EXHIBIT 10.3
SERVICES COLLABORATION AGREEMENT
SERVICES COLLABORATION AGREEMENT ("Agreement") is made as of the 30th
day of June, 1999, between Transmedia Network Inc., a Delaware corporation
("Transmedia"), and SignatureCard, Inc., an Indiana corporation ("Signature").
WHEREAS, Transmedia operates a membership program under the
"Transmedia" trade name and service xxxx and, as of the date hereof, has
acquired certain assets of Signature related to a similar membership program
which Signature formerly operated under the Dining a la Card trade name and
service xxxx;
WHEREAS, Signature has retained certain marketing partner relationships
pertaining to the DALC Program, and wishes to (i) continue to promote and market
the DALC Program to existing DALC Members acquired from such relationships, (ii)
acquire new DALC Members pursuant to such relationships, and (iii) develop new
marketing partner relationships;
WHEREAS, each party has determined that it is advisable that (i)
Signature conduct marketing and promotional programs, and seek to enter into
marketing partner relationships, to acquire DALC Members in the United States of
America, and (ii) Transmedia generally manage the DALC Program, including
performing certain DALC Member services and managing the Merchant network, all
on the terms and subject to the conditions prescribed herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
GENERAL
1.1 Capitalized terms used in this Agreement have the respective
meanings set forth in Schedule I hereto.
1.2 This Agreement shall be effective as of the date first written
above and thereafter shall remain in full force and effect until terminated in
accordance with Article XI hereof.
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ARTICLE II
SERVICES COMMITTEE
2.1 Services Committee. Promptly following the execution and delivery
of this Agreement, the parties shall establish a Services Committee (the
"Services Committee"). The Services Committee shall consist of two members, one
of whom shall be the Chief Executive Officer or other designee of Transmedia
reasonably acceptable to Signature and one of whom shall be the Signature senior
executive primarily responsible for the DALC Program or other designee of
Signature reasonably acceptable to Transmedia (such acceptance, in each case,
not to be unreasonably withheld). The Services Committee shall act as the
committee for strategic initiatives and major operational issues relating to the
Operating Guidelines and the Economic Covenants (each, as hereinafter defined),
and shall review, among other things, the performance of the parties hereunder,
including adherence by the parties to the Operating Guidelines and compliance by
the parties with the Economic Covenants. The Services Committee otherwise shall
review strategies designed to enhance and market the DALC Program and to
maximize the fees and revenue therefrom. Each party shall designate its member
to the Services Committee and shall notify the other party in writing each time
it proposes to permanently replace its member and appoint a new designated
member, but shall not permanently replace its member and appoint a new
designated member without the prior written consent of the other party (which
consent shall not be unreasonably withheld).
2.2 Meetings. The Services Committee shall meet at such times and
places as it may elect but in any event, not less than once each calendar
quarter. The Services Committee may meet in person or by telephonic or video
conference, and either member may call such a meeting. All costs of
participation by each member in the activities of the Services Committee shall
be borne by the party appointing such member.
2.3 Specific Responsibilities of the Services Committee. The
responsibilities of the Services Committee shall, with respect to the promotion
and marketing of the DALC Program, include, but not be limited to:
(a) review or development of new marketing and promotional strategies;
(b) review of all new marketing partner contracts;
(c) review of design and uses of advertising, marketing, promotional
and solicitation materials and selection and use of all media;
(d) review and oversight of adherence by the parties to the Operating
Guidelines and, where appropriate, recommending corrective action;
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(e) evaluation and approval of proposals by a party desiring to enter
into a marketing partner contract or other arrangement contrary to the
requirements of the Operating Guidelines and the Economic Covenants and, if
appropriate, enforce payment of the Make-Whole Amount pursuant to Article VII
hereof;
(f) review of and, if appropriate, adjustment to, the Operating
Guidelines and Economic Covenants on a periodic basis; and
(g) review of, and determination with respect to, proposals to close a
market.
It is expressly acknowledged that the responsibilities of the Services Committee
shall be limited to issues relating solely to the DALC Program as operated by
the parties in accordance with the terms hereof, and the Services Committee
shall have no jurisdiction over matters that relate to, arise out of or are in
connection with the respective businesses of the parties hereto other than the
DALC Program. The parties shall notify their respective employees and their
respective Affiliates who perform services in connection with this Agreement of
this limitation and shall require them to abide by its terms.
2.4 Voting. Each member of the Services Committee shall have one vote
on all matters and the Services Committee shall act by the unanimous vote of its
members. If the Services Committee is unable to obtain the required vote to
approve, or take other action on, any matter requiring a vote, or if any member
wishes to contest a deadlock, then the matter may be settled in accordance with
the provisions of Section 14.4 hereof, and any requirement for approval by the
Services Committee under this Agreement shall be satisfied by action in
accordance with such Section.
ARTICLE III
ROLES AND RESPONSIBILITIES OF THE PARTIES
3.1 Signature Responsibilities.
(a) Signature shall perform the marketing and promotional functions
described in this Section 3.1 in connection with the DALC Program with respect
to Signature DALC Members only, in accordance with the terms of this Agreement.
The goals of Signature's marketing and promotional functions are to generate
new, active members for the DALC Program and to induce members of the DALC
Program, where applicable, to renew their memberships annually and to be active
members of the DALC Program.
(b) Signature, in conjunction with Transmedia shall, at Signature's
expense:
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(i) develop a promotional and marketing strategy
to be implemented by Signature with respect
to the Signature DALC Members for the DALC
Program (including, without limitation, at
Signature's discretion, developing and
implementing programs and strategies to
stimulate utilization by inactive and low
usage DALC Members);
(ii) prepare a plan for the marketing and
promotion of the DALC Program in advance of
each calendar year, update and modify the
same during each calendar year and provide
to Transmedia periodic reports of the DALC
Program's performance measured against such
plan;
(iii) maintain and expand Exclusive DALC Sponsor
Relationships and relationships with other
DALC Sponsors existing on the date hereof
and develop and initiate new Exclusive DALC
Sponsor Relationships and relationships with
other DALC Sponsors in addition to those in
existence on the date hereof, all in
accordance with the marketing and promotion
plan prepared pursuant to Section
3.1(b)(ii);
(iv) develop advertising and promotional
materials to be used by Signature to support
the DALC Program;
(v) select the print and broadcast media to be
used by Signature in marketing and promoting
the DALC Program; and
(vi) perform such other functions as Signature
and Transmedia may agree are appropriate to
Signature's marketing and promoting the DALC
Program to the Signature DALC Members.
(c) In addition to the responsibilities set forth in paragraph (b)
above, Signature shall, in connection with Exclusive DALC Sponsor Relationships
existing on the date hereof or entered into in accordance with the terms hereof,
pay for all airline miles purchased thereunder and Transmedia shall reimburse
Signature for the same within ten business days following Transmedia's receipt
from Signature of Signature's "Request for Distribution" or other documentation
substantiating the amount paid. The amounts for which Transmedia is required to
reimburse Signature under this Section 3.1(c) shall not be subject to set off
against any amounts owed or alleged to be owed by Signature to Transmedia under
this Agreement or any other agreement between the parties.
(d) Marketing activities which may be undertaken by Signature under
this Agreement may include, among other things:
(i) preparation and mailing of solicitation
materials;
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(ii) telemarketing;
(iii) advertising, including via radio,
television, newspapers, magazines and other
print media, internet or other electronic
media and other appropriate venues; and
(iv) conducting DALC Member surveys and marketing
tests;
provided, however, that Transmedia shall have the right to approve the form and
content of any of the foregoing activities or materials solely for the purpose
of (x) ensuring that the statements contained therein are accurate, and (y)
protecting the value of the DALC Intellectual Property or the Transmedia
Intellectual Property and the reputation of the DALC Program; provided, further,
that such approval shall not be unreasonably withheld.
3.2 Transmedia Responsibilities.
(a) Transmedia shall have charge of the day-to-day management and
operations of the DALC Program. Transmedia's responsibilities will include, but
not be limited to:
(i) making all Transmedia personnel decisions
(including those personnel who have
responsibility for the DALC Program);
(ii) approval of all non-employee sales personnel
engaged by Signature to perform marketing or
promotional services hereunder;
(iii) review of all product offerings proposed by
Signature in connection with the DALC
Program and all descriptions, solicitations,
advertising copy or other marketing and
promotional materials proposed for use in
connection therewith;
(iv) approval of all DALC Sponsor contracts
entered into after the date hereof whose
term extends beyond three years;
(v) approval of all DALC Sponsor contracts
entered into after the date hereof which
would preclude Transmedia from collecting
Fee Income, if any, from DALC Members
acquired pursuant thereto;
(vi) provision of membership benefits to all DALC
Members;
(vii) provision of customer service, including
fulfillment, preparation and distribution of
directories, preparation and distribution of
DALC Member statements, issuance of rebate
checks and airline miles, if applicable, and
responding to consumer complaints or
inquiries;
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(viii) collection of Fee Income from DALC Members
(except to the extent otherwise provided in
a contract between Signature and a DALC
Sponsor in existence on the date hereof or
approved by Transmedia in accordance with
paragraph (v) above) and Rights-to-Receive
from Merchants;
(ix) communication with Merchants (including
development of collateral sales materials
and periodic Merchant reporting);
(x) management of Merchant processing partner
relationships;
(xi) technological functions, including
maintenance and management of databases,
software programs and the like;
(xii) communication with regulatory authorities
concerning provision of membership benefits
and advertising, marketing and promotional
materials; provided, however, that to the
extent such materials relate to the
responsibilities and obligations of
Signature hereunder, Signature and
Transmedia shall jointly communicate with
regulatory authorities;
(xiii) maintain, update and program interfaces onto
the websites associated with the DALC
Program (including, without limitation, such
information with respect to arrangements
with DALC Sponsors and links to websites of
such DALC Sponsors as Signature reasonably
requests from time to time);
(xiv) provision to Signature (either through
electronic access or other reasonable means)
of such data and information relating to the
DALC Program as may, from time to time, be
required by the terms of any DALC Sponsor
contract existing on the date hereof or
hereafter entered into in accordance with
the terms hereof and such other data and
information as the parties may reasonably
agree; and
(xv) subject to Signature's areas of
responsibility and obligations as described
herein, each other function, duty or service
(other than those expressly undertaken by
the Services Committee under Section 2.3
hereof), the performance of which is deemed
by Transmedia in its sole discretion to be
necessary or advisable in operating the DALC
Program.
(b) Notwithstanding the provisions of Section 3.1 and of paragraph (a)
of this Section 3.2, it is expressly understood and agreed that Transmedia
and/or its Affiliates may, in its sole
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discretion, undertake to perform, with respect to any DALC Member other than a
Signature DALC Member, any of the functions required to be performed by
Signature with respect to Signature DALC Members hereunder. Any such activity
undertaken by Transmedia shall not be subject to the terms of this Agreement and
Signature shall have no obligations with respect to such DALC Members.
ARTICLE IV
MARKETING AND PROMOTION; EXPENSES;
LICENSE OF INTELLECTUAL PROPERTY
4.1 Marketing Efforts. During the term of this Agreement, Signature
agrees that it shall (and shall cause its successor to) maintain marketing and
sales personnel capable of performing its obligations hereunder, and shall be
solely responsible for the hiring, compensation, management and evaluation of
such personnel.
4.2 Advertising and Promotional Materials. All marketing, advertising,
and promotional materials (including, without limitation, any and all
telemarketing scripts) for Signature's marketing of the DALC Program shall
comply with all applicable laws and regulations and shall be submitted to and
subject to approval by Transmedia as provided herein prior to the use thereof;
provided that such approval shall not be unreasonably withheld. Signature and
Transmedia shall advise one another of customer and Merchant reactions to the
marketing and promotional materials they use. All such materials shall include,
in a location and in a manner which can easily be seen and read, the following
notice: "The Dining A La Card(R) program and trademark are the property of
Transmedia Network Inc., used under license by SignatureCard, Inc." As permitted
by applicable laws and regulations, all documentary information, promotional
materials and media presentations (where practical) promoting the DALC Program
shall display the trade names, trademarks, service marks, logos and trade dress
thereof in a manner consistent with the past practices of the parties.
4.3 Expenses. Signature shall bear the expense for the preparation of
all solicitation materials and all marketing, advertising and promotional
expenses it incurs in marketing and promoting the DALC Program to the Signature
DALC Members. Except to the extent costs and expenses are deducted from revenues
in accordance with the definition of "Profit" as set forth in Schedule I,
Transmedia shall bear the expense for its performance hereunder.
4.4 Membership Applications. Signature shall cause all applications for
membership in the DALC Program generated by Signature's performing of marketing
and promotional functions to be transmitted directly to Transmedia for its
review.
4.5 Membership Data. Transmedia shall maintain appropriate records
identifying (i) which persons are DALC Members on the date hereof as set forth
on a computer disc delivered to Transmedia pursuant to Section 3.1(k) of the
Asset Purchase Agreement, (ii) which persons are
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DALC Members on the date hereof pursuant to an Excluded Contract (as defined in
the Asset Purchase Agreement) as set forth on a computer disc delivered to
Transmedia pursuant to Section 6.3 hereof, and (iii) which persons become DALC
Members after the date hereof as a result of Signature's marketing and
promotional efforts hereunder; it being understood and agreed that the DALC
Members identified in clauses (i) through (iii) of this sentence are the only
DALC Members Transmedia shall be obligated to service under this Agreement.
4.6 Licenses of Intellectual Property. Pursuant to the terms of the
License Agreement and the Software License Agreement by and between Transmedia
and Signature of even date herewith (together, the "License Agreements"),
Transmedia shall grant to Signature (a) a non-exclusive license to use the DALC
Intellectual Property and an exclusive license to use the "Earn Meals for Your
Miles" service xxxx, in each case for the sole purpose of performing marketing
and promotional functions with respect to the DALC Program as contemplated by
this Agreement during the term hereof, (b) a non-exclusive license to use, and
prepare derivative works of, any advertising copy prepared by Signature under
this Agreement, for use only in connection with Signature's other non-dining
programs, and (c) a royalty-free, perpetual, non-exclusive license to use the
Data Merchant System solely for the purposes set forth in the Software License
Agreement.
4.7 No Rights by Implication. Except as specifically provided herein or
in the License Agreement, no rights or licenses with respect to the DALC
Intellectual Property, other technical information or other proprietary rights
(including licenses or rights in confidential information, membership data and
information, marketing plans, surveys, research, member information, merchant
information and records, service information, marketing strategies, training
materials, marketing and promotional materials or other information relating to
advertising, marketing, promotion or commercial sale of the DALC Program) are
granted or deemed granted by Transmedia to Signature hereunder or in connection
herewith.
ARTICLE V
OPERATING GUIDELINES
5.1 Operating Guidelines. Each party hereto shall use its commercially
reasonable efforts to preserve the integrity and reputation of the DALC Program.
By signing this Agreement, each party recognizes that adherence to the operating
guidelines set forth on Annex A hereto (as the same may be adjusted from time to
time by the Services Committee in accordance with the terms hereof, the
"Operating Guidelines") is in its best interests and covenants to and agrees
with the other party that it shall use its commercially reasonable efforts to
abide by the Operating Guidelines applicable to it in performing its duties
hereunder. If, at any time during the term of this Agreement, a party has
performed its duties in a manner inconsistent with the Operating Guidelines
applicable to it, it shall use its commercially reasonable efforts to explain
the same and the reasons therefor to the Services Committee and shall cooperate,
in good faith, with the Services Committee to rectify the
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situation (including, without limitation, by taking any corrective action deemed
appropriate by the Services Committee).
5.2 Opening New Markets. The parties shall cooperate with each other in
identifying and selecting new markets in which to offer, market or promote the
DALC Program. If (i) Transmedia deems it advisable to open a market in a
Territory, and (ii) Signature commits to deliver a sufficient number of DALC
Members within the Territory such that, with respect to the number of DALC
Members residing therein, the Territory would become a Qualified Territory
solely through the efforts of Signature, then Transmedia shall use its
commercially reasonable efforts, within 180 days of its receipt of notice from
Signature of such commitment (such date is hereinafter referred to as the
"Market Launch Date"), to deliver a sufficient number of Merchants to satisfy a
minimum Member-Merchant Ratio of 150:1. If Transmedia delivers the number of
Merchants required to satisfy its obligations hereunder and Signature does not
achieve DALC Member acquisition or utilization at the levels established by the
Operating Guidelines with respect to such new market, Signature shall be
responsible for, shall assume the liability of, and shall reimburse Transmedia
for, all uncollected Rights-to-Receive incurred by Transmedia in such market.
Signature shall remit any payments owed to Transmedia pursuant to the preceding
sentence within thirty (30) days following its receipt of notice from Transmedia
referencing the failure to comply with this Section 5.2 and specifying the
amount owed, together with appropriate documentation evidencing the same. If
Signature delivers the number of DALC Members required to satisfy its
obligations as set forth above and Transmedia does not supply DALC Merchants at
the levels and quality established by the Operating Guidelines with respect to
such new market, Transmedia shall be responsible for, shall assume the liability
of, and shall reimburse Signature for, all marketing and promotional
expenditures reasonably incurred by Signature in delivering DALC Members in such
market. Transmedia shall remit any payments owed to Signature pursuant to the
preceding sentence within thirty (30) days following its receipt of notice from
Signature referencing the failure to comply with this Section 5.2 and specifying
the amount owed, together with appropriate documentation evidencing the same.
Neither party may deliver any notice hereunder prior to the Market Launch Date.
The remedies provided by this Section 5.2 shall be the sole and exclusive
remedies of the parties with respect to the liabilities incurred in connection
with opening new markets hereunder, and they each hereby waive any and all
rights that might otherwise be available at law or in equity with respect
thereto.
ARTICLE VI
MARKETING EXCLUSIVITY AND SPONSOR INFORMATION
6.1 Signature Exclusivity. Signature shall, during the Profit Sharing
Period, have the exclusive right to market the DALC Program through use of all
of its existing and hereafter acquired Airline Frequent Flyer Member Files and
the Exclusive DALC Sponsor Relationships, and Transmedia and its Affiliates
shall not market or promote the DALC Program or the Transmedia Program through
use thereof; provided, however, that nothing in this Section 6.1 shall be deemed
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to prohibit Transmedia and its Affiliates from (i) offering mileage credits in
airline mileage programs in connection with the DALC Program, the Transmedia
Program or otherwise, (ii) marketing or promoting other non-dining services to
the Exclusive DALC Sponsor Relationships, (iii) receiving relevant information
about, and servicing DALC Members acquired through the use of DALC Sponsor
Relationships (whether existing or hereinafter initiated) or Airline Frequent
Flyer Member Files under the terms of this Agreement, or (iv) marketing the DALC
Program or the Transmedia Program to DALC Members acquired by Transmedia
pursuant to the Asset Purchase Agreement, notwithstanding that any such DALC
Member may also be listed on any computer disc delivered pursuant to Section 6.3
hereof.
6.2 Non-Exclusivity. It is expressly understood and agreed that
Signature shall not have the exclusive right to market the DALC Program, the
Transmedia Program or any other dining program through the use of any DALC
Sponsors or other marketing partners other than the Exclusive DALC Sponsor
Relationships, and Transmedia and its Affiliates may, at any time, market and
promote the DALC Program, the Transmedia Program or other dining program through
such other DALC Sponsors and such other marketing partners. The parties agree to
use their commercially reasonable efforts to coordinate their respective
marketing activities vis a vis such prospective DALC Sponsors or marketing
partners.
6.3 Membership Files and Data. Prior to or simultaneous with the
execution and delivery of this Agreement, Signature shall deliver to Transmedia
(in addition to those DALC Members acquired by Transmedia pursuant to the terms
of the Asset Purchase Agreement) a computer disc containing a complete and
accurate list of all current DALC Members who were acquired pursuant to the
Excluded Contracts (as defined in the Asset Purchase Agreement) and all other
data ("Data") related to such DALC Members as of the date hereof which is
reasonably required by Transmedia in order for it to fulfill its obligations
hereunder.
6.4 Negotiation of DALC Sponsor Contracts. During the term of this
Agreement, Signature shall advise Transmedia of each significant meeting (as
reasonably determined by Signature in good faith) whether in person, by
telephone or video conference, it schedules with a DALC Sponsor and each other
current or future marketing partner of Signature at which an existing or
proposed arrangement (pertaining to the DALC Program) with Signature is to be
discussed or negotiated, and shall invite at least one representative of
Transmedia to attend such meeting and participate therein at Transmedia's
expense. In addition, Signature shall afford Transmedia the right to review, on
a timely basis, all significant correspondence relating to such arrangements,
and to review all new contracts into which Signature may enter with DALC
Sponsors or other marketing partners prior to their execution and to review and,
to the extent provided herein, approve all marketing and promotional materials
proposed for use pursuant thereto. Transmedia shall grant or withhold its
approval of such materials within ten business days following receipt of the
same and shall not unreasonably withhold its approval.
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ARTICLE VII
ECONOMIC COVENANTS
7.1 Economic Covenants.
(a) The parties recognize that each operates businesses other than the
DALC Program. In recognition of the fact that each party will be harmed by the
other party entering into uneconomic transactions so as to advance the interests
of such other businesses, the parties agree that compliance with the economic
covenants set forth in Annex B hereto (as the same may be adjusted from time to
time by the Services Committee in accordance with the terms hereof, the
"Economic Covenants") is essential. Signature covenants and agrees with
Transmedia that it, its Affiliates, and their respective employees,
representatives and agents, will comply with the Economic Covenants set forth in
Section I of Annex B. Transmedia covenants and agrees with Signature that it,
its Affiliates and their respective employees, representatives and agents, will
comply with the Economic Covenants set forth in Section II of Annex B.
(b) Notwithstanding the provisions of paragraph (a) of this Section
7.1, either party hereto may enter into a transaction which would result in an
event of non-compliance with respect to an Economic Covenant applicable to it if
(i) prior to entering into such transaction, the party obtains the written
consent of the other party hereto or (ii) the party tenders payment to the other
party of a Make-Whole Amount. For purposes of this Section 7.1, the "Make-Whole
Amount" shall mean: (x) the actual amount of the expenditure pursuant to the
proposed transaction, less (y) the amount of the expenditure if the applicable
Economic Covenant had been complied with; it being understood and agreed that no
payment shall be due or made by either party hereunder if the amount set forth
in clause (y) exceeds the amount set forth in clause (x). Subject to the
foregoing proviso, any event of non-compliance with the Economic Covenants as to
which the affected party has not consented shall give rise to an obligation by
the other party to tender payment of the Make-Whole Amount. The remedies
provided by this Section 7.1 shall be the sole and exclusive remedies of the
parties with respect to liabilities incurred in connection with any event of
non-compliance with the Economic Covenants as to which the affected party has
not consented, and the parties each hereby waive any and all rights that might
otherwise be available at law or in equity with respect thereto.
ARTICLE VIII
MARKETING FEES PAYABLE TO SIGNATURE
In consideration of the marketing services to be provided by Signature
hereunder, Transmedia shall pay to Signature the following amounts:
8.1 Fee Sharing. Signature shall receive sixty-seven percent (67%) (i)
of all Membership Fee Income collected (during the five-year period commencing
on the date hereof) from persons who
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are DALC Members on the date hereof, and (ii) of all Membership Fee Income
collected from persons (during the five-year period following their initially
becoming DALC Members) who become DALC Members after the date hereof as a result
of Signature's marketing and promotional efforts hereunder; provided, however,
that Signature shall not be entitled to any percentage of Membership Fee Income
received after the end of the Profit Sharing Period. Transmedia shall pay and
deliver to Signature the portion of Membership Fee Income to which it is
entitled, together with a calculation in appropriate detail of the Membership
Fee Income received from new and existing DALC Members, within forty-five (45)
days following the end of each calendar quarter. Subject to the previous
sentence, if Signature shall collect Membership Fee Income from any DALC Member
in accordance with the terms of this Agreement, it shall remit the full amount
thereof to Transmedia within forty-five (45) days following the end of each
calendar quarter.
8.2 Profit-Based Payments.
(a) Signature shall receive during the twelve and one-half year period
commencing on the date hereof, unless this Agreement is earlier terminated in
accordance with Section 11.2, in which event during the period ending on such
termination date (the "Profit Sharing Period"), a quarterly marketing fee equal
to forty percent (40%) of all Profits derived from persons who are (as of the
date hereof) or, as a direct result of Signature's performance of marketing and
promotional services hereunder with respect to the DALC Program, become (after
the date hereof) DALC Members. Transmedia shall pay and deliver to Signature the
portion of the Profits to which it is entitled, together with a calculation
thereof in appropriate detail, within forty-five (45) days following the end of
the first three fiscal quarters of each fiscal year of Transmedia and within
sixty (60) days following the end of each fiscal year of Transmedia, subject to
appropriate fiscal year-end adjustments.
(b) If Transmedia generates Operating Losses, the same shall be taken
into account in calculating Profits, but Signature shall not otherwise be
required to contribute to the funding thereof.
ARTICLE IX
GRANT OF ADDITIONAL MARKETING RIGHTS
9.1 Transmedia Program Memberships. Signature shall be entitled to
purchase from Transmedia such number of memberships in the Transmedia Program as
Transmedia and Signature shall agree. Such memberships, unless Transmedia and
Signature otherwise agree (i) may be resold by Signature for cash or other
consideration acceptable to Transmedia only in connection with the marketing and
promotional services Signature provides to Transmedia and its Affiliates with
respect to the Transmedia Program, (ii) shall entitle the holders thereof to
discounts and other benefits generally available to other members of the
Transmedia Program, and (iii) shall be renewable upon terms generally applicable
to members of the Transmedia Program having similar memberships.
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9.2 No Rights to Members or Membership Data. Nothing in this Article IX
shall grant or convey or be deemed to grant or convey to Signature any rights
whatsoever to Transmedia Members or any rights whatsoever to the membership
lists or files pertaining to Transmedia Members; it being expressly understood
and agreed that all such rights are and shall at all times remain the sole and
exclusive property of Transmedia.
ARTICLE X
OWNERSHIP, CONFIDENTIALITY AND PUBLIC INFORMATION
10.1 Ownership. Transmedia is the sole and exclusive owner of the DALC
Intellectual Property and the Transmedia Intellectual Property and shall own any
and all rights in intellectual property developed by Signature or Transmedia for
use in the DALC Program, the Transmedia Program or any other programs offering
discount dining during the term of this Agreement, including but not limited to
all copyright rights and other intellectual property rights in any and all
brochures, advertising, promotional and marketing materials (including, without
limitation, videos, scripts, recordings, etc.) that are developed by Signature
in the fulfillment of its responsibilities hereunder. All materials and works
created or produced by Signature in the fulfillment of its responsibilities
hereunder falling within 17 U.S.C. ss.101 shall be deemed works made for hire
and will rest in and will be the property of Transmedia. To the extent that any
works or materials created or produced by Signature in fulfillment of its
responsibilities hereunder do not fall within 17 U.S.C. ss.101, Signature hereby
assigns to Transmedia all right, title and interest now existing or that may in
the future exist in, and to any intellectual property rights, including any
trademarks, copyrights, patents and inventions, any trade secrets in any and all
works or materials created or produced by Signature for Transmedia and in and to
any and all other works or materials created or produced in the course of
preparing such works or materials for Transmedia. Except as set forth in the
penultimate sentence to this paragraph, to the extent such rights are held by
third parties, Signature shall obtain all assignments, consents and agreements
necessary to convey to Transmedia all right, title and interest in and to any
and all such intellectual property. Signature shall furnish to Transmedia copies
of such assignments, consents and agreements. The foregoing intellectual
property rights include, but are not limited to (x) all rights to register, or
to renew any registration(s) or letter(s) patent for, such intellectual property
rights and (y) all causes of action related to such intellectual property
rights, including the right to xxx for past damages. Notwithstanding the
foregoing, Transmedia acknowledges that Signature's existing agreements with the
persons set forth in Schedule II hereto do not contain the assignment provision
required herein, and agrees that, as such, these agreements do not contravene
Signature's obligations under this Section. Signature will not attempt to
register any works or materials created or produced by Signature pursuant to
this Agreement at the U.S. Copyright Office, the U.S. Patent and Trademark
Office, or in any foreign counterparts of those U.S. offices. Nothing herein
shall be interpreted or construed to grant to Signature or any other party any
rights, license or interest in the DALC Intellectual Property or the Transmedia
Intellectual Property, except as expressly provided in this Agreement and the
License Agreement.
(Page 100 of 252 Pages)
10.2 Ownership Exclusions. Notwithstanding Section 10.1 above,
Signature owns and shall own all intellectual property included in the Excluded
Assets (as defined in the Asset Purchase Agreement) (i.e., the intellectual
property rights in any and all brochures, advertising, promotional and marketing
materials (including, without limitation, videos, scripts, recordings, etc.)
that were, are or are in the future developed exclusively for and used
exclusively in the marketing of the dining program presently conducted by
Signature Japan Co., Ltd. (f/k/a CardPlus Japan Co., Ltd.)), and nothing herein
shall be interpreted or construed to grant to Transmedia any rights, license or
interest therein.
10.3 Confidentiality.
(a) Signature and its Affiliates agree to treat as confidential and not
to disclose to any person (other than to Signature employees who have a need to
know the same for purposes of Signature's performing its obligations hereunder)
or use the same for its own benefit or for any purpose other than performing its
obligations hereunder all confidential or proprietary information, data, plans,
strategies, projections, budgets, reports, research, financial information,
files, reports, agreements and other materials and information it receives,
obtains or learns about Transmedia and its Affiliates, the DALC Program, the
Transmedia Program or any other program, service or product Transmedia and/or
Signature develops in connection with this Agreement. Signature shall notify
those of its employees who perform services for Transmedia and its Affiliates of
this covenant and shall secure their agreement to abide by its terms.
(b) Transmedia and its Affiliates agree, during the term of this
Agreement (and, with respect to any DALC Sponsor contract existing on the date
hereof or entered into in accordance with the terms hereof, during the period
Signature is required to treat information as confidential pursuant thereto), to
treat as confidential and not to disclose to any person (other than to
Transmedia employees who have a need to know the same for purposes of
Transmedia's performing its obligations hereunder) or use the same for its own
benefit or for any purpose other than performing its obligations hereunder all
confidential or proprietary information it receives, obtains or learns about
Signature and its Affiliates, including information relating to the DALC
Sponsors and the DALC Members generated thereby. Transmedia shall notify those
of its employees who perform services under this Agreement of this covenant and
shall secure their agreement to abide by its terms.
(c) Notwithstanding the foregoing, neither party shall be obligated
with respect to confidential or proprietary information that it can document:
(i) is or has become readily publicly available
through no fault of its own or that of its
employees or agents; or
(ii) is received from a third party lawfully in
possession of such information and lawfully
empowered to freely disclose such
information to it; or
(Page 101 of 252 Pages)
(iii) was lawfully in its possession, without
restriction, after the date hereof.
10.4 Covenant Not to Compete. During the two (2) year period following
the date of this Agreement, for any reason, Signature shall not, nor shall it
permit any of its Affiliates, directly or indirectly, anywhere in the world
other than Japan, Hong Kong (including Hong Kong Island, Kowloon and the New
Territories), Macau, Australia, Singapore, South Korea, Taiwan, Malaysia,
Philippines, New Zealand, Thailand, Vietnam, Indonesia, Guam, Saipan, and The
People's Republic of China to (x) engage in, or invest in, the Business (as
defined in the Asset Purchase Agreement) in direct or indirect competition with
Transmedia and its Affiliates, or (y) offer, market or promote any program or
other arrangement which directly competes with the DALC Program, the Transmedia
Program or any other substantially similar discount dining program marketed or
promoted by Transmedia during the term hereof; it being understood that nothing
herein shall limit any dining transaction or dining program membership fees
being charged to any credit card program maintained or serviced by General
Electric Corporation and its affiliates; provided, however, that nothing
contained herein shall prohibit Signature from performing its obligations
hereunder or under the License Agreements, from owning the Closing Date Shares,
the Option and, upon exercise thereof, the Option Shares (each, as defined in
the Asset Purchase Agreement) pursuant to the terms of the Asset Purchase
Agreement, owning securities in Signature Japan Co., Ltd. (f/k/a CardPlus Japan
Co., Ltd.) or from owning solely as an investment, securities of any person
which are traded on any national securities exchange, the Nasdaq National Market
or on Nasdaq Stock Market Inc, if Signature does not, directly or indirectly,
own more than 20% of any securities of such person; and provided, further, that
Signature shall not be bound by this Section 10.4 from and after the date, if
ever, on which a petition against Transmedia is filed under Chapter VII of the
United States Bankruptcy Code (whether such filing is voluntary or involuntary)
and such petition is not dismissed or stayed within 60 days or Transmedia
materially ceases to engage in the DALC Program, causing a termination hereunder
pursuant to Section 11.2 hereof.
10.5 Public Announcements. Each party agrees that prior to releasing
any media or press announcement with respect to this Agreement or the functions
to be performed hereunder, it shall submit the text thereto to the other party
for review and approval (which approval shall not be unreasonably withheld).
ARTICLE XI
TERM AND TERMINATION
11.1 Term. This Agreement shall be effective as of the date first above
written and shall, unless sooner terminated or extended in accordance with the
two succeeding sentences, be in full force and effect through December 31, 2011
(the "Stated Termination Date"). Any party not desiring to extend the term of
this Agreement for an additional two-year period (a "Renewal Term") shall notify
the other eighteen months prior to the Stated Termination Date. Thereafter, this
(Page 102 of 252 Pages)
Agreement shall be subject to further renewals of a two (2) year duration each
unless one party notifies the other of its intention not to renew at least three
(3) months prior to the end of a Renewal Term.
11.2 Early Termination by Either Party. This Agreement may be
terminated by either party prior to the expiration of the term set forth in
Section 11.1 upon written notice to the other party in accordance with Section
14.8 hereof in the event of a material breach by the other party of its
covenants and obligations hereunder that is continuing and is not effectively
cured within sixty (60) days (or, in the case of the event described in clause
(d) below, within thirty (30) days) after notice thereof from the other party.
For purposes of the foregoing, the following events shall be deemed a "material
breach":
(a) the failure by the other party to pay any Make-Whole Amount when
due;
(b) a material breach by the other party of the covenants set forth in
Section 10.3 hereof;
(c) a material breach by Signature of the covenant set forth in
Section 10.4 hereof;
(d) a material breach by the other party of its obligations under the
License Agreement;
(e) a petition is filed against the other party under Chapter VII of
the United States Bankruptcy Code (whether such filing is voluntary or
involuntary) and such petition is not dismissed or stayed within the period
described above;
(f) Transmedia materially ceases to operate the DALC Program or
otherwise materially abandons its duties hereunder;
(g) Signature materially ceases to market the DALC Program or otherwise
materially abandons its duties hereunder;
(h) a material breach by Transmedia of Section 6.1 hereof; or
(i) a material breach by Transmedia of its obligations to pay Signature
as set forth in Section 8.1 or 8.2 hereof (except to the extent such amounts are
the subject of a dispute hereunder or subject to set off by Purchaser in
accordance with Section 7.6 of the Asset Purchase Agreement).
ARTICLE XII
EFFECT OF TERMINATION
12.1 Run-off. Upon (x) notification by a party of its intention not to
renew this Agreement under Section 11.1 or (y) termination of this Agreement in
accordance with Section 11.2, the
(Page 103 of 252 Pages)
marketing arrangement set out in this Agreement shall enter "Run-Off." Run-Off
means that (i) Transmedia shall continue to service active DALC Members existing
on the date of notification or termination, as the case may be, until their
membership is canceled by the DALC Member or by the DALC Sponsor which generated
the DALC Member (but not by either party hereto), and (ii) Signature may
continue to acquire DALC Members through the term of the Exclusive DALC Sponsor
Relationships in effect as of the date of notification or termination, as the
case may be (but may not enter into new contracts). Notwithstanding the
foregoing, the parties understand and agree that the economic relationship
between the parties hereunder (including under Article VIII hereof) shall
terminate upon the termination or expiration of this Agreement in accordance
with Article XI hereof.
12.2 Confidential Information. Upon conclusion of the Run-Off period
set forth in Section 12.1, Signature shall immediately return to Transmedia any
and all confidential or proprietary information and data it shall have received
or developed in connection with this Agreement or the functions to be performed
by it hereunder and Transmedia shall immediately return to Signature any and all
confidential or proprietary information it shall have received in connection
with this Agreement.
12.3 Accrued Obligations. Subject to the provisions of Section 12.1,
termination of this Agreement shall not relieve the parties hereto of any
liability which accrued hereunder prior to the effective date of such
termination nor prejudice either party's right to obtain performance of any
obligation provided for in this Agreement which expressly survives termination
or expiration.
12.4 Return of Materials. Upon conclusion of the Run-Off period set
forth in Section 12.1, Signature shall, at Transmedia's election, either destroy
or return to Transmedia all promotional materials relating to the DALC Program
or the Transmedia Program then in Signature's possession, except to the extent
that a DALC Sponsor has proprietary rights in such materials.
12.5 Remedies. The fact that either party exercises any right of
termination it may have under this Agreement shall not prevent such party from
seeking any other remedy it may be entitled to in law or equity, except as
otherwise specifically provided in this Agreement; nor shall any provision under
this Agreement which provides a remedy to a party for the other party's
non-performance be deemed to be an exclusive remedy, except as otherwise
specifically provided in this Agreement. Prior to seeking relief through the
courts, the parties must attempt to resolve any dispute through the mechanism
set forth in Section 14.4 hereof.
12.6 Survival. The provisions of Article X, this Article XII and
Article XIII, as well as those rights and obligations which by their intent or
meaning have validity beyond termination of expiration of this Agreement, shall
survive the termination or expiration of this Agreement.
(Page 104 of 252 Pages)
ARTICLE XIII
INDEMNIFICATION
13.1 Indemnification by Signature. Signature shall indemnify, defend
and hold harmless Transmedia and its Affiliates, and its and their respective
employees, officers, directors and agents, and each of their respective
successors and assigns (each, a "Transmedia Indemnified Party"), from and
against any and all liability, loss, damage, cost, tax, penalty, fine and
expense (including, without limitation, reasonable attorneys' fees)
(collectively, a "Liability"), which a Transmedia Indemnified Party may incur,
suffer or be required to pay resulting from or arising in connection with (i)
the breach by Signature of any covenant, representation or warranty contained in
this Agreement, or (ii) any negligent or wrongful act or omission of Signature
or its Affiliates (including, without limitation, fraud) in the performance of
its obligations hereunder.
13.2 Indemnification by Transmedia. Transmedia shall indemnify, defend
and hold harmless Signature and its Affiliates and its and their respective
employees, officers, directors and agents, and each of their respective
successors and assigns (each, a "Signature Indemnified Party") from and against
any and all Liabilities, which a Signature Indemnified Party may incur, suffer
or be required to pay resulting from or arising in connection with (i) the
breach by Transmedia of any covenant, representation or warranty contained in
this Agreement, or (ii) any negligent or wrongful act or omission of Transmedia
or its Affiliates (including, without limitation, fraud) in the performance of
its obligations hereunder.
13.3 Indemnification Procedure. Any person seeking indemnification
hereunder shall give written notice to the indemnifying party of the claim for
indemnification promptly after the party claiming indemnification becomes aware
of the Liability for which indemnification or the basis therefor; provided,
however, that the failure to give such notice shall not constitute a waiver of
the right to indemnification hereunder unless the indemnifying party is actually
prejudiced in a material respect thereby. The indemnifying party agrees to
assume the defense of any suit or claim related to the Liability at the
indemnifying party's own cost and expense with counsel of its own choice, who
shall be, however, reasonably acceptable to the indemnified party (such
acceptance not to be unreasonably withheld), and such assumption shall
conclusively establish that the indemnifying party is responsible for the
subject matter of such suit or claim within the scope of this Article XIII. No
Liability shall be compromised or settled without the prior written consent of
the party seeking indemnification therefor (unless the sole relief provided is
monetary damages that are paid in full by the indemnifying party), which consent
shall not be unreasonably withheld or delayed, and the indemnified party will
have no liability or obligation with respect to any compromise or settlement of
such claims without its prior written consent. The indemnified party shall have
the right but not the obligation to participate at its own expense in the
defense thereof by counsel of its own choice. If requested by the indemnifying
party, the indemnified party shall (at the indemnifying party's expense) (i)
cooperate with the indemnifying party and its counsel in contesting any claim or
demand which the indemnifying party defends, (ii) provide the indemnifying party
with reasonable access during normal business hours to its books and records to
the extent they relate to the condition or
(Page 105 of 252 Pages)
operation of the DALC Program and are requested by the indemnifying party to
perform its indemnification obligations hereunder, and to make copies of such
books and records, and (iii) make personnel available to assist in locating any
books and records relating to the DALC Program or whose assistance,
participation or testimony is reasonably required in anticipation of,
preparation for or the prosecution and defense of, any claim subject to this
Article XIII. In the event that the indemnifying party fails timely to defend,
contest or otherwise protect the indemnified party against any such suit,
action, investigation, claim or proceeding, the indemnified party shall have the
right to defend, contest or otherwise protect itself against the same and may
make any compromise or settlement thereof and recover the entire cost thereof
from the indemnifying party, including without limitation, reasonable attorneys'
fees, disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or compromise or settlement thereof.
13.4 Consequential Damages. An indemnifying party shall have no
obligation to indemnify an indemnified party for any Liabilities arising out of
any interruption of business, loss of profits, loss of use of facilities, loss
of customers, loss of goodwill or other indirect or consequential damages (a) to
the extent, if any, such Liabilities are caused or contributed to by the actions
of the indemnified party or (b) that are recoverable (and actually recovered) by
the indemnified party from any third party (including insurers). If the amount
of any Liabilities at any time subsequent to payment thereof by the indemnifying
party to the indemnified party pursuant to this Article XIII is reduced by any
recovery, settlement or otherwise or under or pursuant to any insurance coverage
or pursuant to any claim, recovery settlement against or with any third party
(including any insurer), the amount of such reduction (net of out-of-pocket
expenses incurred in obtaining such reduction) shall promptly be repaid by the
indemnified party to the indemnifying party. To the extent that an indemnifying
party discharges any claim for indemnification hereunder, the indemnified party
shall promptly notify the indemnifying party of any and all claims the
indemnified party has against third parties (including insurers) and the
indemnifying party shall be subrogated (and the indemnified party shall take all
reasonable steps to effect such subrogation) to all related rights of the
indemnified party against third parties (including any insurers).
13.5 Subrogation. To the extent that a claim for indemnification is
discharged hereunder, any rights against third parties the indemnifying party
may have with respect to the subject matter of such claim shall be subrogated to
those of the indemnified party.
13.6 Mitigation. An indemnified party shall take all reasonable steps
to mitigate all indemnifiable Liabilities upon and after becoming aware of any
event which is reasonably likely to give rise to such Liabilities.
(Page 106 of 252 Pages)
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be deemed to have been made in
the State of New York and its form, execution, validity, construction and effect
shall be determined in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of law thereof.
14.2 Injunctive Relief. The parties acknowledge that damages at law may
be an inadequate remedy for the breach of any of the covenants and obligations
of the parties contained in this Agreement; accordingly, to the extent permitted
under, and in accordance with, Section 14.4(b) and the other provisions of this
Agreement, each party shall be entitled, without the need of establishing actual
damages, to such injunctive relief as may be necessary to prevent, or to enjoin
the continuation of, any such breach.
14.3 Tax Characterization. The parties hereby agree to, and cause their
respective affiliates to, treat the services arrangements that are the subject
of this Agreement in the following manner for all federal, state and local tax
purposes:
(i) this Agreement and the services arrangements
set out herein shall be treated as a
contractual relationship between independent
contractors, and not as a partnership or
other separate entity;
(ii) the sharing of Membership Fee Income
pursuant to Section 8.1 shall be treated as
a non-partnership revenue sharing
arrangement (with the consequence that each
of Transmedia and Signature shall include in
gross income directly its share of the
Membership Fee Income); and
(iii) the profit-based marketing fees payable to
Signature pursuant to Section 8.2 shall be
treated as fees paid by Transmedia to
Signature for the marketing services
provided by Signature hereunder.
14.4 Access; Dispute Resolution.
(a) Access. Transmedia and Signature shall provide each other's
authorized employees, auditors and attorneys with access, once a calendar
quarter, at reasonable times during regular business hours and upon reasonable
prior notice, and subject to the confidentiality undertakings contained in this
Agreement, to such party's books and records relating to Profits, Operating
Losses and Membership Fee Income for purposes of reviewing the calculations
thereof; provided, however, any audits performed hereunder will be at the
expense of the party requesting the audit.
(Page 107 of 252 Pages)
(b) Dispute Resolution (Mediation). Signature and Transmedia will
endeavor in good faith to promptly, reasonably and equitably settle disputes
arising out of or relating to this Agreement or the breach hereof (including
claims with respect to a party's performance, failure to perform or adequacy of
performance hereunder). All disputes which the parties cannot settle in the
normal course of business or with the assistance of the Services Committee shall
be mediated in accordance with the provisions of this Section 14.4(b). The party
asserting the claim shall give a written statement to the other party describing
the nature and substance of the dispute, a brief summary of its position with
respect thereto and its justifications therefor, and its proposal for
resolution. The other party shall provide a written response thereto within ten
business days of its receipt. The position papers shall be forwarded to Xx.
Xxxxxx Xxxxx of Transmedia (or, in the event of Xx. Xxxxx'x unavailability, the
Chairman of the Board of Transmedia) and to Xx. Xxxxxxx Xxxxx of Xxxxxxxxxx Xxxx
& Co. Incorporated (or, in the event of Xx. Xxxxx'x unavailability, a designee
of Xxxxxxxxxx Xxxx & Co. Incorporated or its successor) (together, the "Senior
Executives"). The Senior Executives shall, within ten business days of receiving
position papers, meet to attempt to resolve the dispute. Any such mediation
shall be concluded within 30 days of its commencement.
(c) Dispute Resolution (Arbitration). If the mediation provided by
Section 14.4(b) of this Agreement is unsuccessful, it is agreed that any
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be presented for arbitration within 60 days of the conclusion of
such mediation. Such arbitration shall be administered by the American
Arbitration Association in Chicago, Illinois under its Commercial Arbitration
Rules, before a panel of three (3) arbitrators, one of whom shall be selected by
Transmedia, one of whom shall be selected by Signature, and one of whom shall be
selected jointly by Transmedia and Signature (or, in the event that Transmedia
and Signature cannot agree, by the first two arbitrators). Judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction over
the parties. The costs of such arbitration, including, without limitation,
reasonable attorneys' fees, shall be borne by the nonprevailing party. Any such
arbitration shall be concluded within ninety (90) days of its commencement.
14.5 Severability.
(a) If any provision of this Agreement is held to be invalid or
unenforceable, it shall be modified, if possible, to the minimum extent
necessary to make it valid and enforceable or, if such modification is not
possible, it shall be stricken and the remaining provisions shall remain in full
force and effect; provided, however, that if a provision is stricken so as to
significantly alter the economic arrangements of this Agreement, the party
adversely affected may terminate this Agreement upon thirty (30) days' prior
written notice to the other party.
(b) If any of the terms or provisions of this Agreement is in conflict
with any applicable statute or rule of law in any jurisdiction, then such term
or provision shall be deemed inoperative in such jurisdiction to the extent of
such conflict and the parties will renegotiate the affected terms and conditions
of this Agreement to resolve any inequities.
(Page 108 of 252 Pages)
14.6 Entire Agreement. This Agreement constitutes the entire agreement
between the parties relating to the subject matter hereof and supersedes all
previous writings and understandings, whether oral or written.
14.7 Amendment. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both parties.
14.8 Notices. Any notice required or permitted under this Agreement to
be sent shall be sent by certified mail or courier service, charges pre-paid, or
by facsimile transmission, to the address or facsimile number specified below:
If to Signature: SignatureCard, Inc.
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn.: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxxxxxx Xxxx & Co., Incorporated
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 00-X
Xxxxxxx, Xxxxxxxx 00000
Attn.: Xx. Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn.: Xxxxxx Xxxx Xxxxx, Esq.
Telephone: (000)000-0000
Fax: (000) 000-0000
(Page 109 of 252 Pages)
If to the Company: Transmedia Network Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxx, Xxxxxxx 00000
Attn.: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Equity Group Investments
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn.: F. Xxxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other address or facsimile number as the person may specify in a
notice duly given to the sender as provided herein. A notice will be deemed to
have been given when received, if delivered personally, sent by telecopy or
overnight courier (and confirmed in writing within three (3) business days
thereafter), or five calendar days after the same is sent by registered or
certified mail, return receipt requested, postage prepaid.
14.9 Assignment. Except as provided in the following sentence, this
Agreement and the rights and obligations of the parties hereto and their
respective interests hereunder shall not be assignable or delegable (other than
by operation of law). Either party may assign any or all of its rights and
interests and delegate any or all of its obligations under this Agreement to any
one or more of its Affiliates without the prior written consent of the other
party, in which event the relevant rights and obligations of the assignor and
remedies available to it hereunder shall extend to and be enforceable by such
Affiliate; provided, however, that the assignor shall remain, and the assignee
shall be, fully liable for the performance of all such obligations in the manner
prescribed in this Agreement. In the event of any such assignment and
delegation, any reference to the assignor by name or as a "party" in this
Agreement shall be deemed to refer to such assignee and shall be deemed to
include both the assignor and such assignee where appropriate. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the
(Page 110 of 252 Pages)
parties hereto and their respective successors (including by merger, sale or
otherwise) and assigns. Any assignment in contravention of the provisions of
this Section 14.9 shall be void.
14.10 Standstill. Signature agrees with Transmedia that for a period of
five (5) years following the date of this Agreement, it will not, and it will
ensure that its Affiliates and any person acting on behalf of or in concert with
it or any of its Affiliates shall not, without the prior written consent of
Transmedia:
(i) acquire, offer to acquire or agree to acquire,
directly or indirectly (in addition to the Closing Date Shares, the Option and,
upon exercise thereof, the Option Shares (each, as defined in the Asset Purchase
Agreement)), by purchase or otherwise, more than 3% of the voting securities or
(direct or indirect rights to acquire more than 3% of the voting securities of
Transmedia), on a fully diluted basis, or any assets of Transmedia or any
subsidiary or division thereof or of any such successor controlling person;
(ii) make, or in any way participate, directly or
indirectly, in, any "solicitation" for "proxies" to vote (as such terms are used
in the rules of the Securities and Exchange Commission), or seek to advise or
influence any person or entity with respect to the voting of any voting
securities of Transmedia;
(iii) submit a proposal for, or offer (with or
without conditions) of any extraordinary transaction involving Transmedia or its
securities or assets; or
(iv) form, join or in any way participate in a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, in connection with any of the foregoing.
Signature shall promptly advise Transmedia of any inquiry or proposal made to it
with respect to any of the foregoing.
14.11 Headings and References. All section headings contained in this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement. Unless the context requires otherwise, all
references in this Agreement to any article or section shall be deemed and
construed as references to an article or section of this Agreement.
14.12 No Agency; No Partnership. It is understood and agreed that each
party shall have the status of an independent contractor under this Agreement
and that nothing in this Agreement shall be construed as authorization for
either party to act as agent for the other. The relationship between the parties
as set forth herein shall not be construed as a partnership and neither party
shall have any fiduciary duties to the other.
14.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument. A facsimile
transmission of the signed Agreement shall be legal and binding on all parties.
[Signature Page Follows]
(Page 111 of 252 Pages)
IN WITNESS WHEREOF, the parties, through their authorized officers,
have duly executed this Agreement intending it to be effective and binding as of
the date first written above.
TRANSMEDIA NETWORK INC.
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
SIGNATURECARD, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
[Signature Page to Services Collaboration Agreement]
(Page 112 of 252 Pages)
SCHEDULE I
DEFINITIONS
"Active DALC Member" means a DALC Member who has paid the annual fee, if
applicable, and has used the DALC Program at least once within the previous
three months.
"Affiliate" means, with respect to a specified corporation or other
organization, a corporation or organization that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, the corporation or other organization specified. For purposes of
this definition, the term "control" means (a) the power, direct or indirect, to
vote more than 50% of the securities having ordinary voting power for the
election or directors (or others performing similar functions) of such
corporation or organization or (b) being a general partner of such organization.
Notwithstanding the foregoing, for purposes of Sections 10.4, 14.9 and 14.10, no
corporation or other organization (including, without limitation, General
Electric Capital Corporation) that would be deemed an Affiliate of Signature
solely by virtue of its control of Xxxxxxxxxx Xxxx Holding Corp. or any material
stockholder of Xxxxxxxxxx Xxxx Holding Corp. shall be deemed an Affiliate of
Signature unless and until it purchases substantially all of the assets or the
stock of Signature/Financial Marketing, Inc., and thereafter the term
"affiliate" shall include General Electric Capital Services, Inc. and its
subsidiaries but shall not include the General Electric Company and its other
subsidiaries.
"Airline Frequent Flyer Member Files" means the lists, files, records,
information and data relating to members of frequent flyer and similar programs
of the Exclusive DALC Sponsor Relationships.
"approval" means the process by which a party's authorization(s) for specified
actions and materials are requested and obtained through submitting such actions
or materials to the approving party. Unless otherwise indicated herein, all
disapprovals must be in writing, and all actions or materials as to which
approval or disapproval is not communicated within five (5) business days
following submission of the action or material to the party from whom approval
is being sought shall be deemed to have been approved by such party. No
approvals shall be unreasonably withheld.
"Asset Purchase Agreement" means the Asset Purchase Agreement dated as of March
17, 1999 between Signature and Transmedia, as the same may be amended from time
to time.
"DALC Intellectual Property" means all fictional business names, trade names,
d/b/a names, logos, Internet domain names (including www.dalccom,
xxx.xxxxxx-x-xx-xxxx.xxx and xxx.xxxxxxxxxxxxx.xxx), trademarks, service marks
(including but not limited to DINING A LA CARD(Registered), trade dress and any
and all federal, state, local and foreign applications, registrations and
renewals therefor, and all the goodwill associated therewith (collectively,
"DALC Marks"); all patents (including but not limited to all continuations,
extensions, and reissues), patent applications, and inventions and discoveries
that may be patentable (collectively, "DALC Patents"); all copyrights
(Page 113 of 252 Pages)
in both published works and unpublished works (including but not limited to the
copyright subsisting in any marketing materials, membership data, and merchant
data, and in online works such as Internet web sites, excluding any proprietary
software underlying such web sites), and any federal or foreign applications,
registrations and renewals therefor (collectively, "DALC Copyrights"); all
rights in any and all licensed or proprietary computer software, firmware,
middleware, programs, applications, databases, and files (in whatever form or
medium) including all material documentation, relating thereto, and all source
and object codes relating thereto (collectively, "DALC Computer Software and
Files"); all know-how, trade secrets, confidential information, competitively
sensitive and proprietary information (including but not limited to pricing
information, supplier information, telephone and telefax numbers, and e-mail
addresses), technical information, data, process technology, business plans,
drawings, and blue prints (collectively, "DALC Trade Secrets"); and the right to
xxx for past infringement, if any, in connection with any of the foregoing; in
each case to the extent used or held for use in the DALC Program; provided,
however, that the DALC Intellectual Property shall not be deemed to include any
intellectual property included among the Excluded Assets (as defined in the
Asset Purchase Agreement).
"DALC Members" means the members, from time to time, of the DALC Program.
"DALC Program" means the registered card, discount dining club membership
program operated under the Dining a la Card(R) trade name and service xxxx.
"DALC Sponsors" means the marketing partners with which Signature, from time to
time, contracts in relation to the DALC Program.
"Data" has the meaning specified on Section 6.3.
"Economic Covenants" has the meaning specified in Section 7.1(a).
"Exclusive DALC Sponsor Relationships" means any and all marketing partner
arrangements with all airlines worldwide to which Signature is or may, during
the term of this Agreement, be a party.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied.
"Initial Fee Income" means the income from initial membership fees paid by
persons upon becoming DALC Members, net of cancellations, charge backs and other
similar credits.
"Liability" has the meaning specified in Section 13.1.
"License Agreements" have the meaning specified in Section 4.6.
"Make-Whole Amount" has the meaning specified in Section 7.1(b).
"Market Launch Date" has the meaning specified in Section 5.2.
(Page 114 of 252 Pages)
"Member-Merchant Ratio" means the applicable number of total DALC Members to
Merchants within a Territory.
"Membership Fee Income" means Initial Fee Income plus Renewal Fee Income.
"Merchants" means the restaurants and other establishments, from time to time,
that participate in the DALC Program.
"Operating Guidelines" has the meaning specified in Section 5.1.
"Operating Losses" means the excess of (i) the sum of all direct costs,
including, but not limited to, cost of sales, rebate, loss reserves, third party
processing, health insurance premium increases directly attributable solely to
the addition or termination of the Transferred Employees (as defined in the
Asset Purchase Agreement) by Purchaser during the term of the Transition
Services Agreement dated as of the date hereof between the parties and payable
by Transmedia, sales commissions, residual sales commissions payable in respect
of existing Rights-to-Receive generated by the following active independent
sales contractors listed on Schedule 1.2(i) to the Asset Purchase Agreement: (i)
Riverside Marketing, (ii) Universal Biotics Corp., (iii) Card Service
International, Inc. and (iv) Bancard Systems, Inc., customer service (including
directory, fulfillment, enrollment processing call center maintenance costs
associated with both active and inactive members) and cost of inventory (e.g.,
capital cost) (but not including fixed overhead) over (ii) dining revenue from
restaurant spending by DALC Members (net of tax and tip, to the extent
reimbursed to Merchants), all as determined in accordance with GAAP.
"Profits" means the excess of dining revenue from restaurant spending by DALC
Members (net of tax and tip, to the extent reimbursed to Merchants) over all
direct costs, including, but not limited to, cost of sales, rebate, loss
reserves, third-party processing, health insurance premium increases directly
attributable solely to the addition or termination of the Transferred Employees
(as defined in the Asset Purchase Agreement) by Purchaser during the term of the
Transition Services Agreement dated as of the date hereof between the parties
and payable by Transmedia, sales commissions, residual sales commissions payable
in respect of existing Rights-to-Receive generated by the following active
independent sales contractors listed on Schedule 1.2(i) to the Asset Purchase
Agreement: (i) Riverside Marketing, (ii) Universal Biotics Corp., (iii) Card
Service International, Inc. and (iv) Bancard Systems, Inc., customer service
(including directory, fulfillment, enrollment processing, call center
maintenance costs associated with both active and inactive members) and cost of
inventory (e.g., capital cost) but before fixed overhead, as determined in
accordance with GAAP. Profits during any period shall be reduced by any
Operating Losses accumulated from any prior period, to the extent not applied to
the reduction of Profits in any prior period.
"Profit Sharing Period" has the meaning specified in Section 8.2(a).
"Qualified Territory" means a Territory in which at least 15,000 DALC Members
reside within its boundaries.
(Page 115 of 252 Pages)
"Renewal Fee Income" means the income from annual membership fees paid by DALC
Members, net of cancellations, chargebacks and other similar credits.
"Renewal Term" has the meaning specified in Section 11.1.
"Rights-to-Receive" means all rights-to-receive and other credits consisting of
food, beverage, tax and tip credits at all Merchants wherever located in the
United States of America and all agreements, contracts, guarantees, instruments,
security agreements and other documents evidencing or securing, and any and all
collateral and security interests securing, such rights-to-receive and credits
and any and all claims, rights and causes of action related thereto in
connection with the DALC Program.
"Run-off" has the meaning specified in Section 12.1.
"Senior Executives" has the meaning specified in Section 14.4(b).
"Services Committee" has the meaning specified in Section 2.1.
"Signature DALC Members" means each DALC Member which (i) is or was acquired
pursuant to an Exclusive DALC Sponsor Relationship, (ii) is or was acquired
pursuant to an arrangement with any other DALC Sponsor or (iii) is acquired
after the date hereof solely through the marketing and promotional efforts of
Signature.
"Stated Termination Date" has the meaning specified in Section 11.1.
"Territory" means a Designated Market Area as reported by the Standard Rate and
Data Service.
"Transmedia Intellectual Property" means all fictional business names, trade
names, d/b/a names, logos, Internet domain names and other Internet addresses,
trademarks, service marks (including but not limited to TRANSMEDIA(Registered),
trade dress and any and all federal, state, local and foreign applications,
registrations and renewals therefor, and all the goodwill and going concern
value associated therewith (collectively, "Transmedia Marks"); all patents
(including but not limited to all continuations, extensions, and reissues),
patent applications, and inventions and discoveries that may be patentable
(collectively, "Transmedia Patents"); all copyrights in both published works and
unpublished works (including but not limited to the copyright subsisting in any
marketing materials, membership data, and merchant data, and in online works
such as Internet web sites, including the software underlying such web sites),
and any federal or foreign applications, registrations and renewals therefor
(collectively, "Transmedia Copyrights"); all rights in any and all licensed or
proprietary computer software, firmware, middleware, programs, applications,
databases, and files (in whatever form or medium) including all documentation
relating thereto, and all source and object codes relating thereto
(collectively, "Transmedia Computer Software and Files"); all know-how, trade
secrets, confidential information, competitively sensitive and proprietary
information (including but not limited to pricing information, supplier
information, telephone and telefax numbers, and e-mail addresses), technical
information, data, process technology, business plans,
(Page 116 of 252 Pages)
drawings, and blue prints (collectively, "Transmedia Trade Secrets"); and the
right to xxx for past infringement, if any, in connection with any of the
foregoing; in each case to the extent used or held for use in the Transmedia
Program.
"Transmedia Members" means the members, from time to time, of the Transmedia
Program.
"Transmedia Program" means the discount dining program operated by Transmedia
and its Affiliates under the Transmedia(R) tradename and service xxxx.
(Page 117 of 252 Pages)
ANNEX A
to Marketing Agreement
OPERATING GUIDELINES
--------------------
SIGNATURE OPERATING GUIDELINES
------------------------------
During the term of the Agreement to which this Annex A is attached
(unless a different period is specified below), Signature shall be guided by the
following principles, and shall use its commercially reasonable efforts to
adhere to such principles whenever possible:
I. MEMBERSHIP ACQUISITION
Exclusive DALC Sponsor Relationships. During the five-year period
commencing on the date of the Agreement to which this Annex A is attached,
subject to Section III below, Signature shall deliver, from the Exclusive DALC
Sponsor Relationships only, the following number of new DALC Members (i.e.,
persons who are not as of the date of this Agreement, and were not during the
preceding 12 months, DALC Members) in the aggregate for each year of such
five-year period, distributed evenly (to the extent practicable) on a quarterly
basis; provided, however, that the yearly totals set forth below shall be
cumulative as measured in two year increments:
Year 1 - 500,000
Year 2 - 600,000
Year 3 - 500,000
Year 4 - 400,000
Year 5 - 300,000
---------
2,300,000
II. UTILIZATION
The average monthly utilization rate during the five-year period following the
date of the Agreement shall be no less than 12%.
III. MERCHANT-MEMBER RATIO
Notwithstanding the requirements of Section I above, Signature may not deliver
new DALC Members of such quantity so as to cause the Member-Merchant Ratio
within a Territory to exceed 300:1 at any time; provided, however, that if
Transmedia does not deliver a sufficient number of quality Merchants to enable
Signature to satisfy the guidelines set forth under Section I above, Signature
shall be relieved of any obligation to satisfy such guidelines to the extent of
Transmedia's failure to deliver a sufficient number of qualified Merchants.
(Page 118 of 252 Pages)
IV. TELEMARKETING STANDARDS
To the extent that Signature engages in telemarketing in connection with the
performance of its duties hereunder, Signature shall use commercially reasonable
efforts to ensure that the quality thereof is consistent with Transmedia's
overall service quality standards as provided to Signature in writing from time
to time. Signature shall use its commercially reasonable efforts to ensure that
the following guidelines are followed:
A. Signature representatives (or communicators employed by vendors)
shall approach each call courteously and professionally.
B. Signature shall use its commercially reasonable efforts to ensure that
all communicators understand the DALC Program and the particulars of
the offer being promoted and are able to respond to all probable
questions.
C. The communicator who makes or receives calls shall clearly identify
himself or herself when the call begins.
D. Signature shall not call consumers who are listed on the TPS Service
provided by the Direct Marketing Association.
E. The consumer shall always have the choice to freely accept or reject
any telemarketing offer.
F. Signature communicators and representatives shall respond to (but not
necessarily resolve) all consumer questions or complaints regarding
telemarketing that are referred to it within 48 hours.
G. All offers and promotions made by Signature to businesses or
consumers shall be legal and legitimate.
H. All telemarketing scripts shall clearly communicate all terms of the
offer to the consumer, and the terms and scripts shall have been
presented to and, to the extent provided in this Agreement, approved by
Transmedia in advance (which approval shall not be unreasonably
withheld).
I. Signature shall not solicit through the use of prerecorded messages.
J. Signature shall require its telemarketing vendors to monitor and follow
all federal, state and local telemarketing laws and regulations.
K. Signature shall promptly advise Transmedia of, or fulfill, all
telemarketing requests for additional written information relevant to
the product offering made by the consumer prior to his or her making a
purchase decision.
(Page 119 of 252 Pages)
L. Signature shall not call consumers or prospective DALC Members on the
following holidays: New Year's Eve (stop calling at 1:00 p.m.), New
Year's Day, Good Friday, Easter Sunday, Passover (first two nights),
Rosh Hashanah Eve and Rosh Hashanah, Yom Kippur Eve and Yom Kippur Day,
Christmas Eve (stop calling at 1:00 p.m.) and Christmas Day.
M. To ensure quality assurance, calls shall periodically be monitored by
supervisors (including Transmedia employees or representatives) and
recorded.
TRANSMEDIA OPERATING PRINCIPLES
-------------------------------
Transmedia shall, during the term of this Agreement, comply with the
standards set forth in DALC Sponsor contracts existing on the date of this
Agreement or hereafter entered into in accordance with the terms hereof, as the
same may from time to time be in effect. In addition, during the term of the
Agreement to which this Annex A is attached (unless a different period is
specified below), Transmedia shall be guided by the following principles, and
shall use its commercially reasonable efforts to adhere to such principles
whenever possible:
I. MERCHANT ACQUISITION
During the period commencing 180 days after the date of the Agreement to which
this Annex A is attached and terminating on the fifth anniversary of the date of
the Agreement, Transmedia shall satisfy the following:
(A) Number of Merchants. For every 150 DALC Members existing and
delivered in any Qualified Territory, Transmedia shall, within
180 days of the date on which either (i) the Territory becomes
Qualified or (ii) the requisite number of DALC Members is
delivered, deliver one Merchant; provided, however, that in no
event shall either party permit the Member-Merchant ratio to
exceed 300:1 at any time.
(B) Merchant Quality. At least ninety percent of Merchants in a
Qualified Territory shall have credit card receipts equal to
or greater than $300,000 during the 12 months preceding
measurement.
II. FULFILLMENT & DIRECTORY
(A) Within five (5) business days of Transmedia's receipt and
approval of an application for enrollment in the DALC Program,
Transmedia will send to the new DALC Member a fulfillment kit
containing the following materials:
1. Merchant directory
2. Welcome letter
3. Membership brochure
4. Outer envelope
(Page 120 of 252 Pages)
5. Such other materials as the parties shall from time
to time determine.
Transmedia shall fulfill all offers made by Signature in
accordance with the terms of such offers.
(B) Subsequent to delivery of the fulfillment kit, Active DALC
Members will continue to receive at least four updated
Directories each year at times to be determined by the parties
in advance. Transmedia reserves the right to cease sending
directory updates to Members who have not used the DALC
Program at least once in the preceding six-month period;
provided, that such members will automatically be reactivated
and be eligible to receive a directory once they use the DALC
Program.
III. DALC MEMBER STATEMENT & REBATE CHECK
(A) Transmedia will produce and mail a monthly statement to all
Active DALC Members, containing the following information:
1. Itemized list of Merchants visited
2. Total expenditure per visit
3. Total number of miles and/or total amount of cash
rebate earned per visit
4. Total amount of mileage credits and/or cash rebates
earned that month
5. Such other information as the parties shall from time
to time determine.
(B) Transmedia shall issue and mail to each DALC Member a check
equal to the requisite discount applicable to such Member's
total expenditures during qualified visits at Merchants during
the previous month or (ii) if elected by a DALC Member (and
permitted under a DALC Sponsor contract, if any), arrange to
have the requisite discount reflected on the DALC Member's
credit card statement. Rebate checks, if applicable, should be
processed within fifteen (15) business days of the end of the
calendar month in which the rebate was earned.
IV. CUSTOMER SERVICE
Transmedia shall use commercially reasonable efforts to achieve the following
customer service standards on a per calendar quarter basis:
(A) Transmedia shall maintain a toll-free customer service number
which shall be set forth on all directories.
(B) Transmedia representatives (or communicators employed by
vendors) shall approach each customer call courteously and
professionally.
(Page 121 of 252 Pages)
(C) The communicator who makes or receives calls shall clearly
identify himself or herself when the call begins.
(D) Transmedia shall use commercially reasonable efforts to ensure
that all communicators understand the call subject matter and
are able to respond to probable questions.
(E) All correspondence or customer service inquiries should be
resolved within an average of five (5) business days.
(F) On a monthly basis, all Membership and customer service
telephone inquiries should be answered personally within an
average of 20 seconds or less.
(G) On a monthly basis, no greater than an average of five percent
(5%) of inbound telephone inquiries should be abandoned.
(H) On a monthly basis, busy signal rates for inbound telephone
inquiries should not exceed an average of five percent (5%)
during the hours of 9:00 a.m. to 8:00 p.m., E.S.T.
(I) Customer Service hours of operation initially shall be 24
hours per day, seven days a week (except legal holidays);
provided, however, that Signature shall use commercially
reasonable efforts to renegotiate DALC Sponsor contracts to
substantially reduce such hours of operation.
(J) To ensure quality assurance, calls shall periodically be
monitored by supervisors (including Transmedia employees or
representatives) and recorded.
(Page 122 of 252 Pages)
ANNEX B
to Marketing Agreement
ECONOMIC COVENANTS
I. Signature Covenants. Signature and its Affiliates covenant and agree
with Transmedia that it shall not during the term of the Agreement to which this
Annex B is attached:
(A) offer rebates to DALC Members in excess of 20% of the gross dining
xxxx (including tax, tip and, if applicable, beverage);
(B) agree with any person to provide a directory of Merchants more
frequently than once per calendar quarter;
(C) enter into any marketing partner arrangements with existing or
hereafter acquired DALC Sponsors pursuant to which the directory, fulfillment
and service costs thereof would exceed a standard unit cost agreed to by the
Services Committee by more than 5%; or
(D) sell any new DALC membership during the nine-month period following
the date of this Agreement without charging an annual fee of at least $49.00,
provided, however, that such amount shall thereafter be subject to adjustment
from time to time by the Services Committee (whose approval shall not be
unreasonably withheld or delayed);
II. Transmedia Covenants. Transmedia and its Affiliates covenant and agree
with Signature that it shall not, during the term of the Agreement to which this
Annex B is attached:
(A) incur new Rights-to-Receive such that the ratio of food and
beverage (including tax and tip, if applicable) credits received to cash
advanced is not, during the three year period commencing on the date of this
Agreement, less than 1.6:1 in the first year, 1.7:1 in the second year and 1.8:1
in the third year; provided, however, that up to 10% of all Rights-to-Receive
outstanding at any time or 10% of all Merchants to which such Rights-to-Receive
relate (at Transmedia's election) shall be excluded from the foregoing
calculation; or
(B) grant or pay to any salesperson, independent contractor or other
sales personnel commissions in a manner or in an amount inconsistent with
Transmedia's practices in respect of sales of the Transmedia Program; provided,
however, that for five years after the date hereof, Transmedia shall not exceed
the following commission standards:
(i) For tier one sales people, 5% for the first year of
the restaurant contract and 2% for each subsequent
year renewal; and
(Page 123 of 252 Pages)
(ii) For tier two sales people (defined as sales people
with a restaurant portfolio in excess of $3 million
in gross usage per year), 3% for the first year of
the restaurant contract and 2% for each subsequent
year renewal;
provided, further, that these standards shall be subject to adjustment by the
Services Committee after the end of the fifth year following the date of this
Agreement.
(Page 124 of 252 Pages)
