EXHIBIT 4.11
PURCHASE AGREEMENT
dated as of June 29, 2000
by and among
TRANSMEDIA NETWORK INC.,
SPECTRUM PARTNERS, INC.,
POTOMAC DINING LIMITED PARTNERSHIP,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TABLE OF CONTENTS
Page No.
ARTICLE I TRANSFER OF ASSETS; TERMINATION OF FRANCHISE AGREEMENT
AND REPRESENTATIVE AGREEMENT..................................................................3
1.1 Transfer of Assets; Termination of Franchise Agreement........................................3
1.2 Purchase Price................................................................................5
1.3 Closing.......................................................................................5
1.4 Excluded Assets and Obligations...............................................................7
1.5 Rights-to-Receive Adjustment..................................................................8
1.6 Calculation of Number of Shares...............................................................9
1.7 Further Assurances............................................................................9
1.8 Nonassignability.............................................................................10
ARTICLE II REPRESENTATIONS AND WARRANTIES...............................................................11
2.1 The Seller...................................................................................11
2.2 Transmedia...................................................................................22
ARTICLE III REGISTRATION.................................................................................25
3.1 Shelf Registration...........................................................................25
3.2 Postponement.................................................................................25
3.3 Obligations of Transmedia....................................................................26
3.4 Furnish Information..........................................................................28
3.5 Indemnification..............................................................................28
3.6 Reports Under the Exchange Act...............................................................32
3.7 No Assignment of Registration Rights.........................................................33
ARTICLE IV AGREEMENTS OF THE SELLER AND OTHERS..........................................................33
4.1 Ordinary Course of Business..................................................................33
ARTICLE V ADDITIONAL AGREEMENTS........................................................................34
5.1 Legal Conditions to Transaction..............................................................34
5.2 Taxes........................................................................................35
5.3 Confidentiality..............................................................................35
5.4 Access to Information........................................................................36
5.5 Non-Competition..............................................................................36
5.6 NYSE Listing.................................................................................39
5.7 Allocation of Purchase Price.................................................................39
ARTICLE VI CONDITIONS TO CLOSING........................................................................40
6.1 Conditions to the Obligations of Transmedia..................................................40
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6.2 Conditions to the Obligations of the Seller..................................................41
ARTICLE VII TERMINATION..................................................................................43
7.1 Termination..................................................................................43
7.2 Effect of Termination........................................................................43
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION .................................44
8.1 Survival of Representations and Warranties...................................................44
8.2 Indemnification Obligations..................................................................44
8.3 Transmedia's Indemnification Obligations.....................................................45
8.4 Claims for Indemnification; Defense of Indemnified Claims; Limitations on Indemnification...46
8.5 Set-Off......................................................................................48
ARTICLE IX DEFINITIONS..................................................................................49
ARTICLE X MISCELLANEOUS; GENERAL.......................................................................54
10.1 Fees and Expenses............................................................................54
10.2 Modification or Amendment....................................................................55
10.3 Waiver of Conditions.........................................................................55
10.4 Counterparts.................................................................................55
10.5 Governing Law; Forum; Consent to Jurisdiction................................................55
10.6 WAIVER OF JURY TRIAL.........................................................................56
10.7 Notices......................................................................................56
10.8 Disclosure Letter and Exhibits; Entire Agreement.............................................58
10.9 Assignment...................................................................................58
10.10 Titles and Captions..........................................................................58
10.11 Severability.................................................................................58
10.12 Publicity....................................................................................59
10.13 No Third Party Beneficiaries.................................................................59
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PURCHASE AGREEMENT
PURCHASE AGREEMENT (the "Agreement"), dated as of June 29,
2000, by and among Transmedia Network Inc., a Delaware corporation
("Transmedia"), Spectrum Partners, Inc., a Maryland corporation ("Spectrum"),
Potomac Dining Limited Partnership, a Maryland limited partnership ("Potomac"
and, together with Spectrum, the "Seller"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Bessalel"),
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇" and, together with Bessalel, the "Original
Franchisees") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇").
WHEREAS, Transmedia and the Original Franchisees entered into
a Franchise Agreement, dated February 14, 1992, as amended by an Amendment,
dated February 14, 1992, and a Second Amendment, dated September 24, 1993
(collectively, the "Franchise Agreement"), pursuant to which Transmedia granted
the Original Franchisees the right to utilize certain property and promote and
sell certain services owned by Transmedia in the Territory, upon the terms and
conditions contained in the Franchise Agreement;
WHEREAS, the Original Franchisees and Spectrum entered into an
Assignment of the Franchise Agreement, dated June 15, 1992, pursuant to which
the Original Franchisees assigned and transferred to Spectrum all of their
right, title and interest as "Franchisee" under the Franchise Agreement;
WHEREAS, Spectrum, as the general partner of Potomac,
contributed all of its rights and burdens under the Franchise Agreement to
Potomac;
WHEREAS, Transmedia entered into a Guaranty, dated as of June
14, 1995 (the "Guaranty"), in favor of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services
Inc. ("MLBFS") for the benefit of the Seller in connection with the WCMA Note,
Loan and Security Agreement, dated as of June 14, 1995, between Potomac and
MLBFS (the "Loan Agreement") and an Agreement, effective July 11, 1995, between
Transmedia and Potomac with respect to such Bank Guaranty;
WHEREAS, Transmedia and Spectrum entered into a Sale
Representative Agreement, dated as of July 1, 1999 (the "Representative
Agreement"), pursuant to which Transmedia appointed Spectrum as sales
representative in the Territory for the Dining a la Card program; and
WHEREAS, Transmedia and the Seller desire to terminate the
Franchise Agreement and the Representative Agreement and the Seller desires to
sell to Transmedia, or its designee, and Transmedia, or its designee, desires to
purchase from the Seller, certain assets of the Seller relating to the Territory
in exchange for the termination of the Franchise Agreement and the
Representative Agreement and the consideration described herein, all on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
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ARTICLE I
TRANSFER OF ASSETS; TERMINATION OF FRANCHISE AGREEMENT
AND REPRESENTATIVE AGREEMENT
1.1 Transfer of Assets; Termination of Franchise
Agreement. On the terms and subject to the conditions in this Agreement and for
the consideration specified herein, at the Closing (as hereinafter defined):
(a) Transmedia shall purchase from the Seller,
and the Seller shall sell, transfer, convey, assign and deliver to Transmedia
Restaurant Company Inc., a Delaware corporation ("Transmedia Restaurant"), free
and clear of all mortgages, pledges, assessments, security interests, leases,
liens, adverse claims, levies, charges or other encumbrances of any nature,
conditional sale or title retention contracts, agreements or understandings or
any contracts, agreements or understandings to grant any of the foregoing
(collectively, "Liens"), all of the Seller's right, title and interest in, to
and under (i) the contractual rights-to-receive (both funded and unfunded)
including, without limitation, the food and beverage credits of the Seller at,
and any loans or advances of the Seller to, restaurants and other establishments
in the Territory (including, without limitation, those restaurants and
establishments listed on Exhibit A attached hereto and the restaurants and
establishments listed on Exhibit B attached hereto (the "Additional
Restaurants")) used or held for use in connection with the Seller's business in
the Territory and at the Additional Restaurants, all agreements, contracts,
guarantees, instruments, security agreements and other documents evidencing or
securing, and any collateral and security interests securing, such credits and
all claims of the Seller related thereto (collectively, the
"Rights-to-Receive"), as the same shall exist on the Closing Date, (ii) (x) all
agreements, contracts and other documents (including arrearage sale contracts)
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evidencing the Rights-to-Receive and the Seller's other rights with respect to
the restaurants and other establishments in the Territory and the Additional
Restaurants in connection with the Seller's business pursuant to the Franchise
Agreement and the Representative Agreement and (y) the Lease Agreement, dated
April 17, 1997, between NY Life Funding, Inc. and Potomac (as amended), and, in
each case, all claims of the Seller's related thereto (the "Assigned
Agreements"), (iii) all electronic processors in the Territory and at the
Additional Restaurants (a list of which is attached hereto as Exhibit C) (the
"Processors"), and (iv) specified tangible assets (a list of which is attached
hereto as Exhibit D) (the "Property") but excluding the Excluded Assets as
hereinafter defined, (items (i) - (iv), being, collectively, the "Assets"), by
the execution and delivery of the General Assignment and ▇▇▇▇ of Sale Agreement,
in the form attached hereto as Exhibit E (the "▇▇▇▇ of Sale").
(b) Effective as of the Closing Date, the
Seller's rights under the Franchise Agreement (including the right to market
under the Franchise Agreement the TRANSMEDIA System in the Territory), and,
except as otherwise provided in the Letter Agreements (as defined herein), the
Representative Agreement (including the right to market under the Representative
Agreement the Dining a la Card program in the Territory) shall, by the execution
and delivery of the letter agreements, in the form attached hereto as Exhibits F
and G (collectively, the "Letter Agreements"), terminate and be of no further
force and effect. The Seller shall execute and deliver the power of attorney, in
the form attached hereto as Exhibit H (the "Power of Attorney"), the release, in
the form attached hereto as Exhibit I (the "Release"), and the two subordinated
convertible notes issued by Transmedia Restaurant, in the forms attached hereto
as Exhibits J and K (the "Payment Notes").
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1.2 Purchase Price. In consideration of the transfer of
the Assets specified in Section 1.1(a), the cancellation and termination of the
Seller's rights under the Franchise Agreement and under the Representative
Agreement and the execution and delivery of the Release, at the Closing, subject
to Sections 1.5 and 1.6, Transmedia shall deliver to Potomac: (i) by wire
transfer of immediately available funds to an account in Potomac's name or the
names of its designees at such banks in the United States as Potomac (or such
other party as Potomac shall designate) shall specify in writing to Transmedia
at least two Business Days prior to the Closing Date, $1,425,888.00 in the
aggregate, (ii) the Payment Notes in aggregate principal amount of
$2,000,000.00, registered in the name of Potomac, which shall bear appropriate
legends stating that they have not been registered under federal and state
securities laws, and (iii) certificates for such number of shares (the "Shares")
of Common Stock, calculated as provided in Section 1.6, registered in the name
of Potomac, which shall bear appropriate legends stating that the shares
evidenced thereby have not been registered under federal and state securities
laws.
1.3 Closing.
(a) Date and Place. The closing of the
transactions contemplated hereby (the "Closing") shall take place at the offices
of Transmedia, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such
other location as the parties shall mutually agree, commencing at 10:00 a.m.
local time, on June 29, 2000, or at such other time and place as the parties may
agree in writing. The "Closing Date" shall be the date on which the Closing
occurs.
(b) Transfer and Purchase.
(i) On the Closing Date, the Seller will
convey, transfer, assign and deliver the Assets to Transmedia
Restaurant, and put Transmedia Restaurant in
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possession (or right thereto) of all Assets, free and clear of all
Liens. In furtherance thereof, the Seller shall deliver to Transmedia
(or its designees):
(1) the ▇▇▇▇ of Sale;
(2) such other specific
assignments, bills of sale and forms of transfer to such of
the Assets, and in such form, as Transmedia may reasonably
request;
(3) the Power of Attorney, the
Letter Agreements, the Release and the Payment Notes; and
(4) such other assignments,
financing statements, instruments or other documents as
Transmedia may reasonably request.
(ii) On the Closing Date, Transmedia and
Transmedia Restaurant, as appropriate, shall execute and deliver to the
Seller: the ▇▇▇▇ of Sale, the Letter Agreements, the Payment Notes and
the release, in the form attached hereto as Exhibit L (the "Transmedia
Release"), and shall deliver (x) to Potomac or its designee, cash in
the amount specified in Section 1.2(i) and (y) to Potomac, certificates
representing the Shares.
(iii) From and after the Closing Date,
Transmedia, as successor in interest to the Seller but on behalf of and
for the benefit of Transmedia, 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 Transmedia shall deem
advisable (including, without
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limitation, asserting any rights under any Assets or performing or
accepting performance under any agreements), and Transmedia shall
retain for its own account any amounts collected pursuant to the
foregoing, including any sums payable as interest in respect thereof.
1.4 Excluded Assets and Obligations.
(a) Notwithstanding anything in this Agreement
to the contrary, the following assets, properties and rights of the Seller (the
"Excluded Assets") shall be excluded from and shall not constitute Assets, and
Transmedia shall have no rights, title or interest in or to or duties or
obligations of any nature whatsoever with respect thereto by virtue of the
consummation of the transactions contemplated by this Agreement:
(i) Agreements. The rights of the
Seller in, to and under, and the obligations of the Seller under, all
contracts, agreements and leases of any nature, including the Letter
Agreements and the Seller's arrangement with Stoney Creek Dining Inc.,
other than the Assigned Agreements and the Rights-to-Receive.
(ii) Other Assets. All assets,
properties and rights owned, used or previously used by the Seller
other than the Assets, including, without limitation, all of the
Seller's tangible personal property (other than the Property and the
Processors) and cash and accounts receivables (other than with respect
to the Rights-to-Receive).
(iii) Litigation Claims. Any rights
(including indemnification) and claims and recoveries under litigation
of the Seller relating solely to the Excluded Assets described in
clauses (i) through (ii) of this Section 1.4.
(b) In connection with the sale, transfer,
assignment and delivery of the Assets pursuant to this Agreement, Transmedia
shall have no liability for, and shall not assume, any
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debt, liability or obligation of the Seller or any of its Affiliates
(collectively, the "Retained Liabilities") (other than with respect to the
unfunded portion of the Rights-to-Receive included in the Assets and the
Assigned Agreements, excluding, however, any claim, liability or obligation with
respect to any breach, default or failure by the Seller arising on or before the
Closing Date (collectively, the "Assumed Liabilities")).
1.5 Rights-to-Receive Adjustment. The Seller represents,
warrants and covenants to Transmedia that the balance sheet of the Seller as of
the end of the calendar month immediately preceding the Closing Date, and the
related statements of income and stockholders' equity and cash flow (the
"Closing Date Balance Sheet") to be delivered pursuant to Section 6.1(d) shall
reflect contractual rights-to-receive which have been purchased by the Seller
from restaurants which are members of the TRANSMEDIA network, currently accept
the TRANSMEDIA card, are then currently in operation and for which no bankruptcy
or liquidation proceedings (whether voluntary or involuntary) have been
commenced or, to the knowledge of the Seller, have been threatened to be
commenced, in either case prior to or on the Closing Date. The Seller and
Transmedia acknowledge and agree that Transmedia, though having completed some
due diligence, will not have completed its due diligence with respect to the
Rights-to-Receive prior to the Closing Date. No later than twenty (20) Business
Days following the Closing Date, Transmedia shall complete such due diligence.
Upon the completion of the due diligence with respect to the rights-to-receive
and the calculation of the Rights-to-Receive Amount, Transmedia shall provide
the Seller with a calculation indicating the valuation and aging of all
Rights-to-Receive as of the Closing Date (the "Data Sheet"). If Transmedia
determines that the value of the Rights-to-Receive Amount is less than
$1,850,000.00, effective as of the Closing, the principal amount of the Payment
Note having a term of two years
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shall be reduced by the full amount of the shortfall in the Rights-to-Receive
Amount. If Transmedia determines that the Rights-to-Receive Amount is greater
than $1,850,000.00, effective as of the Closing, the principal amount of the
Payment Note having a term of two years shall be increased by the full amount of
such difference.
1.6 Calculation of Number of Shares. The number of Shares
to be delivered to Seller pursuant to Section 1.2 shall be determined by
dividing (x) $1,500,000 by (y) the trailing average closing price of a share of
Common Stock on the New York Stock Exchange calculated over the ten trading days
immediately preceding June 29, 2000; provided, however, that in no event shall
Transmedia issue to the Seller more than 375,000 shares of Common Stock. If the
foregoing calculation would result in requiring more than 375,000 shares of
Common Stock to be issued, the cash value of such additional Shares (being the
product of (A) the price determined in (i) above and (B) such number of
additional Shares) shall be paid in cash or added to the principal of the
Payment Notes, as Transmedia, in its sole discretion, shall determine.
1.7 Further Assurances. If at any time after the Closing
it shall be determined that any further bills of sale, assignments, assurances
or any other actions or things are necessary or proper to vest, perfect or
confirm, of record or otherwise, in Transmedia, Transmedia Restaurant or any
designee of either its right, title or interest in, to or under any of the
Assets, acquired as a result of, or in connection with, the transactions
contemplated by this Agreement, or otherwise to carry out the purposes of this
Agreement, the Seller shall deliver to Transmedia such bills of sale,
assignments and assurances and take and do all such other actions and things, at
Transmedia's cost and expense, as may be necessary or proper to vest, perfect
or confirm any and all right, title and interest in, to and under the Assets
and the rights, properties or assets transferred hereby.
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1.8 Nonassignability. Anything contained in this
Agreement or any Additional Agreement to the contrary notwithstanding, neither
this Agreement nor any Additional Agreement shall constitute an assignment,
transfer, sublicense or sublease of or an agreement to assign, transfer,
sublicense or sublease any right, title or interest in, to or under any
contract, license, lease, commitment, sales order, purchase order or other
agreement or any claim or right to any benefit arising thereunder or resulting
therefrom, if an attempted assignment, transfer, sublicense or sublease
thereof, without the consent or waiver of a third party thereto would constitute
a breach thereof or a violation of any Law, or in any way adversely affect the
rights of the Seller, Transmedia or Transmedia Restaurant thereunder. In any
case to which the immediately preceding sentence applies, Transmedia shall, at
the request of the Seller and at the cost and for the account of the Seller,
cooperate and assist the Seller in the Seller's reasonable efforts to obtain
such consent. In the event and to the extent that the Seller and Transmedia are
unable to obtain any such required consent or waiver, the parties shall use all
commercially reasonable efforts to provide Transmedia or Transmedia Restaurant
the benefits of any such contract, license, commitment, sales order, purchase
order or other agreement included in the Assets (including executing and
delivering such further contracts or agreements between the Seller and
Transmedia or Transmedia Restaurant as are appropriate and necessary to provide
such benefits to Transmedia or Transmedia Restaurant; provided that no such
agreement or contract shall constitute an assignment); provided, that Transmedia
or Transmedia Restaurant, as applicable, shall undertake to pay or satisfy the
corresponding liabilities with respect to such Asset for the enjoyment of such
benefit to such Asset to the extent that Transmedia or Transmedia Restaurant,
as applicable, would have been responsible for such liabilities hereunder if
such consent, waiver or approval had been obtained.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 The Seller. The Seller and each of Bessalel, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, jointly and severally, each for his own benefit, represents and
warrants to Transmedia that, except as disclosed in a letter (the "Seller
Disclosure Letter") delivered by the Seller to Transmedia at the date of this
Agreement containing schedules (the "Schedules") specifically referencing the
particular representations and warranties to which such Schedules relate:
(a) Organization and Qualification. Spectrum is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Maryland, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted and is duly qualified, registered or licensed and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary, except such jurisdictions, if any, where the failure to
be so qualified would not have a material adverse effect on its business and
operations, taken as a whole. Seller does not own and has never held, directly
or indirectly, any other interest or any right to acquire any interest in
another corporation, partnership, trust, limited liability company, joint
venture or other domestic or foreign entity (each, a "Person") other than, in
the case of Spectrum, its general partner interest in Potomac, in which it is
the sole general partner, and which interest it holds free and clear of all
Liens. Potomac is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Maryland, has all requisite
partnership power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and is duly qualified,
registered or licensed
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and in good standing to do business in each jurisdiction in which the nature of
the business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, except such jurisdictions, if any, where the
failure to be so qualified would not have a material adverse effect on its
business and operations, taken as a whole. Schedule 2.1(a) of the Seller
Disclosure Letter lists each of the limited partners of Potomac, their mailing
addresses and their percentage interest in Potomac. Each limited partner of
Potomac listed on Schedule 2.1(a) of the Seller Disclosure Letter is the record
and beneficial owner of such interest and holds such interest free and clear of
all Liens. Seller has furnished to Transmedia complete and correct copies of (i)
the Certificate of Incorporation and the By-Laws of Spectrum and (ii) the
Certificate of Limited Partnership and the Agreement of Limited Partnership of
Potomac, in each case as amended or restated, as of the date hereof.
(b) Capitalization. The authorized, issued and
outstanding capital stock of Spectrum, and the holders thereof as of the date
hereof, are set forth in Schedule 2.1(b)(i) of the Seller Disclosure Letter.
Each of Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ is the record and beneficial owner of the
securities of Spectrum shown as owned by him in Schedule 2.1(b)(i) of the Seller
Disclosure Letter, free and clear of all Liens. No shares of Spectrum capital
stock are held in treasury or are reserved for any other purpose (including,
without limitation, for issuance pursuant to any options, warrants, debentures
or similar convertible security). All outstanding shares of Spectrum capital
stock are duly authorized, fully paid and non-assessable and were validly issued
free of any preemptive rights. Except as set forth in Schedule 2.1(b)(ii) of the
Seller Disclosure Letter, there are no options, warrants, or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of, or other equity interests in, Seller or obligating
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Seller to grant, issue, sell or register for sale any shares of the capital
stock of, or other equity interests in, Seller. There are no obligations,
contingent or otherwise, of Seller to (x) repurchase, redeem or otherwise
acquire any shares of capital stock, or the capital stock of, or other equity
interests in, Seller or (y) provide funds to, or make any investment in (in the
form of a loan, capital contribution or otherwise), or provide any guarantee
with respect to the obligations of, any other person or entity.
(c) Authority; Vote Required.
(i) The Seller has the requisite power
and authority to execute and deliver this Agreement and the Additional
Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Additional Agreements
by the Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate or partnership action on the part of Seller
(including approval by its Board of Directors, in the case of Spectrum,
and its partners, in the case of Potomac) and no other proceedings on
the part of the Seller are necessary to authorize this Agreement or the
Additional Agreements or to consummate the transactions contemplated
hereby and thereby. This Agreement and each of the Additional
Agreements has been duly executed and delivered by the Seller and,
assuming the due authorization, execution and delivery by each of the
other parties (other than Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇) hereto or
thereto, constitutes the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.
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(ii) Each of Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
has all legal right, power and capacity to execute and deliver and to
perform its obligations under this Agreement and each Additional
Agreement to which he is a party and to consummate the transactions
contemplated hereby and thereby. Each of this Agreement and each
Additional Agreement to which Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ is a party
has been duly executed and delivered by him and, assuming the due
authorization, execution and delivery by each of the other parties
(other than the Seller, Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇) hereto and
thereto, constitutes a legal, valid and binding obligation of each of
Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, enforceable against each of Bessalel,
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ in accordance with its terms.
(d) No Conflict; Required Filings and Consents.
(i) The execution, delivery and
performance of this Agreement and the Additional Agreements by the
Seller do not, and the consummation of the transactions contemplated
hereby and thereby will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of Spectrum or the Certificate
of Limited Partnership or Agreement of Limited Partnership of Potomac;
(ii) except as set forth in Schedule 2.1(d) of the Seller Disclosure
Letter, 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
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(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 described in
clause (iii) 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 (a "Material Adverse Effect").
(ii) The execution and delivery by each
of Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ of this Agreement and each Additional
Agreement to which he is a party do not, and the performance by each of
Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ of his obligations under this Agreement
and each Additional Agreement to which he is a party and the
consummation of the transactions contemplated hereby and thereby did
not, do not and will not: (A) conflict with or violate any Laws
applicable to either Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ or by which any of
their respective properties is bound or affected; or (B) 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 each of Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
mortgage, license, permit, franchise or other instrument or obligation
to which Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ is a party or by which he or any
of his properties is bound or affected; or (C) require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental authority or court or any other Person, by any of
Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇.
15
(iii) The execution, delivery and
performance of this Agreement and the Additional Agreements by the
Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby 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.
(e) 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 their
business pursuant to the Franchise Agreement and the Representative Agreement as
it is now being conducted in the Territory and at the Additional Restaurants
(the "Permits"), except for those Permits the failure of which to obtain or
maintain would not result in a Material Adverse Effect, and no suspension,
revocation or cancellation of any such Permits is pending, or to the knowledge
of the Seller, threatened. All such Permits are listed on Schedule 2.1(e) of the
Seller Disclosure Letter. The Seller and its Affiliates have not operated and
are not operating 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 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.
(f) Title to Assets. The Seller owns, free and
clear of any Liens, other than as set forth on Schedule 2.1(f) of the Seller
Disclosure Letter, and has full right to sell, assign and convey, all of the
Assets, and at the Closing will convey the Assets and good and marketable title
of the Assets to Transmedia (or its designee), free and clear of any Liens.
16
(g) Absence of Certain Changes or Events. Since
December 31, 1999: (i) the Seller has conducted its business only in the
ordinary and usual course and consistent with past practice; and (ii) to the
knowledge of the Seller, there has not incurred any act, omission, event or
occurrence on the part of or with respect to the Seller or any other Person,
which has had or could reasonably be expected to have a Material Adverse Effect.
(h) Absence of Litigation.
(i) Except as set forth on Schedule
2.1(h)(i) of the Seller Disclosure Letter, there is no claim, action,
suit, litigation, proceeding, arbitration or investigation of any kind
involving the Seller (or any Affiliate of the Seller) or any of the
Assets, the Franchise Agreement, the Representative Agreement or the
business conducted by the Seller pursuant to the Franchise Agreement,
the Representative Agreement or at the Additional Restaurants, at law
or in equity (including actions or proceedings seeking injunctive
relief), which are pending or, to the knowledge of the Seller, are
threatened. To the knowledge of the Seller, there are no circumstances
or set of facts or circumstances that could give rise to any such
claim, action, suit, litigation, proceeding, arbitration or
investigation. There is no action pending, or to the knowledge of the
Seller, threatened, seeking to enjoin or restrain or otherwise make it
imprudent to consummate any of the transactions contemplated by this
Agreement or the Additional Agreements. Neither the Seller nor, to its
knowledge, any of its officers, directors, stockholders, employees,
agents or representatives has any claims, actions, demands, causes of
action, liability or liabilities, suits, reckonings, obligations,
damages, judgments or executions of whatever kind or
17
character, whether in law, equity or otherwise and whether or not
presently known or unknown, against any Released Party (as defined in
the Release).
(ii) Neither Seller nor any of its
Affiliates are 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 Agreement, the Representative Agreement or
the business conducted by the Seller and its Affiliates pursuant to the
Franchise Agreement, the Representative Agreement or at the Additional
Restaurants.
(i) Contracts; No Default; Etc.
(i) Schedule 2.1(i) of the Seller
Disclosure Letter sets forth the Assigned Agreements 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
Assigned Agreements, together with all amendments, supplements and side
letters thereto, have been delivered to Transmedia for its review and
the material terms of all oral Assigned Agreements, if any, have been
disclosed to Transmedia.
(ii) Except as set forth in Exhibit P,
each Assigned Agreement and any liens or security interests securing
any Rights-to-Receive are valid, subsisting and enforceable, save only
that such enforceability may be affected by bankruptcy, insolvency,
18
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); provided, however,
that, except as otherwise expressly provided under this Agreement, no
warranty as to the financial capability of the other party thereto is
given. 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 Assigned Agreement. The Seller has not
received any written notice of a filing or proposed filing under any
bankruptcy, insolvency or other law for the relief of debtors by any
restaurant or other establishment whose Rights-to-Receive are included
among the Assets. The Seller has not agreed to impair, reduce,
compromise or cancel any such Rights-to-Receive.
(iii) Except as set forth in Exhibit P, no
restaurant or other establishment from which the Seller or any of its
Affiliates has purchased any Rights-to-Receive, 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.
(iv) The Seller has not made any loans or
advances (other than the Rights-to-Receive) to any restaurant or other
establishment in the Territory or to any Additional Restaurant.
(j) Disclosure. No representation or warranty
by the Seller, Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ in this Agreement or the Additional
Agreements and no statement contained in
19
the Seller Disclosure Letter or the Schedules thereto or any certificate
delivered by the Seller to Transmedia pursuant to this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit any
material fact necessary to make the statements herein or therein not misleading.
Copies of all documents which have been delivered or made available to
Transmedia are true, correct and complete copies thereof, and include all
amendments, supplements or modifications thereto or waivers thereunder.
(k) 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.
(l) Representations and Covenants with Respect
to the Shares and the Payment Notes.
(i) Potomac is an "accredited investor,"
as such term is defined in Rule 501(a) of Regulation D under the
Securities Act. Potomac understands that neither the Shares nor the
Payment Notes have been registered under the Securities Act or any
state securities laws by reason of exemptions from the registration
requirements of the Securities Act or any state securities laws which
depend upon, among other things, the accuracy of the representations
set forth in this Section 2.1(l). Potomac is familiar with the
provisions of Rule 144 under the Securities Act, which permits the
limited resale of restricted securities subject to the satisfaction of
certain conditions. Potomac (i) is the true party in interest and is
not acquiring any of the Shares or the Payment Notes for the benefit of
any other person or entity and (ii) is acquiring the Shares and the
Payment Notes for the purpose of investment
20
and not with a view to the resale or distribution of all or any part
thereof in violation of the Securities Act.
(ii) Potomac understands that none of the
Shares nor the Payment Notes have been registered under the Securities
Act or any state securities laws and cannot be sold, pledged or
otherwise disposed of or transferred without compliance with the
Securities Act and any applicable state securities laws.
(iii) The certificates evidencing the
Shares and the Payment Notes will bear a legend in substantially the
form set forth below:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR STATE
SECURITIES LAWS, AND NO TRANSFER OF THESE
SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR (B) PURSUANT TO AN EXEMPTION THEREFROM WITH
RESPECT TO WHICH THE COMPANY MAY REQUIRE AN
OPINION OF COUNSEL FROM THE HOLDER THAT SUCH
TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT."
Upon receipt by Transmedia of (i) such documentation as it deems
necessary and appropriate (including an opinion of counsel, with
counsel and such opinion being reasonably satisfactory to Transmedia)
to evidence that the foregoing legend may be removed from the
certificates evidencing the Shares and (ii) the certificates for the
Shares containing such legend, it shall issue to the holder of the
Shares new certificates for the Shares without such legends.
21
(iv) Potomac covenants that none of the
Shares issued to it nor the Payment Notes will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of
(each being a "Transfer"), except (i) pursuant to an effective
registration statement under the Securities Act, or (ii) unless such
requirement is waived by Transmedia, upon receipt by Transmedia of an
opinion of counsel to Potomac (which opinion and counsel are reasonably
satisfactory to Transmedia), to the effect that no registration
statement is required in connection with such Transfer because of the
availability of an exemption from registration under the Securities Act
and, in each case, after full compliance with all of the applicable
provisions of the Securities Act and the rules and regulations of the
SEC and all applicable state securities laws, rules and regulations.
2.2 Transmedia. Transmedia represents and warrants to the
Seller that, except as set forth in a letter (the "Transmedia Disclosure
Letter") delivered by Transmedia to the Seller at the date of this Agreement
containing Schedules specifically referencing the particular representations and
warranties to which such Schedules relate:
(a) Organization; Authority. Transmedia is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Transmedia has the requisite corporate power and
authority to execute and deliver this Agreement, the ▇▇▇▇ of Sale, the Letter
Agreements, the Payment Notes and the Transmedia Release, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement,
the ▇▇▇▇ of Sale, the Letter Agreements, the Payment Notes and the Transmedia
Release by Transmedia and the consummation by Transmedia of the transactions
contemplated hereby and thereby, have been duly authorized by all
22
necessary corporate action and no other corporate proceedings on the part of
Transmedia are necessary to authorize this Agreement, the ▇▇▇▇ of Sale, the
Letter Agreements, the Payment Notes or the Transmedia Release. This Agreement
and each of the ▇▇▇▇ of Sale, the Letter Agreements, the Payment Notes and the
Transmedia Release have been duly executed and delivered by Transmedia and,
assuming the due authorization, execution and delivery by each of the other
parties hereto or thereto, constitutes the legal, valid and binding obligations
of Transmedia.
(b) Shares. Upon issuance and sale at the
Closing in accordance with the terms hereof, the Shares will be duly authorized,
validly issued, fully paid and nonassessable and will not have been issued in
violation of any preemptive rights.
(c) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this
Agreement, the ▇▇▇▇ of Sale, the Letter Agreements, the Payment Notes
and the Transmedia Release by Transmedia does not, and the performance
thereof by it will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Transmedia, (ii) conflict with or violate
any Laws applicable to Transmedia 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 Transmedia pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Transmedia is a party or by which
Transmedia or any of its properties is bound or affected, the result of
which conflict, breach or default described in (ii) or (iii) would be
material and
23
adverse to the business, properties, condition (financial or
otherwise) or results of operations of Transmedia.
(ii) Except as set forth in Schedule
2.2(c)(ii) of the Transmedia Disclosure Schedule, the execution,
delivery and performance of this Agreement by Transmedia and the
consummation by it of the transactions contemplated hereby do not
require Transmedia to receive any consent, approval, authorization or
permit from, or make any filing with or notification to, any
governmental authority or any other Person.
(d) Absence of Litigation.
(i) There is no action pending, or to
the knowledge of Transmedia, threatened, seeking to enjoin or restrain
or otherwise materially adversely affect Transmedia's ability to
consummate any of the transactions contemplated by this Agreement.
(ii) Neither Transmedia 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 Transmedia, 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 Transmedia.
(e) 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 Transmedia or any of its Affiliates.
24
ARTICLE III
REGISTRATION
3.1 Shelf Registration. Transmedia shall prepare and file
and use its best efforts to have declared effective a Shelf Registration
Statement that shall include all Registrable Securities on any appropriate
form pursuant to Rule 415 under the Securities Act, and/or any similar rule
that may be adopted by the SEC, no later than one hundred twenty (120) days
from the date hereof (the "Registration Date"), which such Shelf Registration
Statements shall identify all of the Holders as potential re-sellers of the
Registrable Securities.. Transmedia shall use its best efforts to keep such
Shelf Registration continuously effective for such period following the date on
which the Shelf Registration is declared effective until the earlier of (x) all
such Registrable Securities have been disposed of in accordance with the
registration statement covering them, and (y) the Holders of Registrable
Securities may sell all of such shares pursuant to Rule 144 under the Securities
Act (the "Effective Period"). Transmedia shall pay all Registration Expenses in
connection with the Shelf Registration, whether or not it becomes effective.
Transmedia shall have no obligation to pay any underwriting discounts,
commissions or fees attributable to the sale of Registered Securities, which
expenses will be borne by all sellers of securities.
3.2 Postponement. Transmedia shall be entitled to
postpone for a reasonable period of time (but not exceeding the number of days
set forth in the next two sentences) (the "Postponement Period") the filing of
any Shelf Registration Statement required to be prepared and filed by it
pursuant to this Agreement if Transmedia determines, in its reasonable judgment,
that such registration and offering would materially and adversely interfere
with any financing, corporate reorganization or other material transaction or
development involving Transmedia or any subsidiary
25
or would require a premature disclosure thereof, and shall promptly give the
Holders of Registrable Securities written notice of such determination,
containing a general statement of the reasons for such postponement and an
approximation of the anticipated delay (which notice, in the event of a
postponement resulting from the registration by Transmedia of any of its common
equity securities under the Securities Act, shall be given to each holder of
Registrable Securities no later than two Business Days before the Registration
Date). In the event of a postponement resulting from the offer, sale or
distribution or registration under the Securities Act by Transmedia of any
common equity securities, the Postponement Period shall be 180 days. In the
event of a postponement for any other reason, the Postponement Period shall be
90 days.
3.3 Obligations of Transmedia. In connection with the
registration of the Registrable Securities pursuant to this Agreement,
Transmedia shall, as expeditiously and reasonably as possible:
(a) Prepare and file with the SEC the Shelf
Registration Statement with respect to such Registrable Securities and use its
reasonable efforts to cause such Shelf Registration Statement to become
effective on or before the Registration Date.
(b) During the Effective Period, prepare and
file with the SEC such amendments and supplements to such Shelf Registration
Statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of the Registrable Securities covered by such Shelf
Registration Statement.
(c) Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and
26
such other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities covered by the Shelf Registration
Statement owned by them.
(d) Use its best efforts to register and qualify
the securities covered by such Shelf Registration Statement under such other
securities or laws of such states or other jurisdictions within the United
States of America as shall be reasonably requested by the Holders, provided that
Transmedia shall not be required to qualify to do business, to file a general
consent to service of process or to subject itself to taxation in any such
states or jurisdictions where it is not so subject.
(e) Notify each Holder of Registrable Securities
covered by such Shelf Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event known to Transmedia as a result of which the prospectus
included in such registration statement, as then in effect, contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and then use its best efforts to
promptly correct such statement or omission. Notwithstanding the foregoing and
anything to the contrary set forth in this Section 3.3, each Holder acknowledges
that Transmedia shall have the right to suspend the use of the prospectus
forming a part of the Shelf Registration Statement if the offering would
interfere with a pending corporate transaction or for other reasons until such
time as an amendment to the Shelf Registration Statement has been filed by
Transmedia and declared effective by the SEC, or until such time as Transmedia
has filed an appropriate report with the SEC pursuant to the Exchange Act. Each
Holder hereby covenants that it will (a) keep any such notice strictly
confidential, and (b) not sell any shares of Common Stock pursuant to such
prospectus during
27
the period commencing at the time at which Transmedia gives the Holder notice of
the suspension of the use of such prospectus and ending at the time Transmedia
gives the Holder notice that it may thereafter effect sales pursuant to such
prospectus. Transmedia shall only be able to suspend the use of such prospectus
for periods aggregating no more than 90 days in respect of any registration.
(f) Use its reasonable best efforts to cause
counsel to Transmedia to deliver promptly to the transfer agent such opinions on
behalf of Transmedia as are customary so as to permit a Holder to sell the
Registrable Securities covered by the Shelf Registration Statement pursuant to
the registration effected by such Shelf Registration Statement.
3.4 Furnish Information. It shall be a condition
precedent to the obligations of Transmedia to take any action pursuant to this
Agreement with respect to the Registrable Securities of any Holder that such
Holder shall furnish to Transmedia such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities and as may be required from time to time to keep such
registration current in accordance with the terms hereof.
3.5 Indemnification. In the event any Registrable
Securities are included in the Shelf Registration Statement under this
Agreement:
(a) To the extent permitted by Law, Transmedia
will indemnify and hold harmless each Holder and their respective directors,
officers and each Person, if any, who controls such Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and such
controlling Person's directors, officers and general partners, against any
losses, claims, damages or liabilities (joint or several) (or actions with
respect thereto) to which any of the foregoing persons may become subject, under
the Securities Act, the Exchange Act or other federal or state
28
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus (but only if such statement is
not corrected in the final prospectus) contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, not misleading (but only if such omission is not corrected in the final
prospectus), or (iii) any violation or alleged violation by Transmedia in
connection with the registration of Registrable Securities under the Securities
Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law; and Transmedia will pay, as incurred, any legal or other expenses
reasonably incurred by any Person intended to be indemnified pursuant to this
Section 3.5(a) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 3.5(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Transmedia (which consent shall
not be unreasonably withheld), nor shall Transmedia be liable in any such case
or any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon written information furnished expressly for use
in connection with such registration by any such Holder or controlling person.
Each indemnified party shall furnish such information regarding itself or the
claim in question as an indemnifying party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
29
(b) To the extent permitted by Law, each Holder
will indemnify and hold harmless Transmedia and its employees, agents,
directors, officers, each other Holder and each Person, if any, who controls
Transmedia or other Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and such controlling Person's employees,
agents, directors, officers and general partners, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary Prospectus contained therein, or any amendment
or supplement thereto, if such statement or alleged statement or omission or
alleged omission was made about such Holder in reliance upon and in conformity
with written information furnished to Transmedia by or on behalf of such Holder,
specifically stating that it is for use in the preparation of such registration
statement; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any Person intended to be indemnified pursuant
to this Section 3.5(b) in connection with investigating or defending any such
loss, claim, damage, liability or action.
(c) The obligations of Transmedia and the
Holders under this Section 3.5 shall survive the completion of any offering of
Registrable Securities in a Shelf Registration Statement under this Agreement,
shall remain in full force and effect regardless of any investigation made by or
on behalf of Transmedia, or such Holder, as the case may be, or any of their
respective directors, officers, controlling Persons or general partners and
shall survive the transfer of such securities by such Holder. The obligations of
each Holder pursuant to this Section 3.5 are to be
30
several and not joint; provided, that, with respect to each claim pursuant to
this Section 3.5, each such Holder's maximum liability under this Section 3.5
shall be limited to an amount equal to the gross proceeds actually received by
such Holder from the sale of Registrable Securities being sold pursuant to such
registration statement or Prospectus by such Holder.
(d) Promptly after receipt by an indemnified
party under this Section 3.5 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section
3.5, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties. The failure to deliver written notice to
the indemnifying party within a reasonable time after the commencement of any
such action, if materially and actually prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 3.5 to the extent of such prejudice, but
the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 3.5. The indemnified party shall have the right, but not
the obligation, to participate in the defense of any action referred to above
through counsel of its own choosing and shall have the right, but not the
obligation, to assert any and all separate defenses, cross claims or
counterclaims which it may have, and the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of such
counsel has been specifically authorized in advance by the indemnifying party,
(ii) there is a conflict of interest that prevents counsel for the indemnifying
party
31
from adequately representing the interests of the indemnified party or there are
defenses available to the indemnified party that are different from, or
additional to, the defenses that are available to the indemnifying party, (iii)
the indemnifying party does not employ counsel that is reasonably satisfactory
to the indemnified party within a reasonable period of time, or (iv) the
indemnifying party fails to assume the defense or does not reasonably contest
such action in good faith, in which case, if the indemnified party notifies the
indemnifying party that it elects to employ separate counsel, the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party and the reasonable fees and expenses of such separate
counsel shall be borne by the indemnifying party.
3.6 Reports Under the Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
Transmedia to the public without registration or pursuant to a registration on
Form S-3, Transmedia agrees to:
(a) use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in
a timely manner all reports and other documents required under the Securities
Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request
(i) a written statement by Transmedia as to its compliance with the reporting
requirements of Rule 144, or as to whether it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (ii) a copy of the most recent
annual or quarterly report of Transmedia and such other reports and documents so
filed by Transmedia, and (iii) such other information (and Transmedia shall take
such action) as may be
32
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
3.7 No Assignment of Registration Rights. The rights to
cause Transmedia to register Registrable Securities pursuant to this Agreement
may not be assigned by Potomac.
ARTICLE IV
AGREEMENTS OF THE SELLER AND OTHERS
4.1 Ordinary Course of Business.
(a) For the period from the date hereof through
the Closing Date, and except as approved in writing by Transmedia, the Seller
covenants and agrees that it shall, and each of Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
covenants and agrees that it shall cause the Seller to:
(i) carry on its business in material
compliance with the Franchise Agreement and the Representative
Agreement in the ordinary course substantially in the manner carried on
as of the date hereof;
(ii) use its, and cause its Affiliates to
use their, commercially reasonable efforts to preserve for Transmedia
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;
(iii) not, and shall cause its Affiliates
not to, modify, impair, reduce, compromise or cancel any Asset or
amend, modify, terminate or extend any of the Assigned Agreements;
33
(iv) not, and shall cause its Affiliates
not to, sell, assign, transfer, or otherwise dispose of any Asset, or
subject any Asset to any Liens;
(v) 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
(vi) 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.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 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 Transmedia 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 Transmedia: (i) all
necessary consents to the assignment to Transmedia of the Assets and the
34
Assigned Agreements; and (ii) any other consents that Transmedia may reasonably
require. All such consents shall be in form and substance reasonably
satisfactory to Transmedia and its counsel.
5.2 Taxes. Transmedia shall pay all sales and other
transfer taxes arising as a result of the transfer of the Assets pursuant to
this Agreement and Potomac and Transmedia shall share equally all the costs of
amending the Financing Statements and assigning the security interests evidenced
thereby.
5.3 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 Transmedia 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 Agreement, the Representative Agreement, the business
conducted pursuant to the Franchise Agreement or the Representative Agreement in
the Territory or the Additional Restaurants or the Assigned Agreements or any
confidential or proprietary information relating to the business of the Seller
in the Territory; provided, that this Section 5.3 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,
in any legal proceeding arising between the Seller and Transmedia or its
Affiliates out of this Agreement, by applicable Laws, or which are requested by
Transmedia 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 5.3
and that Transmedia shall, whether or not it is
35
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 terms or
provisions.
(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 Transmedia or any of its Affiliates with any broader,
further or other remedy or protection than that provided herein.
5.4 Access to Information. Upon reasonable prior 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
Transmedia 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 the Assigned Agreements and, during such
period, the Seller shall (and shall cause its Affiliates to) furnish promptly to
Transmedia all other information concerning its business in the Territory and at
the Additional Restaurants, the Assets and the Assigned Agreements as Transmedia
may reasonably request. Unless otherwise required by law, Transmedia 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
Transmedia, and in the event of termination of this Agreement for any reason
Transmedia shall promptly return all nonpublic documents obtained from the
Seller or its affiliates, and any copies made of such documents, to the Seller.
5.5 Non-Competition.
(a) Each of Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇,
severally and not jointly and for his own account, and the Seller covenants
that, for the period commencing on the Closing Date
36
until the third anniversary of the Closing Date, except as otherwise approved in
writing by Transmedia, he or it and each of his or its respective Affiliates
(excluding any limited partners of Potomac listed on Schedule 2.1(a)) shall not,
either directly or indirectly, for himself or itself, or through, on behalf of,
or in conjunction with any Person, (i) own, maintain, engage in, advise,
finance, assist, or have any interest in, any business engaging, in whole or in
part, in providing discount dining or discount restaurant services, whether
through use of barter, trade credits, scrip or similar items, or printing,
selling, distributing or soliciting of a charge card for discount services and
activities or promoting a charge card or providing services the same or similar
to that sold, offered or provided through the TRANSMEDIA System (as defined in
the Franchise Agreement and including the Dining A La Card program) within the
Territory (or the Metropolitan Statistical Area (MSA), as that term is defined
by the United States Census, in which the Territory is located, whichever is
greater), within a radius of fifty miles of the Territory, within a radius of
fifty miles of the location of any other business using the TRANSMEDIA System
(as defined above), whether franchised or owned by Transmedia, or any such area
in which, within the twelve month period prior to the Closing Date, Transmedia
has taken significant affirmative steps to commence operations or (ii) interfere
with, or divert or attempt to divert from Transmedia and its subsidiaries,
licensees or franchises the benefits of, any relationship with employees,
agents, suppliers, restaurant clients, membership card holders or other
customers maintained by Transmedia and its subsidiaries, licensees or
franchisees.
(b) Each of Bessalel, Gorman, ▇▇▇▇▇▇▇ and the
Seller agrees that damages are an inadequate remedy for any breach of the terms
or provisions of this Section 5.5 and that each of Transmedia or any Person
shall, whether or not it is pursuing any potential remedies at law, be
37
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 term or provision of this Section 5.5 and to the
remedy of specific performance to restrain Bessalel, Gorman, ▇▇▇▇▇▇▇ or the
Seller from committing or continuing any such breach and to enforce Bessalel's,
Gorman's, ▇▇▇▇▇▇▇'▇ or the Seller's obligations hereunder.
(c) It is expressly understood and agreed that
although Transmedia and each of Bessalel, Gorman, ▇▇▇▇▇▇▇ and the Seller
consider the restrictions contained in Section 5.5(a) hereof to be reasonable
for the purpose of preserving the goodwill, proprietary rights and going concern
value of Transmedia and its subsidiaries, if a final judicial determination is
made by a court having jurisdiction that the time or territory or any other
restriction contained in Section 5.5(a) hereof is an unenforceable restriction
on Bessalel's, Gorman's, ▇▇▇▇▇▇▇'▇ or the Seller's activities, the provisions of
Section 5.5(a) hereof shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other extent with
respect to such Person, as applicable, as such court may judicially determine or
indicate to be reasonable. Alternatively, if the court referred to above finds
that any restriction contained in Section 5.5(a) hereof or any remedy provided
therein is unenforceable, and such restriction or remedy cannot be amended so as
to make it enforceable, such finding shall not affect the enforceability of any
of the other restrictions contained therein or the availability of any other
remedy with respect to such Person or any other party.
(d) 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 Transmedia or any of
38
it Affiliates or subsidiaries with any broader, further or other remedy or
protection than that provided herein.
(e) If any court or tribunal of competent
jurisdiction shall refuse to enforce any or all of the provisions of this
Section 5.5, 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, and shall be revised to the extent necessary to permit the
enforcement of such provisions.
5.6 NYSE Listing. Transmedia will use its best efforts
to list the Shares on the New York Stock Exchange by the Registration Date.
5.7 Allocation of Purchase Price. Attached hereto as
Exhibit M is a schedule setting forth an allocation of the purchase price paid
by Transmedia for the Assets (as specified in Section 1.2) for use in accordance
with all applicable Laws (the "Allocation Schedule"), which allocation was made
in accordance with section 1060 of the Internal Revenue Code of 1986, as
amended, and applicable regulations promulgated thereunder by the United States
Treasury. Each of the Seller and Transmedia shall (i) be bound by such
allocation set forth in the Allocation Schedule for purposes of determining any
taxes, (ii) prepare and file its tax returns on a basis consistent with the
allocation set forth in the Allocation Schedule and (iii) take no position that
is inconsistent with the allocation set forth on the Allocation Schedule on any
applicable tax return, in any proceeding before any taxing authority or
otherwise. In the event that the allocation set forth in the Allocation Schedule
is disputed by any taxing authority, the party receiving notice of the dispute
shall promptly notify the other party hereto concerning resolution of the
dispute.
39
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Transmedia. The
obligation of Transmedia 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 Transmedia
to the extent permitted by applicable Law:
(a) Representations and Warranties; Covenants.
The representations and warranties of the Seller, Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
set forth in this Agreement or in any certificate or document delivered pursuant
hereto shall be true and correct in all material respects (unless qualified by
materiality, in which case such representation and warranty shall be true and
correct in all respects) when made and on and as of the Closing Date, as if made
on such date, and the Seller, Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall have duly
performed and complied in all material respects with all of its agreements,
covenants, conditions and obligations contained in this Agreement. Transmedia
shall have received a certificate from the Seller dated the Closing Date signed
by the Chief Executive Officer of the Seller to the effect that the conditions
of this paragraph have been satisfied.
(b) Other Consents and Filings. All approvals
and consents of or filings with governmental authorities, and all 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 Transmedia.
(c) Documents of Transfer. All bills of sale,
instruments of transfer and assignment and other statements, instruments and
documents contemplated by Article I hereof shall
40
have been duly executed and delivered by the Seller, and the Seller shall have
furnished Transmedia with copies of all such items, and such other certificates
and documents as Transmedia 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.
(d) Closing Date Balance Sheet. Transmedia
shall have received the Closing Date Balance Sheet.
(e) Additional Agreements. Each of the
Additional Agreements shall have been duly executed and delivered by the Seller,
Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, and Transmedia shall have received evidence,
reasonably satisfactory to it, of the termination of the Loan Agreement and the
release by MLBFS of Transmedia under the Guaranty.
(f) Opinion of Counsel. Seller shall have
delivered to Transmedia an opinion of Wechsler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Chtd., dated
the Closing Date, to the effect set forth in Exhibit N.
(g) FIRPTA Certificate. Seller shall have
delivered to Transmedia a FIRPTA Certificate in the form attached hereto as
Exhibit O.
(h) 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.
6.2 Conditions to the Obligations of the Seller. The
obligation of the Seller to consummate the transactions contemplated hereby is
subject to the fulfillment at or prior to the
41
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:
(a) Representations and Warranties; Covenants.
The representations and warranties of Transmedia 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 Transmedia 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 Transmedia to the effect that the conditions of this
paragraph have been satisfied.
(b) 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.
(c) Documents of Transfer. The ▇▇▇▇ of Sale,
the Letter Agreements, the Payment Notes and the Transmedia Release shall have
been duly executed and delivered by Transmedia or Transmedia Restaurant, as
applicable.
(d) Other Consideration. At the Closing,
Transmedia shall have delivered to the Seller or its designee by wire transfer
of immediately available funds in an aggregate amount equal to the cash amount
listed in Section 1.2 and shall have delivered the Payment Notes and
certificates for the Shares.
42
(e) Absence of Litigation. No action shall be
pending seeking to enjoin or restrain or otherwise materially adversely affect
the Seller's ability to consummate any of the transactions contemplated by this
Agreement.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by the mutual consent of the Seller and
Transmedia, by action of their respective Boards of Directors (or other legally
binding authority of such party);
(b) by Transmedia if there has been a material
breach of any representation, warranty, covenant or agreement on the part of the
Seller set forth in this Agreement which breach has not been cured within five
Business Days following receipt by the Seller of notice of such breach, or by
either party 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; or
(c) by either Transmedia or the Seller if the
transactions contemplated hereby shall not have been consummated before July 30,
2000, provided that the party seeking to terminate this Agreement is not
otherwise in breach in any material respect of any of its obligations hereunder.
7.2 Effect of Termination. In the event of termination
of this Agreement by either Transmedia or the Seller as provided in Section 7.1,
this Agreement shall forthwith become void and
43
there shall be no liability or obligation on the part of Transmedia or the
Seller, or their respective officers or directors, except (y) with respect to
Sections 5.2, Article VIII (with respect to any claim for breach of the
representation in Sections 2.1(k) or 2.2(e)) and 10.1) 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 VIII
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
8.1 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, Bessalel, Gorman,
Transmedia or Transmedia Restaurant 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.
8.2 Indemnification Obligations. Subject to the terms and
conditions of this Article VIII, each of the Seller, Bessalel, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, jointly and severally, agrees to defend, indemnify and hold Transmedia,
Transmedia Restaurant and their respective officers, directors, agents,
attorneys, employees, representatives and other affiliates (collectively, the
"Transmedia Parties") harmless against any and all liabilities, losses, costs
and expenses including, without limitation, reasonable legal and other expenses
(collectively "Damages"), resulting from or relating to:
44
(a) any misrepresentation or breach of any
representation or warranty of the Seller, Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ contained
in this Agreement or in any Schedule or any certificate, written statement or
other document delivered by or on behalf of the Seller pursuant to this
Agreement;
(b) any breach of any covenant, agreement or
obligation of the Seller, Bessalel, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ contained in this
Agreement;
(c) any debt, liability or obligation of the
Seller or any of its Affiliates (other than with respect to the unfunded portion
of the Rights-to-Receive included in the Assets and the Assigned Agreements,
excluding, however, any claim, liability or obligation with respect to any
breach, default or failure by the Seller arising on or before the Closing Date);
(d) 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;
(e) the Retained Liabilities; and
(f) 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 each of the
Seller, Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, severally and not jointly, shall be liable
for any damages arising out of their respective, or any of their respective
Affiliates', breach of the covenants set forth in Section 5.5.
8.3 Transmedia's Indemnification Obligations. Subject to
the terms and conditions of this Article VIII, Transmedia agrees to defend,
indemnify and hold Spectrum, Potomac and each of their respective officers,
directors, agents, attorneys, employees and representatives
45
(collectively, the "Seller Parties") harmless against any and all Damages
resulting from or relating to:
(a) any misrepresentation or breach of any
representation or warranty of Transmedia or Transmedia Restaurant contained in
this Agreement or any certificate, written statement or other document delivered
by or on behalf of Transmedia or Transmedia Restaurant pursuant to this
Agreement;
(b) any breach of any covenant, agreement or
obligation of Transmedia contained in this Agreement;
(c) the ownership, use and operation of the
Assets by Transmedia after the Closing Date;
(d) the Assumed Liabilities; and
(e) any and all actions, suits, demands,
assessments or judgments with respect to any claim arising out of or relating to
the subject matter of indemnification.
8.4 Claims for Indemnification; Defense of Indemnified
Claims; Limitations on Indemnification.
(a) 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
46
such notice shall not constitute a waiver of the right to indemnification
hereunder unless the Indemnifying Party is prejudiced in an actual and 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 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.
(b) No amounts of indemnity shall be payable as
a result of a claim under Section 8.2 (other than a claim with respect to a
misrepresentation or breach of Section 2.1(a), (b), (c), (d), (f), (i), (k) or
(j) (as it relates to such Sections), Section 5.5 or Section 8.2(c), (d) or
(e)), unless and until the Transmedia Parties have suffered, incurred or
sustained Damages with respect to claims hereunder in excess of $25,000.00, and
then indemnity shall be payable for the amount of all Damages sustained by the
Transmedia Parties. In no event, however, shall the Seller, Bessalel, ▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ be liable for an amount in excess of $5,600,000.00, in the aggregate,
for Damages under Section 8.2 (other than a claim with respect to a
misrepresentation or breach of
47
Section 2.1(a), (b), (c), (d), (f), (i), (k) or (j) (as it relates to such
Sections), Section 5.5 or Section 8.2(c), (d) or (e)).
(c) No amounts of indemnity shall be payable as
a result of a claim under Section 8.3 (other than a claim of a breach of Section
8.3(d)) unless and until the Seller Parties have suffered, incurred or sustained
Damages with respect to claims hereunder in excess of $25,000.00, and then
indemnity shall be payable for the amount of all Damages sustained by the Seller
Parties. In no event, however, shall Transmedia be liable for an amount in
excess of $3,500,000.00, in the aggregate, for Damages under Section 8.3 (other
than a claim of a breach of Section 8.3(d)).
(d) 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.
8.5 Set-Off. If from time to time and at any time
Transmedia shall be entitled to be paid any amount under the provisions of this
Agreement, including this Article VIII, Transmedia shall be entitled, if it so
elects, to set-off such amount against any other amounts due to the Seller from
Transmedia or any of its Affiliates, including, without limitation, the Payment
Notes. Such right of set-off shall be in addition to and not in substitution of
any other rights Transmedia shall be entitled to under the provisions of this
Article VIII or otherwise.
48
ARTICLE IX
DEFINITIONS
9.1 As used in this Agreement, the following defined
terms shall have the meanings indicated below:
"Additional Agreements" mean the ▇▇▇▇ of Sale, the
Letter Agreements, the Power of Attorney, the Release, the Payment Notes and the
Stockholder Releases.
"Additional Restaurants" has the meaning assigned to
it in Section 1.1(a).
"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 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.
"Additional Restaurants" has the meaning assigned to
it in Section 1.1(a).
"Agreement" has the meaning set forth in the preamble
hereto.
"Allocation Schedule" has the meaning assigned to it
in Section 5.7.
"Assets" has the meaning assigned to it in Section
1.1(a).
"Assigned Agreement" has the meaning assigned to it
in Section 1.1(a).
"Assumed Liabilities" has the meaning assigned to it
in Section 1.4(b).
"Bessalel" has the meaning set forth in the recitals
hereto.
49
"▇▇▇▇ of Sale" has the meaning assigned to it in
Section 1.1(a).
"Business Day" means a calendar day other than a
Saturday, Sunday or any other day on which banks located in the State of New
York, the State of Florida or the State of Maryland are authorized or obligated
to be closed.
"Closing" has the meaning assigned to it in Section
1.3(a).
"Closing Date" has the meaning assigned to it in
Section 1.3(a).
"Closing Date Balance Sheet" has the meaning assigned
to it in Section 1.5.
"Common Stock" means the common stock, par value $
0.02 per share, of Transmedia, any securities into which such Common Stock shall
have been changed, and all other securities of any class or classes (however
designated) of Transmedia, the holders of which have the right, without
limitation as to amount, after payment on any securities entitled to a
preference on dividends or other distributions upon any dissolution, liquidation
or winding-up, either to all or to a share of the balance of payments upon such
dissolution, liquidation or winding-up.
"Damages" has the meaning assigned to it in
Section 8.2.
"Data Sheet" has the meaning assigned to it in
Section 1.5.
"Effective Period" has the meaning assigned to it in
Section 3.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder.
"Excluded Assets" has the meaning assigned to it in
Section 1.4(a).
"Financing Statements" has the meaning assigned to it
in Section 2.1(i)(i).
"Franchise Agreement" has the meaning set forth in
the recitals hereto.
"▇▇▇▇▇▇" has the meaning set forth in the recitals
hereto.
50
"Guaranty" has the meaning set forth in the recitals
hereto.
"Holder" means any (i) recipient (including all the
appropriate general and limited partners of Spectrum as set forth in Schedule
2.1(a) of the Seller Disclosure Letter) of the Shares issued as consideration
under Section 1.2 hereof and (ii) recipient (including all the appropriate
general and limited partners of Spectrum as set forth in Schedule 2.1(a) of the
Seller Disclosure Letter) of the Common Stock issued upon conversion of all or
any part of the Payment Notes in accordance with the terms thereof.
"Indemnified Party" has the meaning assigned to it in
Section 8.4(a).
"Indemnifying Party" has the meaning assigned to it
in Section 8.4(a).
"Knowledge" means the knowledge of Bessalel, ▇▇▇▇▇▇
or ▇▇▇▇▇▇▇, on his own behalf and/or on behalf of the Seller as a senior officer
or director, as such knowledge has been or reasonably should have been obtained
in the conduct of the business of the Seller.
"Laws" has the meaning assigned to it in Section
2.1(d)(i).
"Letter Agreements" has the meaning assigned to it in
Section 1.1(b).
"Liens" has the meaning assigned to it in Section
1.1(a).
"Loan Agreement" has the meaning set forth in the
recitals hereto.
"Material Adverse Effect" has the meaning assigned to
it in Section 2.1(d)(i).
"MLBFS" has the meaning set forth in the recitals
hereto.
"Original Franchisees" has the meaning set forth in
the recitals hereto.
"Payment Notes" has the meaning assigned to it in
Section 1.1(b).
"Permits" has the meaning assigned to it in
Section 2.1(e).
"Person" has the meaning assigned to it in
Section 2.1(a).
51
"Postponement Period" has the meaning assigned to it
in Section 3.2.
"Potomac" has the meaning set forth in the preamble
hereto.
"Power of Attorney" has the meaning assigned to it in
Section 1.1(b).
"Processors" has the meaning assigned to it in
Section 1.1(a).
"Property" has the meaning assigned to it in Section
1.1(a).
"Release" has the meaning assigned to it in Section
1.1(b).
"Register," "Registered" and "Registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act.
"Registrable Securities" means the Shares issued as
consideration under Section 1.2 hereof and the Common Stock issued upon
conversion of all or any part of the Payment Notes in accordance with the terms
thereof. As to any particular Registrable Securities, such securities will cease
to be Registrable Securities when they have been (x) effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them or (y) transferable pursuant to Rule 144 (or any similar
rule then in force) under the Securities Act or otherwise transferred and, in
each case, new certificates for them not bearing a restrictive Securities Act
legend have been delivered by Transmedia and they can be sold without complying
with the registration requirements of the Securities Act.
"Registration Date" has the meaning assigned to it in
Section 3.1.
"Registration Expenses" as used in this Agreement
shall mean all expenses incident to registration and disposition of the
Registration Securities pursuant to this Agreement, including, without
limitation, all registration, filing and applicable national securities exchange
listing and National Association of Securities Dealers, Inc. fees, all fees and
expenses of complying
52
with state securities or blue sky laws (including reasonable fees and
disbursements of counsel to the underwriters in connection with "blue sky"
qualification of the Registrable Securities under the laws of the various
jurisdictions), all duplicating and printing expenses, all messenger and
delivery expenses, and the fees and disbursements of counsel for Transmedia and
of its independent public accountants. Registration Expenses shall not include
underwriters' and brokers' expenses and underwriting and brokerage fees,
discounts and commissions in respect of the Registrable Securities being
registered, transfer taxes or the fees and expenses of counsel to the holders of
Registrable Securities.
"Release" has the meaning assigned to it in
Section 1.1(b).
"Representative Agreement" has the meaning set forth
in the recitals hereto.
"Retained Liabilities" has the meaning assigned to it
in Section 1.4(b).
"Rights-to-Receive" has the meaning assigned to it in
Section 1.1(a).
"Rights-to-Receive Amount" means an amount equal to
the cash or equivalent consideration funded by the Seller for Rights-to-Receive,
net of usage and adjustments, as reported on the balance sheet data prepared by
Transmedia in the normal course of business as of the Business Day immediately
preceding the Closing Date with restaurants and other establishments in the
Territory and the Additional Restaurants, calculated in accordance with Exhibit
P attached hereto.
"▇▇▇▇▇▇▇" has the meaning set forth in the preamble
hereto.
"Rule 144" means Rule 144 (or any successor rule to
similar effect) promulgated under the Securities Act.
"Schedules" has the meaning assigned to it in
Section 2.1.
"SEC" means the Securities and Exchange Commission.
53
"Securities Act" means the Securities Act of 1933,
as amended, and the rules and regulations thereunder.
"Seller Disclosure Letter" has the meaning assigned
to it in Section 2.1.
"Seller" has the meaning set forth in the preamble
hereto.
"Seller Parties" has the meaning assigned to it in
Section 8.3.
"Shares" has the meaning assigned to it in
Section 1.2.
"Shelf Registration Statement" means a registration
statement intended to effect a shelf registration pursuant to Rule 415
promulgated under the Securities Act.
"Spectrum" has the meaning set forth in the preamble
hereto.
"Stockholder Releases" means the releases, in the
form of Exhibit I attached hereto, to be delivered by Bessalel, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇.
"Territory" has the meaning assigned to it in the
Franchise Agreement.
"Transfer" has the meaning assigned to it in Section
2.1(iv).
"Transmedia" has the meaning assigned to it in the
preamble hereto.
"Transmedia Disclosure Letter" has the meaning
assigned to it in Section 2.2.
"Transmedia Parties" has the meaning assigned to it
in Section 8.2.
"Transmedia Release" has the meaning assigned to it
in Section 1.3(b)(ii).
"Transmedia Restaurant" has the meaning assigned to
it in Section 1.1(a).
54
ARTICLE X
MISCELLANEOUS; GENERAL
10.1 Fees and Expenses. Except as otherwise specified
herein, each party hereto shall pay its own expenses incident to preparing,
entering into or carrying out this Agreement and the consummation of the
transactions contemplated hereby.
10.2 Modification or Amendment. This Agreement
constitutes the entire understanding among the parties relating to the subject
matter hereof, and no modification, amendment or waiver of any provision of
this Agreement will be effective against any party hereto, unless such
modification, amendment or waiver is approved in writing by such party. The
failure of any party to enforce any of the provisions of this Agreement will in
no way be construed as a waiver of such provisions and will not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
10.3 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.
10.4 Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counterparts (each
being an original or facsimile), and each such counterpart being deemed to be
an original instrument, and all such counterparts shall together constitute the
same agreement.
10.5 Governing Law; Forum; Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Maryland applicable to a contract executed and performed in such State
without giving effect to the principles of conflict of laws which would apply
the Law of any state other than the State of Maryland. Each of the Seller,
55
Transmedia, Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ hereby irrevocably and unconditionally
(i) consents to submit to the jurisdiction of the courts of New York County, New
York (state or federal) 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) to the extent such party is not a resident of the
State of New York, agrees to accept service of legal process by registered mail
at the address specified in Section 10.7 in any such proceeding against such
party with the same legal force and validity as if served upon such party
personally within the State of New York and to notify promptly each other party
hereto of any change of address for such service of process from the address
contained in Section 10.7, (iii) waives any objection to the laying of venue of
any such proceeding in the courts of New York County, New York (state or
federal), and (iv) waives, and agrees not to plead or to make, any claim that
any such proceeding brought in any court of New York County, New York (state or
federal) has been brought in an improper or otherwise inconvenient forum.
10.6 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT.
10.7 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally, mailed by certified or registered mail, return
receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
56
If to the Seller:
Potomac Dining Limited Partnership
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
Wechsler, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, Chtd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: H. ▇▇▇▇ ▇▇▇▇▇, Esq.
If to Transmedia:
Transmedia Network Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Bessalel:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇▇:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
57
If to ▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇/▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided, that the failure to delivery copies of notices as indicated above
shall not affect the validity of any notice. Any such communication shall be
deemed to have been received (i) when delivered, if personally delivered, or
sent by nationally-recognized overnight courier or sent via facsimile (with
confirmation of receipt) or (ii) on the third Business Day following the date on
which the piece of mail containing such communication is posted, if sent by
certified or registered mail.
10.8 Disclosure Letter and Exhibits; Entire Agreement.
The 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.
10.9 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.
Transmedia 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
Transmedia, but in such event Transmedia shall remain, and the assignee shall
be, fully liable for the performance
58
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.
10.10 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.
10.11 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.
10.12 Publicity. During the period through the Closing
Date, Transmedia, the Seller Bessalel, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ 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.
10.13 No Third Party Beneficiaries. This Agreement has
been made for the sole benefit of Transmedia 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 Transmedia or the Seller, except as otherwise specifically provided
herein.
[Signature page to follow]
59
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
hereinabove written.
TRANSMEDIA NETWORK INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
SPECTRUM PARTNERS, INC.
By:
------------------------------------
Name:
Title:
POTOMAC DINING LIMITED PARTNERSHIP
By: SPECTRUM PARTNERS, INC.
General Partner
By:
------------------------------------
Name:
Title:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇