRESIDENT
- ----------------------------- ------------------------------
TMNI INTERNATIONAL INCORPORATED.
ATTEST: By: /S/DAVID WEINBERG
-------------------------------
David Weinberg
/S/BARRY KAPLAN Title: PRESIDENT
- ---------------------- ------------------------------
TRANSMEDIA EUROPE, INC.
ATTEST: By: /S/EDWARD GUINON
---------------------------------
Edward Guinon
/S/WILL PRICE Title: CHAIRMAN
- ---------------------- ----------------------------
TRANSMEDIA ASIA PACIFIC, INC.
ATTEST: By: /S/EDWARD GUINON
------------------------------
Edward Guinon
/S/WILL PRICE Title: CHAIRMAN
- ------------------------- -----------------------------
Exhibit 10.15
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of November 15, 1996, between The
Western Transmedia Company, Inc., a Delaware corporation (the "Seller") and
Transmedia Network Inc., a Delaware corporation (the "Purchaser").
R E C I T A L S
WHEREAS, Seller wishes to sell certain of its assets to the
Purchaser and the Purchaser wishes to purchase such assets from the Seller all
upon the terms set forth herein; and
WHEREAS, the Seller has entered into a franchise agreement
with the Purchaser (the "Franchise Agreement") pursuant to which the Seller has
the exclusive right (the "Franchise") to acquire "Rights to Receive" from
participating restaurants and other establishments located in the States of
California, Oregon, Washington and parts of Nevada that accept The Transmedia
Card and to sell such "Rights to Receive" to holders of The Transmedia Card, and
the Seller and the Purchaser wish to terminate the Franchise and the Franchise
Agreement upon the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, agreements and conditions herein
contained, the parties agree as follows:
<PAGE>
ARTICLE
THE TRANSACTIONS
/bullet/ THE TRANSACTIONS. On the terms and conditions set
forth in this Agreement, at the Closing (as hereinafter defined):
() the Purchaser shall purchase from the Seller, and
the Seller shall sell, assign, transfer and convey to the Purchaser, the
following assets, properties and rights existing on the Closing Date, as
hereinafter defined (collectively, the "Assets"):
(i) all of the Seller's "Rights to Receive"
consisting of the food and beverage credits of the Seller and its affiliates at,
and any loans or advances of the Seller and its affiliates to, restaurants and
other establishments that participate in the network of such establishments that
accept The Transmedia Card and any and all agreements, contracts, guarantees,
instruments, security agreements and other documents evidencing or securing, and
any collateral and security interests securing, such credits, loans and advances
(collectively, the "Rights to Receive");
(ii) all of the Seller's furniture, fixtures and
equipment (the "Furniture, Fixtures and Equipment"), including, without
limitation, all POS terminals purchased from the Purchaser and all computer and
automatic machinery software and programs and disks, program documentation,
tapes, manuals and other related materials;
(iii) leases for the real estate and equipment
listed on Exhibit A hereto, including all security deposits deposited by or on
behalf of the Seller as lessee or sublessee, or held by or on behalf of the
Seller as lessor or sublessor, under such leases (the "Assumed Leases");
(iv) the Seller's prepaid expenses and items
listed in Exhibit B hereto (the "Prepaid Expenses"); and
(v) all rights of the Seller and its affiliates in
any intellectual property (the "Intellectual Property") relating to the business
conducted by the Seller and its affiliates pursuant to the Franchise Agreement,
including any patents, trademarks, service marks,
<PAGE>
trade names, slogans, trade secrets, advertising and promotional materials, and
copyrights (and any applications to register and licenses to use any of the
foregoing); and
() the Seller and the Purchaser shall terminate the
Franchise Agreement, the Franchise and any associated rights and licenses with
immediate effect.
/bullet/ THE CONSIDERATION.
(a) At the Closing, the Purchaser shall pay to the
Seller, by certified check or wire transfer of immediately available funds to an
account at such bank in the United States as the Seller shall specify in writing
to the Purchaser at least two business days prior to the Closing Date, as
consideration:
(i) for the Rights to Receive, an amount equal to
the excess of the gross amount of the Rights to Receive (as specified on
Schedule 1.2(i) of the Seller Disclosure Letter (as hereinafter defined)), over
the amount equal to the sum of (1) the Rights to Receive which the Seller has
determined are uncollectible or unrealizable (as specified on Schedule 1.2(ii)
of the Seller Disclosure Letter); (2) $70,000, which is the amount currently
reserved by the Seller in its accounting records for uncollectible or
unrealizable Rights to Receive (the "Reserve Amount"); and (3) any accounts
payable in respect of the Rights to Receive being assumed by the Purchaser (as
specified on Schedule 1.2(iii) of the Seller Disclosure Letter);
(ii) for the Franchise Agreement, the Franchise
and the Intellectual Property (if any), the sum of $4,750,000;
(iii) for the Furniture, Fixtures and Equipment,
(including the POS terminals) the sum of $28,500;
(iv) for the Prepaid Expenses, the amount shown on
Exhibit B; and
(v) $8,865 (which is the amount of the security
deposits under the Assumed Leases for the real property).
<PAGE>
(b) As further consideration for the Assets, the
Purchaser shall assume and perform the following contractual liabilities and
obligations (the "Assumed Liabilities") of the Seller: (i) the Seller's
liabilities and obligations under the Assumed Leases to the extent such
obligations arise and are to be performed after the Closing Date (but not any
liability or obligation for any breach or default (by the Seller), or penalty
arising out of the use or occupancy of the subject premises or equipment, or any
rent, additional rent, tax or expense due with respect to any period ending on
or prior to the Closing Date) and (ii) the Seller's liabilities and obligations,
disclosed in Exhibit C hereto, arising under any of the agreements, contracts,
guarantees, instruments, security agreements and other documents evidencing or
securing the Rights to Receive, including agreements obligating participating
restaurants in the Franchise territory to sell Rights to Receive to the Seller
(but not any liability or obligation for any breach or default (by the Seller)
or penalty under such agreement, contract, guaranty, instrument or security
agreement). The Purchaser is not assuming and shall not be obligated to pay,
perform or discharge, and the Seller shall indemnify the Purchaser and its
affiliates against, any other liability or obligation of the Seller or any of
its affiliates arising out of the conduct of their business, the ownership or
use of the Assets and the occupancy or use of the premises and equipment subject
to the Assumed Leases on or prior to the Closing Date. The Purchaser has not
agreed to hire or extend any offer of employment to any employee of the Seller
or any of its affiliates other than Stuart M. Pellman.
(c) FORM 8594. The Purchaser and the Seller shall
agree upon the allocation of consideration to the Assets for tax purposes. The
Purchaser and the Seller shall each file the Asset Acquisition Statement on IRS
Form 8594 by the due date of their respective income tax returns for the taxable
year that includes the Closing Date and otherwise report the sale and purchase
of the Assets for all tax purposes in accordance with such allocation and
consistent with one another.
/bullet/ CLOSING.
() DATE AND PLACE. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Morgan,
Lewis & Bockius LLP, 101 Park
<PAGE>
Avenue, New York, New York 10178, commencing at 10:00 a.m. local time, on the
fifth business day following the date on which the last of the conditions set
forth herein in Article VI hereof shall be fulfilled or waived in accordance
with this Agreement, or at such other place and time as the parties may agree in
writing. The "Closing Date" shall be the date on which the Closing occurs.
() TRANSFER, ASSUMPTION AND PURCHASE.
(i) On the Closing Date, the Seller will convey,
transfer, assign and deliver to the Purchaser (or its designees), and put the
Purchaser (or its designees) in full possession and quiet enjoyment of the
Assets. In furtherance thereof, the Seller shall deliver to the Purchaser (or
its designees):
(1) a general assignment and bill of sale in the form
of Exhibit D hereto;
(2) such other specific assignments, bills of sale
and forms of transfer to such of the Assets, and in such form, as the Purchaser
may reasonably request;
(3) an assignment of each of the Assumed Leases and
of any other agreement, contract or arrangement to be assumed by the Purchaser
(or its designees), in form and substance satisfactory to the Purchaser and
indemnifying, defending and holding harmless the Purchaser from and against all
claims, actions, proceedings, losses, liabilities and expenses (including,
without limitation, reasonable attorneys' fees) imposed upon or incurred by the
Purchaser by reason of the Seller's failure to perform the obligations under the
Assumed Leases or such other agreements, contracts or arrangements prior to the
Closing, with any necessary or appropriate executed consents of lessors or other
persons attached and any related transfer tax forms;
(4) a FIRPTA affidavit in the form of Exhibit E
hereto; and
(5) such other assignments, financing statements,
instruments or other documents as the Purchaser may reasonably request. In
addition, the Seller
<PAGE>
shall use its best efforts to obtain an estoppel certificate from each of the
landlords under the Assumed Leases in form and substance satisfactory to the
Purchaser, dated not more than ten (10) days prior to the Closing Date, but the
receipt of such certificate shall not be a condition of Closing.
(ii) On the Closing Date, the Purchaser shall execute
and deliver to the Seller an assumption agreement substantially in the form of
Exhibit D hereto whereby the Purchaser shall agree to assume the Assumed
Liabilities.
(iii) From and after the Closing Date, except as
provided in Section 1.3(e), the Purchaser, in the name of the Seller but on
behalf of and for the benefit of the Purchaser, may at its own cost or expense
collect, assert or enforce any claim, right or title of any kind in, with
respect to or 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 to do all such acts and things in relation to the
Assets as the Purchaser shall deem advisable (including, without limitation,
asserting any rights under any Assets or performing or accepting performance
under any agreements), and the Purchaser shall retain for its own account any
amounts collected pursuant to the foregoing, including any sums payable as
interest in respect thereof.
() REAL PROPERTY. At the Closing, the Purchaser and
the Seller will apportion the amount of any fixed and additional rent, real
estate taxes, and utility expenses, including, without limitation, expenses for
gas, electricity, telephone and water, with respect to the real property subject
to the Assumed Leases for the month or other relevant period during which the
Closing occurs.
() POST-CLOSING ADJUSTMENT. As soon as practicable,
but in any event within 60 days after the Closing Date, the Purchaser shall
cause to be prepared, without audit, as of the Closing Date a statement of the
Prepaid Expenses (the "Final Statement of Prepaid Expenses") and a statement of
the Rights to Receive (the "Final Statement of the Rights to Receive", and
together with the Final Statement of Prepaid Expenses, the "Final Statements").
<PAGE>
The Final Statement of Prepaid Expenses shall set forth as of the Closing Date
the amount of the Prepaid Expenses.
The Final Statement of Rights to Receive shall set
forth as of the Closing Date the value of the Rights to Receive determined as
follows: the gross amount of the Rights to Receive as of the Closing Date, less
the sum of (i) the amount of specifically identified unrealizable or
uncollectible accounts set forth in Schedule 1.2(ii) as of the date of this
Agreement, (ii) the Reserve Amount, (iii) any accounts payable in respect of the
Rights to Receive being assumed by the Purchaser and (iv) the amount of any
Rights to Receive (not reflected on Schedule 1.2(ii)) which prior to the Closing
Date became unrealizable or uncollectible (but excluding any Right to Receive in
excess of $10,000 that is acquired by the Seller after the date hereof and prior
to the Closing Date with the consent of the Purchaser). The Final Statement of
the Rights to Receive shall specifically identify the value of each of the
Rights to Receive designated on Schedule 1.3(e) of the Seller's Disclosure
Letter (which shall be the amount paid for such Rights to Receive for purposes
of Section 1.3(e)). In the event any of such Rights to Receive designated on
Schedule 1.3(e) become unrealizable or uncollectible between the date hereof and
the Closing Date, the provisions of Section 1.3(e) shall apply with respect
thereto.
The Purchaser shall furnish the Final Statements to
the Seller. Upon receipt by the Seller of the Final Statements, the Seller shall
be permitted during the ten (10) day period following such receipt (the "Review
Period") to review the Prepaid Expenses and the Rights to Receive and deliver a
written statement to the Purchaser of any objection it has to the Final
Statements. If no such statement of objection is delivered to the Purchaser by
the Seller within the Review Period, the Prepaid Expenses and the Rights to
Receive shall be that set forth in the Final Statement. If, however, the Seller
delivers such a statement of objection to the Purchaser, then the Seller and the
Purchaser shall attempt to resolve the objections contained therein. Failing
their agreement, such objections shall be resolved by a firm of independent
certified public accountants, mutually acceptable to the Seller and Purchaser,
whose determination
<PAGE>
as to each of the Final Statements shall be conclusive and binding upon the
parties. The fees and expenses of such independent certified public accountants
shall be borne equally by the Seller and Purchaser. The Seller and the Purchaser
each agree that the San Francisco office of the accounting firms of Ernst &
Young LLP and Deloitte & Touche LLP are mutually acceptable independent
certified public accountants to resolve any objections hereunder.
If the aggregate value of the Prepaid Expenses and
the Rights to Receive as of the Closing Date as determined in accordance with
this Section 1.3(d) is (i) greater than the amounts paid the Seller by the
Purchaser pursuant to Sections 1.2(a)(i) and 1.2(a)(iv), then the Purchaser
shall pay the Seller the amount of the difference, or (ii) less than the amount
paid the Seller by the Purchaser pursuant to Sections 1.2(a)(i) and 1.2(a)(iv),
then the Seller shall promptly pay the Purchaser the amount of the difference.
Any such payment shall be made within five (5) business days after the
determination of the value of the Prepaid Expenses and the Rights to Receive
from the Final Statements.
() OTHER ADJUSTMENTS. If any of the Rights to Receive
which are designated on Schedule 1.3(e) of the Seller's Disclosure Letter become
uncollectible or unrealizable within twelve (12) months after the Closing Date,
the Seller shall refund to the Purchaser the full amount paid for such Rights to
Receive at the Closing less the amount, if any, the Purchaser has collected on
such Rights to Receive, and such Rights to Receive shall be reassigned to the
Seller.
() DETERMINATION OF UNCOLLECTIBLE OR UNREALIZABLE
RIGHTS TO RECEIVE. For purposes of Sections 1.2(a)(i), 1.3(d) and 1.3(e) hereof,
Rights to Receive shall be deemed to be uncollectible or unrealizable if (i) the
counterparty thereto does not accept The Transmedia Card, (ii) the counterparty
thereto ceases business operations or (iii) the counterparty thereto seeks to
take advantage of, or any involuntary action is taken with respect to it under,
any bankruptcy, insolvency or other law for the relief of debtors. In addition,
for purposes of Section 1.3(e) only, Rights to Receive shall also be deemed to
be uncollectible or unrealizable if the value of Rights to Receive previously
purchased from the counterparty thereto and in any 60-day period sold to holders
of The Transmedia Card is less than 50% of the product of (x) the value of such
<PAGE>
Rights to Receive sold to holders of The Transmedia Card during the one-year
period immediately preceding the Closing Date and (y) .164383561.
/bullet/ FURTHER ASSURANCES.
() On the Closing Date and from time to time
thereafter, the Seller shall take all actions that may be required to put the
Purchaser in the position to take actual possession and control of all of the
Assets. The Seller and its affiliates shall on the Closing Date and thereafter
from time to time execute and deliver at the request of the Purchaser all such
further assignments, instruments, financing statements, licenses, applications
and any other documents which the Purchaser may reasonably request, in form and
substance reasonably satisfactory to the Purchaser and its counsel, in order to
effectuate the sale and transfer of the Assets to the Purchaser as contemplated
by this Agreement and to terminate the Franchise and the Franchise Agreement.
() From the date hereof, the Seller agrees to use its
best efforts to obtain any required or appropriate consent of any third party to
the transactions contemplated hereby. To the extent that the full benefit of any
of the Assumed Leases or any of the other Assets to be assigned, sold and
conveyed to the Purchaser (or its designees) or any of the Assumed Liabilities
to be assumed by the Purchaser (or its designees) hereunder, cannot be obtained
for the Purchaser or its designees without the consent of a third party or
without giving rise to an event of default or a right of cancellation or
acceleration in favor of a third party, and despite the best efforts of the
Seller to obtain such consent of the other party or parties on or before the
Closing Date, such consent is not obtained by such date, any such Assets,
Assumed Leases or Assumed Liabilities shall be deemed to be excluded from the
Assets, the Assumed Leases or the Assumed Liabilities, as the case may be,
hereunder and the Seller agrees to cooperate with the Purchaser or its designees
in any reasonable arrangements, at the Seller's expense (other than filing fees
for the Financing Statements, as hereinafter defined, which shall be borne by
the Purchaser up to the first $5,000, and shared equally by the Purchaser and
the Seller
<PAGE>
to the extent they exceed the first $5,000), designed to obtain such consent and
to provide for the Purchaser or its designees the benefits under any such
Assets, Assumed Leases or Assumed Liabilities, including enforcement for the
account of the Purchaser or its designees after the Closing Date of any and all
rights of the Seller against the other party thereto arising out of the breach,
cancellation or acceleration thereof by such other party or otherwise.
ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents, warrants and covenants to the Purchaser that,
except as disclosed in a letter (the "Seller Disclosure Letter") delivered by
the Seller to the Purchaser at the date of this Agreement containing schedules
(the "Schedules") specifically referencing the particular representations and
warranties to which such Schedules relate:
/bullet/ ORGANIZATION; POWER; CAPITAL STOCK, ETC.
() The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Seller has the requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Seller and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Seller and no other corporate proceedings, other than the approval of the
transactions contemplated by this Agreement and of the Charter Amendment (as
hereinafter defined) by the holders of a majority of the outstanding common
stock of the Seller (the "Stockholder Approval"), are necessary to authorize
this Agreement or the consummation of the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by the Seller
and, assuming the due authorization, execution and delivery by the Purchaser,
constitutes the legal, valid and binding obligation of the Seller, enforceable
against it in accordance with its terms.
() As of the record date of the meeting of the
Seller's stockholders to be held pursuant to Section 5.3 hereof, the authorized
and outstanding capital stock of the
<PAGE>
Seller consists of 25,000,000 shares of Common Stock, par value $.60 per share,
of which 7,903,421 shares are outstanding, and 2,000,000 shares of Preferred
Stock, par value $.10 per share, none of which are outstanding; and a total of
2,783,821 shares of Common Stock are reserved for issuance upon outstanding
options, warrants, conversion and other rights.
/bullet/ NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
() The execution, delivery and performance of this
Agreement by the Seller do not, and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws of the 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 the Seller or
the Assets or by which the Seller or any of its properties is bound or affected;
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a 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 or encumbrance on any of the properties
or assets of the Seller (including the Assets) pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, mortgage, license, permit,
franchise or other instrument or obligation to which the Seller is a party or by
which the Seller or any of its properties is bound or affected, the result of
which conflict, breach or default would be material and adverse to the business,
properties, condition (financial or otherwise) or results of operations of the
Seller, or to any of the Assets, the Assumed Leases or the Assumed Liabilities
(a "Material Adverse Effect") or any thereof.
() The execution, delivery and performance of this
Agreement by the Seller and the consummation by it of the transactions
contemplated hereby do not require the Seller or any of its affiliates to
receive any consent, approval, authorization or permit from, or make any filing
with or notification to, any governmental authority or court or any other
person, except for the filing with the Securities and Exchange Commission (the
"SEC") of a proxy statement in definitive form relating to the meeting of the
Seller's stockholders to be held in
<PAGE>
connection with the transactions contemplated hereby and the Charter Amendment
(the "Proxy Statement").
/bullet/ PERMITS; COMPLIANCE. The Seller and its affiliates
are in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary for it to own the Assets or to carry on its business pursuant to the
Franchise Agreement as it is now being conducted (the "Seller Permits"), except
for those Seller Permits the failure of which to obtain or maintain would not
result in a Material Adverse Effect, and no suspension, revocation or
cancellation of any such Seller Permits is pending, or to the knowledge of the
Seller, threatened. All such Seller Permits are listed on Schedule 2.3 of the
Seller's Disclosure Letter. The Seller and its affiliates have not operated such
business in conflict with, or in default or violation of, (i) any Law applicable
to it or by which it or any of its properties is bound or affected or (ii) any
of the Seller Permits (except in either case for any such conflicts, defaults or
violations which would not have a Material Adverse Effect), and the Seller has
not received any notice to that effect. Anything in the foregoing representation
and warranty to the contrary notwithstanding, no representation or warranty is
made as to compliance by the Seller with laws relating to the extension of
credit, the protection of consumers or the billing or reporting of transactions
under The Transmedia Card, or the possession by the Seller of franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders that may be required with respect
thereto.
/bullet/ TITLE TO ASSETS; ABSENCE OF LIENS AND ENCUMBRANCES;
DEFAULTS. The Seller has good, valid and marketable title to, and full right to
sell, assign and convey, all of the Assets, and at the Closing will convey the
Assets to the Purchaser, free and clear of any liens, charges and encumbrances
of any kind whatsoever, including any rights of first refusal, set-off,
reduction and counterclaim, but excluding (i) liens for taxes, fees, levies,
imposts, duties or governmental charges of any kind which are not yet delinquent
or are being contested in good faith by appropriate proceedings which suspend
the collection thereof and which are not material in amount individually or in
the aggregate; (ii) liens for mechanics, materialmen, laborers, employees,
suppliers or others which are not yet delinquent or are being contested in good
faith
<PAGE>
by appropriate proceedings and which are not material in amount individually or
in the aggregate; (iii) liens created in the ordinary course of business in
connection with the leasing or financing of office, computer and related
equipment and supplies; (iv) easements and similar encumbrances ordinarily
created for fuller utilization and enjoyment of property; and (v) liens or
defects in title or leasehold rights that either individually or in the
aggregate do not and will not have a Material Adverse Effect. The Assumed Leases
and the Assumed Liabilities are in full force and effect and are valid, binding
and enforceable in accordance with their respective terms and there exists no
material default on the part of the Seller in the performance of its covenants
and obligations under any of the Assumed Leases or the Assumed Liabilities. No
party to any Assumed Lease or any Assumed Liability has given written notice of
or made a written claim with respect to, and the Seller is not otherwise aware
of, any breach or default or any event which with notice or lapse of time or
both would constitute a breach or default by any party under any of the Assumed
Leases or the Assumed Liabilities. To the knowledge of the Seller, none of the
properties covered by any Assumed Lease is subject to any sublease, license or
other agreement granting to any person (other than the Seller) any right to use,
occupy or enjoy such property or any portion thereof. Correct and complete
copies of the Assumed Leases, together with any letters or agreements amendatory
thereto, have heretofore been provided to the Purchaser by the Seller. Each item
of personal property to be included among the Assets (with a book value of
$1,000 or more) is in good and useable condition, ordinary wear and tear
excepted.
/bullet/ ABSENCE OF LITIGATION.
() There is no claim, action, suit, litigation,
proceeding, arbitration or investigation of any kind involving the Seller (or
any affiliate of the Seller) and any of the Assets, the Franchise, the Franchise
Agreement or the business conducted by the Seller pursuant to the Franchise
Agreement, at law or in equity (including actions or proceedings seeking
injunctive relief), which are pending or, to the knowledge of the Seller, are
threatened. There is no action pending, or to the knowledge of the Seller,
threatened, seeking to enjoin or restrain or
<PAGE>
otherwise make it imprudent to consummate any of the transactions contemplated
by this Agreement.
() Neither the Seller nor any of its affiliates is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement, or, to the knowledge of the Seller, 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 any of the Assets, the Franchise, the Franchise Agreement or the business
conducted by the Seller and its affiliates pursuant to the Franchise Agreement.
/bullet/ CONTRACTS; NO DEFAULT; ETC..
() Schedule 2.6(a) of the Seller's Disclosure Letter
sets forth a list of each agreement, contract, guarantee, instrument, security
agreement or other document included among the Assets (collectively the "Seller
Contracts") and any and all financing statements and filings made by or on
behalf of the Seller to perfect any security interest or liens securing any
Rights to Receive or loans or advances or any of the other Assets by the Seller
(the "Financing Statements"). Correct and complete copies of all written Seller
Contracts, together with all amendments, supplements and side letters thereto,
have been delivered to the Purchaser or made available to the Purchaser for its
review and the material terms of all oral Seller Contracts, if any, have been
disclosed to the Purchaser.
() Each Seller Contract and any liens or security
interests securing any Rights to Receive or loans or advances, are valid,
subsisting and enforceable, 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). There is no material
default (or any event known to the Seller which, with the giving of notice or
lapse of time or both, would be a material default) by the Seller or, to the
knowledge of the Seller, any other party, in the timely performance of any
obligation to be performed or paid under any Seller Contract, which default
would reasonably be anticipated to have a Material Adverse Effect. The Seller
has not received
<PAGE>
any written notice of a filing or proposed filing under any bankruptcy,
insolvency or other law for the relief of debtors by any restaurant or other
establishment whose Rights to Receive or loans or advances are included among
the Assets. The Seller has not agreed to modify, extend, impair, reduce,
compromise or cancel any such Rights to Receive, loans or advances.
() No restaurant or other establishment from which
the Seller or any of its affiliates has purchased any Rights to Receive or to
which the Seller or any of its affiliates has loaned or advanced moneys, has
notified the Seller in writing that it has canceled, not renewed or otherwise
terminated, or will cancel, not renew or otherwise terminate, its relationship
with the Seller or its agreement to accept The Transmedia Card.
() The Reserve Amount, which is the reserve for
unrealizable or uncollectible Rights to Receive recorded in the accounting
records of the Seller, is fairly estimated and is calculated on a basis
consistent with that used in the preparation of the audited financial statements
of the Seller included in the Seller's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.
/bullet/ INTELLECTUAL PROPERTY RIGHTS. Except for the rights
granted to the Seller under the Franchise Agreement, neither the Seller nor any
of its affiliates owns, licenses or uses any Intellectual Property. Schedule 2.7
of the Seller Disclosure Letter lists each assumed name and trade name under
which the Seller has done business pursuant to the Franchise Agreement.
/bullet/ BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Seller or any of its affiliates.
/bullet/ NO MATERIAL MISSTATEMENTS OR MISLEADING STATEMENTS.
No representation or warranty by the Seller contained in or made pursuant to
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
<PAGE>
ARTICLE
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller that:
/bullet/ ORGANIZATION; POWER; ETC. The Purchaser is a
corporation, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Purchaser has the requisite
corporate power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Purchaser and no other corporate proceedings on the part of the
Purchaser are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Purchaser and, assuming the due authorization, execution and delivery by the
Seller, constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against it in accordance with its terms.
/bullet/ NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
() The execution and delivery of this Agreement by
the Purchaser does not, and the performance hereof by it will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws of the Purchaser,
(ii) conflict with or violate any Laws applicable to the Purchaser or by which
it or any of its properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of the Purchaser pursuant to
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Purchaser is a
party or by which the Purchaser or any of its properties is bound or affected,
the result of which conflict,
<PAGE>
breach or default would be material or adverse to the business, properties,
condition (financial or otherwise) or results of operations of the Purchaser.
() The execution, delivery and performance of this
Agreement by the Purchaser and the consummation by it of the transactions
contemplated hereby do not require the Purchaser to receive any consent,
approval, authorization or permit from, or make filing with or notification to,
any governmental authority or any other person.
/bullet/ ABSENCE OF LITIGATION.
() There is no action pending, or to the knowledge of
the Purchaser, threatened, seeking to enjoin or restrain or otherwise make it
imprudent to consummate any of the transactions contemplated by this Agreement.
() Neither the Purchaser nor any of its affiliates is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement, or, to the knowledge of the 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 the Purchaser.
/bullet/ BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser or any of its affiliates.
/bullet/ NO MATERIAL MISSTATEMENTS OR MISLEADING STATEMENTS.
No representation or warranty by the Purchaser contained in or made pursuant to
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
<PAGE>
ARTICLE
AGREEMENTS OF THE PARTIES
/bullet/ ORDINARY COURSE OF BUSINESS. Prior to the Closing
Date, and except as otherwise expressly contemplated by this Agreement, or
approved in writing by the Purchaser, the Seller covenants and agrees that:
() The Seller and its affiliates will carry on their
business pursuant to the Franchise Agreement in the ordinary course
substantially in the manner carried on as of the date hereof, and will not
engage in any activity or transaction or enter into any agreement or commitment
other than in the ordinary course of its business as heretofore conducted;
provided, however, that the Purchaser acknowledges that with its acquiescence,
the Seller has ceased the activities required of it in order to expand its
operations into Washington, Oregon and Nevada;
() The Seller and its affiliates will use their
reasonable best efforts to preserve their business organization intact, to keep
available the services of their employees and to preserve for the Purchaser the
Seller's relationships with restaurants and other establishments that accept The
Transmedia Card, with holders of The Transmedia Card and with others having
business relationships with the Seller and its affiliates; provided, however,
that the Seller (i) makes no representation that any of its employees will
become an employee of the Purchaser; and (ii) shall not be obligated to make any
material capital or out of the normal course expenditures prior to the Closing
to comply with this covenant;
() The Seller shall not, without the consent of the
Purchaser, acquire any Rights to Receive from any one counterparty or group of
affiliated counterparties in excess of $10,000;
() Neither the Seller nor any of its affiliates will
modify, impair, reduce, compromise or cancel any material Asset or any material
amount of the Assets or, without the Purchaser's prior written consent, amend,
modify, terminate or extend any of the Assumed Leases or the Assumed
Liabilities;
<PAGE>
() Without limiting the foregoing, the Seller will
consult with the Purchaser regarding all material developments, transactions and
proposals relating to the business of the Seller and its affiliates conducted
pursuant to the Franchise Agreement and the Assets;
() Neither the Seller nor any of its affiliates will
sell, assign, transfer, or otherwise dispose of any material Asset or material
amount of the Assets, or subject any material Asset or material amount of the
Assets to any liens, pledges, restrictions, encumbrances or claims;
() The Seller will maintain all the tangible Assets
in their current condition, ordinary wear and tear excepted, and make all
ordinary and necessary repairs to the Assets; and
() The 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 the Seller contained herein inaccurate in any
material respect.
/bullet/ PURCHASER'S ACTIONS. The Purchaser 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 the Purchaser contained herein
inaccurate in any respect.
ARTICLE
ADDITIONAL AGREEMENTS
/bullet/ PREPARATION OF THE PROXY STATEMENT. The Seller shall
promptly prepare and submit to the SEC the Proxy Statement in preliminary form,
a copy of which will be furnished to counsel to the Purchaser, and promptly
respond to any SEC comments received in respect of such Proxy Statement.
/bullet/ CHANGE OF SELLER'S NAME. Subject to the approval of
its stockholders, the Seller shall promptly prepare and file a Certificate of
Amendment of its Certificate of Incorporation (the "Charter Amendment") for the
purpose of changing its corporate name to a
<PAGE>
name not containing the word "Transmedia" or any derivative of "Transmedia," or
any other trademark, service mark, trade name or slogan of the Purchaser.
/bullet/ MEETING. The Seller shall call a meeting of its
stockholders to be held as promptly as practicable consistent with the
requirements of the Securities Laws and the Delaware General Corporation Law for
the purpose of voting upon the transactions contemplated in this Agreement and
the Charter Amendment. The Seller will, through its Board of Directors, subject
to their fiduciary duties to the stockholders of the Seller under applicable
law, recommend to the stockholders of the Seller approval of such transactions
and the Charter Amendment.
/bullet/ LEGAL CONDITIONS TO TRANSACTION. Each of the parties
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the transactions
contemplated hereby and in connection with required approvals of or filings with
any other governmental authorities and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their respective affiliates. The Seller will take all
reasonable actions necessary to obtain (and the Purchaser will cooperate with
the Seller in obtaining) any consent, authorization, order or approval of, or
any exemption by, any governmental authority or other public or private third
party required to be obtained or made by the Seller in connection with the
transactions contemplated by this Agreement. By the Closing Date, the Seller
shall use its best efforts to obtain and deliver to the Purchaser: (i) all
necessary consents to the assignment to the Purchaser of the Assets and the
assumption of the Assumed Leases, and any other agreements, contracts and
arrangements to be assumed by the Purchaser or its designees, and (ii) any other
consents that the Purchaser may reasonably require. All such consents shall be
in form and substance reasonably satisfactory to the Purchaser and its counsel.
/bullet/ TAXES. The Seller shall pay all sales and other
transfer taxes arising as a result of the transfer of the Assets pursuant to
this Agreement. The Purchaser shall pay the costs of amending the Financing
Statements and assigning the security interests evidenced thereby up to the
first $5,000, and the Purchaser and the Seller shall share such costs to the
extent they exceed the first $5,000.
<PAGE>
/bullet/ CONFIDENTIALITY.
(a) The Seller and its affiliates will hold and keep
confidential and will not disclose or use (i) any information provided to them
or any of their representatives by or on behalf of the Purchaser or any of its
affiliates in connection with the transactions contemplated hereby; and (ii)
after the Closing, any confidential or proprietary information regarding any of
the Assets, the Franchise, the Franchise Agreement, the business conducted
pursuant to the Franchise Agreement or the Assumed Liabilities or the Assumed
Leases or any confidential or proprietary information relating to the business
of the Purchaser; PROVIDED, that this Section 5.6 shall not apply to (1)
information which is publicly available at the time of disclosure (through no
act of the Seller or any of its affiliates); or (2) disclosures which are
required to be made by the Seller or any of its affiliates under legal process
or by applicable laws or regulations, or which are requested by the Purchaser or
any of its affiliates.
(b) The Seller agrees that damages may be an
inadequate remedy for any breach of the terms or provisions of this Section 5.6
and that the Purchaser shall, whether or not it is pursuing any potential
remedies at law, be entitled to equitable relief in the form of preliminary and
permanent injunctions, without having to post any bond or other security, upon
any breach or threatened breach of any of such term or provision.
(c) The parties agree that nothing in this Agreement
shall be construed to limit or negate the common law of torts or trade secrets
where it provides the Purchaser or any of its affiliates with any broader,
further or other remedy or protection than that provided herein.
/bullet/ ACCESS TO INFORMATION. Upon reasonable notice
provided that there is no unreasonable interference with the business of the
Seller, the Seller shall (and shall cause its affiliates to) afford to the
officers, employees, accountants, counsel and other representatives of the
Purchaser, access, during normal business hours during the period prior to the
Closing Date, to all of its properties, books, contracts, commitments and
records relating to the Assets and
<PAGE>
the Assumed Liabilities and, during such period, the Seller shall (and shall
cause its affiliates to) furnish promptly to the Purchaser (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, the Assets and the
Assumed Liabilities as the Purchaser may reasonably request. Unless otherwise
required by law, the Purchaser will hold any such information which is nonpublic
in confidence until such time as such information otherwise becomes publicly
available through no wrongful act of either party, and in the event of
termination of this Agreement for any reason the Purchaser shall promptly return
all nonpublic documents obtained from the Seller or its affiliates, and any
copies made of such documents, to the Seller.
ARTICLE
CONDITIONS TO CLOSING
/bullet/ CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligations of the 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 the
Purchaser to the extent permitted by applicable law:
() REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of the Seller set forth in this Agreement or in
any certificate or document delivered pursuant hereto shall be true and correct
in all material respects when made and on and as of the Closing Date, as if made
on such date, and the Seller shall have duly performed and complied in all
material respects with all of its agreements, covenants, conditions and
obligations contained in this Agreement. The Purchaser shall have received a
certificate dated the Closing Date signed by the Chief Executive Officer or the
Chief Financial Officer of the Seller to the effect that the conditions of this
paragraph have been satisfied. (The parties recognize and agree that the Seller
makes no representation, warranty or agreement as to its results of operations
and, accordingly, the incurrence of operating losses by the Seller prior to the
Closing
<PAGE>
shall not, in and of itself, constitute the breach of any representation,
warrant or covenant herein or the failure of any condition herein).
() STOCKHOLDER APPROVAL. The Stockholder Approval
shall have been obtained.
() OTHER CONSENTS AND FILINGS. All material approvals
and consents of or filings with governmental 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
to the reasonable satisfaction of the Purchaser.
() DOCUMENTS OF TRANSFER. All bills of sale,
instruments of transfer and assignment and other statements, instruments and
documents contemplated by Article I hereof shall have been duly executed and
delivered by the Seller, and the Seller shall have furnished the Purchaser with
copies of all such items, and such other certificates and documents as the
Purchaser and its counsel may reasonably request, in sufficient time prior to
the Closing Date to permit review and evaluation thereof and the making of
preliminary arrangements for any necessary recording and filing thereof on the
Closing Date.
() FRANCHISE AGREEMENT. An instrument (the "Franchise
Termination") in the form of Exhibit F hereto terminating the Franchise
Agreement, the Franchise and any associated rights and licenses and providing
for a mutual release between the parties shall have been duly executed and
delivered by the Seller.
() OPINION OF COUNSEL. Olshan Grundman Frome &
Rosenzweig LLP, counsel to the Seller, shall have delivered a legal opinion to
the Purchaser, in the form of Exhibit G hereto, to the effect that the
provisions of section 9(c) of the Warrant Agreement, dated as of June 25, 1993,
between the Seller and the American Stock Transfer & Trust Company, as amended
(the "Warrant Agreement") are not applicable to the transactions contemplated by
this Agreement and no holder of any warrants issued thereunder has any rights to
require the
<PAGE>
Purchaser to assume any obligations of the Seller thereunder or to receive any
securities or property from the Purchaser.
() ABSENCE OF LITIGATION. No action shall be pending
seeking to enjoin or restrain or otherwise make it imprudent to consummate any
of the transactions contemplated by this Agreement.
/bullet/ CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The
obligations of the Seller 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 the Seller
to the extent permitted by applicable law:
() REPRESENTATIONS AND WARRANTIES; COVENANTS; The
representations and warranties of the Purchaser set forth in this Agreement or
in any certificate or document delivered pursuant hereto shall be true and
correct in all material respects when made and on and as of the Closing Date, as
if made on such date, and the Purchaser shall have duly performed and complied
in all material respects with all of its agreements, covenants, conditions and
obligations contained in this Agreement. The Seller shall have received a
certificate dated the Closing Date signed by the Chief Executive Officer or the
Chief Financial Officer of the Purchaser to the effect that the conditions of
this paragraph have been satisfied.
() STOCKHOLDER APPROVAL. The Stockholder Approval
shall have been obtained.
() OTHER CONSENTS AND FILINGS. All material approvals
and consents of or filings with governmental 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
to the reasonable satisfaction of the Seller.
() DOCUMENTS OF ASSUMPTION. The assumption agreement
contemplated by Article I hereof shall have been duly executed and delivered by
the Purchaser, and the Purchaser shall have furnished the Seller with a copy of
such agreement in sufficient time prior to the Closing Date to permit review and
evaluation thereof by the Seller and its counsel.
<PAGE>
() FRANCHISE AGREEMENT. The Franchise Termination
shall have been duly executed and delivered by the Purchaser.
() OTHER CONSIDERATION. At the Closing, the Purchaser
shall have delivered to the Seller (i) a certified check or wire transfer of
immediately available funds for an amount equal to the sum of the amounts listed
in paragraphs (i), through (v) of Section 1.2(a).
() ABSENCE OF LITIGATION. No action shall be pending
seeking to enjoin or restrain or otherwise make it imprudent to consummate any
of the transactions contemplated by this Agreement.
ARTICLE
TERMINATION
/bullet/ TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, before or after the approval by the stockholders
of the Seller:
() by the mutual consent of the Seller and the
Purchaser, by action of their respective Boards of Directors;
() by either the Purchaser or the Seller if there has
been a material breach of any representation, warranty, covenant or agreement on
the part of the other set forth in this Agreement which breach has not been
cured within five business days following receipt by the breaching party of
notice of such breach, or if any permanent 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;
() by either the Purchaser or the Seller if the
transactions contemplated herebyshall not have been consummated before January
31, 1997, provided that the party seeking to terminate this Agreement are not
otherwise in breach in any material respect of any of its obligations hereunder;
or
<PAGE>
() by either the Purchaser or the Seller if the
Stockholder Approval shall not have been obtained by reason of the failure to
obtain the required affirmative vote at a duly held meeting of its stockholders
or at any adjournment thereof.
/bullet/ EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Purchaser or the Seller as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the Purchaser or the Seller, or their respective
officers or directors, except (y) with respect to Sections 5.5, Article VIII
(with respect to any claim for breach of the representation in Sections 2.8 or
3.4) and 9.1 and (z) 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.
ARTICLE
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
/bullet/ SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement, any schedule and any
certificate, written statement, or other document delivered at the Closing
pursuant to this Agreement by or on behalf of the Seller or the Purchaser shall
be deemed to have been relied upon notwithstanding any investigation heretofore
or hereafter made or omitted by any party hereto and shall survive for a period
of six (6) months after the Closing Date, except for all such representations
and warranties relating to (i) the Rights to Receive specified on Schedule
1.3(e) which shall survive for a period of one year after the Closing Date and
(ii) the Rights to Receive other than those specified on Schedule 1.3(e) which
shall not survive the Closing Date.
/bullet/ SELLER'S INDEMNIFICATION OBLIGATIONS. Subject to the
terms and conditions of this Article 8, the Seller agrees to defend, indemnify
and hold the Purchaser and the officers, directors, agents, attorneys,
employees, representatives and other affiliates of the Purchaser harmless
against any and all liabilities, losses, costs and expenses including, without
limitation, legal and other expenses (collectively "Damages"), resulting from or
relating to:
<PAGE>
() any misrepresentation or breach of any
representation or warranty of the Seller contained in this Agreement or in any
Schedule of the Seller Disclosure Letter or any certificate, written statement
or other document delivered by or on behalf of the Seller pursuant to this
Agreement;
() any breach of any covenant, agreement or
obligation of the Seller contained in this Agreement;
() any debt, liability or obligation of the Seller or
any of its affiliates other than the Assumed Liabilities;
() the conduct of the business of the Seller and its
affiliates, and the ownership, use and operation of the Assets, on or prior to
the Closing Date;
() any failure of the Seller to comply with the
provisions of the Uniform Commercial Code pertaining to bulk sales; and
(f) any obligation, liability or expense imposed upon
or affecting the Purchaser under the Warrant Agreement; and any and all actions,
suits, demands, assessments or judgments with respect to any claim arising out
of or relating to the subject matter of the indemnification; PROVIDED, HOWEVER,
that the sole remedy of the Purchaser for any breach of any representation or
warranty as to the validity or enforceability of (i) any Right to Receive
specified on Schedule 1.3(e) shall be limited to the remedy set forth in Section
1.3(e) of this Agreement and (ii) any Right to Receive other than those
specified on Schedule 1.2(ii) or Schedule 1.3(e) shall be limited to the remedy
set forth in Section 1.3(d) of this Agreement.
/bullet/ PURCHASER'S INDEMNIFICATION OBLIGATIONS. Subject to
the terms and conditions of this Article 8, the Purchaser agrees to defend,
indemnify and hold the Seller and the officers, directors, agents, attorneys,
employees, representatives and other affiliates of the Seller harmless against
any and all Damages resulting from or relating to:
<PAGE>
() any misrepresentation or breach of any
representation or warranty of the Purchaser contained in this Agreement or in
any certificate, written statement or other document delivered by or on behalf
of the Purchaser pursuant to this Agreement;
() any breach of any covenant, agreement or
obligation of the Purchaser contained in this Agreement; and
() any Assumed Liabilities; and any and all actions,
suits, demands, assessments or judgments with respect to any claim arising out
of or relating to the subject matter of the indemnification.
/bullet/ CLAIMS FOR INDEMNIFICATION; DEFENSE OF INDEMNIFIED
CLAIMS; LIMITATIONS ON INDEMNIFICATION.
() 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 VIII 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; 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 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 make any compromise or settlement (subject to the written consent of the
Indemnified Party, which will not be unreasonably withheld). 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. In the event that
the Indemnifying Party fails timely to defend, contest or otherwise protect
itself against any such suit, action, investigation, claim or proceeding, the
Indemnified Party shall have the right to defend, contest or otherwise protect
the
<PAGE>
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.
() For purposes of this Article VIII, all Damages
shall be computed net of any insurance coverage (from the amount of which
coverage there shall be deducted all costs and expenses, including attorneys'
fees, of the Indemnified Party not reimbursed by such coverage) and tax benefits
with respect thereto which reduces the Damages that would otherwise be
sustained; PROVIDED, HOWEVER, that in all cases, the timing of the receipt or
realization of insurance proceeds or tax benefits shall be taken into account in
determining the amount of reduction of Damages.
/bullet/ PAYMENTS; NON-EXCLUSIVITY. Any amounts due an
Indemnified Party under the aforesaid indemnities shall be due and payable by
the Indemnifying Party within fifteen (15) days after written demand therefor.
The remedies conferred in this Article VIII are intended to be without prejudice
to any other rights or remedies available at law or equity to the Indemnified
Parties, now or hereafter.
/bullet/ SET-OFF. If from time to time and at any time the
Purchaser shall be entitled to be paid any amount under the provisions of this
Agreement, including this Article VIII, the Purchaser shall be entitled, if it
so elects, to set-off such amount against any other amounts due to the Seller
from the Purchaser or any of its affiliates. Such right of set-off shall be in
addition to and not in substitution of any other rights the Purchaser shall be
entitled to under the provisions of this Article VIII or otherwise.
ARTICLE
MISCELLANEOUS; GENERAL
<PAGE>
/bullet/ FEES AND EXPENSES. Whether or not the transactions
contemplated hereby shall be consummated, each party hereto shall pay its own
expenses incident to preparing for, entering into or carrying out this Agreement
and the consummation of the transactions contemplated hereby.
/bullet/ MODIFICATION OR AMENDMENT. Subject to the applicable
provisions of the Delaware General Corporation Law, at any time prior to the
Closing Date (whether before or after receipt of the Stockholder Approval), this
Agreement may be supplemented, modified or amended, or the provisions hereof may
be waived, by the mutual agreement of the Purchaser and the Seller, by action of
their respective Boards of Directors followed by written agreement executed and
delivered by duly authorized officers of the respective parties; provided,
however, that no such supplement, modification, amendment or waiver which
materially and adversely affects the rights of the stockholders of the Seller,
shall be made without Stockholder Approval.
/bullet/ 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.
/bullet/ 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 same agreement.
/bullet/ GOVERNING LAW; FORUM; CONSENT TO JURISDICTION. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to the principles of conflict of laws
thereof. Each of the parties to this Agreement hereby irrevocably and
unconditionally (i) consents to submit to the exclusive jurisdiction of the
federal or state courts located in the State of New York for any proceeding
arising in connection with this Agreement (and each such party agrees not to
commence any such proceeding, except in such courts), (ii) waives any objection
to the laying of venue of any such proceeding in the courts of the State of New
York, and (iii) waives, and agrees not to plead or to make, any claim that any
such proceeding brought in any federal or state court in the State of New York
has been brought
<PAGE>
in an improper or otherwise inconvenient forum. Process in any such action may
be served by service upon the Secretary or State (or other appropriate public
official) of the jurisdiction of incorporation of the party to whom it is
directed.
/bullet/ NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party to the other shall be in writing and
shall be deemed to have been duly given on the day when the same is sent, if
delivered personally or sent by telecopy or overnight delivery, 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:
The Western Transmedia Company, Inc.
475 Sansome Street
San Francisco, CA 94111
Facsimile No.: (415) 397-4443
Attn.: Chief Executive Officer
With a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Facsimile No.: (212) 755-1467
Attn.: David J. Adler, Esq.
If to Purchaser:
Transmedia Network Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181
Facsimile No.: (305) 892-3342
Attn.: Chief Executive Officer
<PAGE>
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.
/bullet/ DISCLOSURE LETTER AND EXHIBITS; ENTIRE AGREEMENT. The
Seller Disclosure Letter and all exhibits and schedules and attachments to
exhibits or schedules, 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 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.
/bullet/ ASSIGNMENT. 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. The
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 affiliates of
Purchaser, but in such event the Purchaser shall remain, and the assignee shall
be, fully liable for the performance of all such obligations in the manner
prescribed in this Agreement. Subject to the two 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.
/bullet/ DEFINITION OF "AFFILIATE". When a reference is made
in this Agreement to an affiliate of a party, the word "affiliate" means any
corporation or other organization, whether incorporated or unincorporated, (x)
of which such party or any other affiliate of such party is a general partner or
limited partner or (y) beneficially owns at least a majority of the securities
or interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization, or (z) beneficially owns a
majority of the securities or other interests representing
<PAGE>
the total equity in such organization, is directly or indirectly owned or
controlled by such party or by any one or more of its affiliates, or by such
party and one or more of its affiliates.
/bullet/ 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.
/bullet/ 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.
/bullet/ PUBLICITY. During the period through the Closing
Date, the Purchaser, the 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,
regulation or rule.
/bullet/ NO THIRD PARTY BENEFICIARIES. This Agreement has been
made for the sole benefit of the Purchaser and the 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 the Seller.
<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.
THE WESTERN TRANSMEDIA
COMPANY, INC.
By:/S/STUART M. PELLMAN
----------------------
Name:Stuart M. Pellman
Title: President
TRANSMEDIA NETWORK INC.
By:/S/ MELVIN CHASEN
---------------------
Melvin Chasen
Chairman and President
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE TRANSACTIONS 2
1.1 The Transactions 2
1.2 The Consideration. 3
1.3 Closing 5
1.4 Further Assurances 10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER 12
2.1 Organization; Power; Capital Stock, Etc. 12
2.2 No Conflict; Required Filings and Consents 13
2.3 Permits; Compliance 14
2.4 Title to Assets; Absence of Liens and
Encumbrances; Defaults. 15
2.5 Absence of Litigation 16
2.6 Contracts; No Default; Etc. 17
2.7 Intellectual Property Rights 19
2.8 Brokers 19
2.9 No Material Misstatements or Misleading Statements 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 19
3.1 Organization; Power; Etc. 19
3.2 No Conflict; Required Filings and Consents 20
3.3 Absence of Litigation 21
3.4 Brokers. 21
3.5 No Material Misstatements or Misleading Statements 21
ARTICLE IV AGREEMENTS OF THE PARTIES 22
4.1 Ordinary Course of Business 22
4.2 Purchaser's Actions 23
ARTICLE V ADDITIONAL AGREEMENTS 24
5.1 Preparation of the Proxy Statement 24
5.2 Change of Seller's Name 24
5.3 Meeting 24
5.4 Legal Conditions to Transaction 24
5.5 Taxes. 25
5.6 Confidentiality 25
5.7 Access to Information 26
ARTICLE VI CONDITIONS TO CLOSING 27
6.1 Conditions to the Obligations of the Purchaser 27
6.2 Conditions to the Obligations of the Seller 29
<PAGE>
ARTICLE VII TERMINATION 31
7.1 Termination 31
7.2 Effect of Termination 31
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION 32
8.1 Survival of Representations and Warranties 32
8.2 Seller's Indemnification Obligations 32
8.3 Purchaser's Indemnification Obligations 34
8.4 Claims for Indemnification; Defense of 34
Indemnified Claims; Limitations on
Indemnification
8.5 Payments; Non-Exclusivity 36
8.6 Set-Off. 36
ARTICLE IX MISCELLANEOUS; GENERAL 36
9.1 Fees and Expenses 36
9.2 Modification or Amendment 36
9.3 Waiver of Conditions 37
9.4 Counterparts 37
9.5 Governing Law; Forum; Consent to Jurisdiction 37
9.6 Notices 38
9.7 Disclosure Letter and Exhibits; Entire Agreement 39
9.8 Assignment 39
9.9 Definition of "Affiliate" 40
9.10 Titles and Captions 40
9.11 Severability. 40
9.12 Publicity 41
9.13 No Third Party Beneficiaries 41
<PAGE>
EXHIBIT A Assumed Leases
EXHIBIT B Prepaid Expenses
EXHIBIT C Assumed Liabilities re: Rights to Receive
EXHIBIT D Form of General Assignment and Bill of Sale and Agreement of
Assumption
EXHIBIT E Form of FIRPTA Affidavit
EXHIBIT F Form of Franchise Termination Agreement
EXHIBIT G Form of Olshan Grundman Frome & Rosenzweig LLP Legal Opinion
