<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
FORM 10-K/A1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------------------ --------------
Commission file number 1-13806
-------------
TRANSMEDIA NETWORK INC.
-----------------------
(Exact name of Registrant as specified in its charter)
Delaware 84-6028875
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11900 Biscayne Boulevard, Miami, Florida 33181
----------------------------------------------
(Address of principal executive offices) (zip code)
305-892-3300
------------
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.02 per share
--------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
----- -----
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates of the Registrant
as of December 16, 1997: $52,048,482.
Number of shares outstanding of Registrant's Common Stock, as of December 16,
1997: 10,359,956.
DOCUMENTS INCORPORATED BY REFERENCE:
2
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This Form 10-K/A Report amends the Form 10-K Report filed by Transmedia
Network Inc. (the "Registrant") with the Securities and Exchange Commission on
December 22, 1997 (the "Original Report"). Items 10, 11, 12 and 13 of Part III
of the Original Report were incorporated by reference to the Registrant's
definitive Proxy Statement for its 1998 Annual Meeting of Stockholders to be
filed with the Commission by January 28, 1998. Registrant has filed preliminary
proxy material with the Commission. The definitive Proxy Statement will not be
filed by January 28, 1998. Accordingly, Registrant is filing this amendment to
the Original Report to provide the information required by Items 10, 11, 12 and
13 of Part III of Form 10-K. The statements contained in the Introduction on
page 1 of the Original Report are hereby incorporated by reference herein.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The members of the Company's Board of Directors and nominees to the
Company's Board of Directors are as follows (Note, Messrs. Chasen, Africk and
Gardner are also nominees for election to the Company's Board of Directors at
the 1998 Annual Meeting of Stockholders):
CURRENT DIRECTORS AND NOMINEES FOR ELECTION
Position and/or Director
Nominee Age Principal Occupation Since
- ------- --- -------------------- -----
Melvin Chasen 69 Chairman of the Board, 1984
President and Chief
Executive Officer of the
Company
Jack Africk 69 Chairman of the Board, 1992
Evolution Consulting
Group, Inc.
James J. Callaghan 57 Vice President of the 1991
Company and
President, Transmedia
Restaurant Company Inc.
Irwin Hochberg 69 Senior Partner and 1987
President, Bloom
Hochberg & Co., P.C.
3
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Position and/or Director
Nominee Age Principal Occupation Since
- ------- --- -------------------- -----
Barry S. Kaplan 39 Vice President of the 1996
Company and
President, Transmedia
Service Company Inc.
Henry Seiden 69 Chairman and Chief 1988
Executive Officer, The
Seiden Group Inc.
Herbert M. Gardner 58 Senior Vice President, 1983
Janney Montgomery
Scott, Inc.
Rod F. Dammeyer 57 Managing Director, *
Equity Group
Investments, Inc.
F. Philip Handy 53 Managing Director, *
Equity Group
Investments, Inc.
George S. Wiedemann 53 Chairman of the Board *
and Chief Executive
Officer, Grey
Marketing
Lester Wunderman 77 Chairman of the Board, *
Wunderman Cato
Johnson
- ------------------------------
*Not previously a director of the Company
Business Experience
Mr. Chasen has been a director and the Chairman of the Board, President
and Chief Executive Officer of the Company since 1984. From 1984 through 1987,
he was a director, Chairman of the Board, President and Chief Executive Officer
of Transmedia Colorado. From its
4
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inception in 1983 until 1984, he was President and a director of Transmedia
Network Inc., a private Delaware corporation engaged in the media barter
business, which merged with Transmedia Colorado in 1984. Until March 1995, Mr.
Chasen served as a director of The Western Transmedia Company, Inc., as a
director of Transmedia Europe, Inc., the Company's European licensee, and as a
director of Transmedia Asia Pacific, Inc., the Company's licensee for the
Asia-Pacific rim region.
Mr. Africk, who became a director of the Company in 1992, is the
Chairman of the Board of Evolution Consulting Group, Inc., Boca Raton, Florida.
From 1993 to 1995, he was Vice Chairman of the Board of Duty Free International,
Inc., and was a director of that company until August 1997. Until June 1993, Mr.
Africk was Vice Chairman of UST, Inc. and the President and Chief Executive
Officer of its subsidiary, United States Tobacco Company. He is also a director
of Crown Central Petroleum Corporation and of Tanger Factory Outlet Centers.
Mr. Callaghan, a director of the Company since 1991, was elected Vice
President of the Company and President of Transmedia Restaurant Company Inc., a
subsidiary, in 1994. He joined the Company in 1989 and served as its Executive
Vice President, Vice President, Sales and Marketing and Treasurer.
Mr. Kaplan was elected a Vice President of the Company and President of
Transmedia Service Company Inc., a subsidiary, in September 1995 and was elected
a Director of the Company in March 1996. From 1986 until joining the Company, he
served in various positions including Executive Vice President, Chief Operating
Officer of Liberty Travel, Inc., a chain of full service travel agencies.
Mr. Hochberg, a director of the Company since 1987, served as director
of Transmedia Network Inc., a Colorado corporation ("Transmedia Colorado"),
which was merged into the Company. He has been Senior Partner and President of
Bloom Hochberg & Co., P.C., a firm of certified public accountants, for more
than seven years. He is also a director of Ampal-America Israel Corporation, a
subsidiary of Bank Hapoalim, which finances industrial, financial, commercial
and agricultural enterprises.
Mr. Seiden, a director of the Company since 1988, is presently the
Chairman and Chief Executive Officer of The Seiden Group, Inc., an advertising
consultant, and Vice Chairman of Jordan, McGrath, Case & Taylor Inc., an
advertising agency. Mr. Seiden had been the Chairman of Ketchum Advertising, New
York, an advertising agency which is a division of Ketchum Communications, Inc.,
from 1987 through 1991.
Mr. Gardner, a director of the Company since 1983, has been employed as
a Senior Vice President of Janney Montgomery Scott Inc., an investment banking
firm, for more than five years. He was a director of two predecessors of the
Company from 1983 through 1987. Mr. Gardner is a director of Nu Horizons
Electronics Corp., an electronics components distributor. He is Chairman of the
Board of Supreme Industries, Inc., a company which manufactures specialized
truck bodies and shuttle buses. Mr. Gardner is also a director of American
Country Holdings Inc., a property and
5
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casualty insurance holding company. This company (formerly, the Western
Transmedia Company Inc.) was the Company's franchisee in California, Oregon,
Washington and parts of Nevada until January 1997. He is also a director of TGC
Industries, Inc., a company in the geophysical services industry, a director of
Hirsch International Corp., an importer of computerized embroidery machines, a
developer of embroidery machine application software and a provider of other
services to the embroidery industry.
Rod F. Dammeyer is a Managing Director of Equity Group Investments,
Inc. He also serves as President, Chief Executive Officer and a director of
Anixter International, Inc., where he has been employed since 1985. Currently,
Mr. Dammeyer also serves as a director of each of Antec Corporation, CNA Surety
Corp., Inc., Grupo Azucarero Mexico (GAM), IMC Global, Inc., Jacor
Communications, Inc., Lukens Inc. and TeleTech Holdings, Inc. He is also a
trustee of Van Kampen American Capital, Inc, a closed-end fund, and a member of
the Chase Manhattan Corporation Advisory Board.
F. Philip Handy is a Managing Director of Equity Group Investments,
Inc. Prior to joining Equity Group, Mr. Handy was Chairman and President of
Winter Park Capital Company, a private investment firm he founded in 1980. From
1976 to 1980, he was President of ComBanks Corporation, a bank holding company
in Central Florida. Mr. Handy formerly owned and was Chairman and Chief
Executive Officer of Maryland Club Foods, Inc., a coffee roasting and marketing
company which was purchased from the Coca-Cola Company and subsequently sold in
October 1989 to Procter & Gamble Company. He also served as Chairman and Chief
Executive Officer and was a majority owner of TOC Retail Inc., a 350-store gas
marketing/convenience store chain. He was majority owner and Chairman of the
Board of Bordo Citrus Products, Inc. and Lakeland Packing Company, citrus-based
food service companies. Mr. Handy currently serves as a director of each of
Anixter International, Inc., Banca Quandium S.A., Q-Tel, S.A. de C., and Jacor
Communications, Inc.
George S. Wiedemann is the Chairman of the Board and Chief Executive
Officer of Grey Direct, a direct marketing agency that specializes in multimedia
direct response advertising, which he founded in 1979. He also founded Grey
Interactive in 1993 and Grey Direct e.marketing in 1995. Mr. Wiedemann was
elected to the Direct Marketing Association Board of Directors in October 1990,
and presently serves as Chairman Elect.
Lester Wunderman is founder and Chairman of the Board of Wunderman Cato
Johnson, a direct marketing advertising agency, and a director of Dentsu
Wunderman Direct, an affiliated company, in Japan. He also currently serves as a
Visiting professor of Direct Marketing at the School for
Continuing Education at New York University and as a director of InfoNautics
Inc. Mr. Wunderman was formerly a director of The Advertising Council and of
Direct Marketing Association and served for two years as Secretary/Treasurer and
as a member of the Operations Committee and Board of Directors of the American
Association of Advertising Agencies. Mr. Wunderman coined the term "direct
marketing" and is the author of two books: Frontiers of Direct Marketing,
published in 1981, and Being Direct, published in 1997.
6
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Executive Officers
Information concerning the executive officers of the Company is set
forth following Item 4 in Part I of the Original Report under the caption
"Executive Officers of the Registrant".
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons holding more than 10 percent
of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission reports of changes in ownership and annual
reports of ownership of Common Stock and other equity securities of the Company.
Such directors, executive officers and ten-percent stockholders are also
required to furnish the Company with copies of all such filed reports.
The Company believes that, during the fiscal year ended September 30,
1997, all filing requirements under Section 16(a) of the Securities Exchange Act
of 1934, as amended, applicable to its officers, directors and greater than ten
percent stockholders were complied with on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides, for the periods indicated, certain
summary information concerning the cash and non-cash compensation earned by or
awarded to the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers who were serving as executive officers as
of September 30, 1997 (collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-----------------------
Securities Underlying
Name and Principal Position Year Salary Bonus Options(#)
- --------------------------- -------- ----------- ------- -----------------------
<S> <C> <C> <C> <C>
Melvin Chasen 1997 $ 350,000 $-- 20,000
Chairman of the Board, President and 1996 300,000 216,100 --
Chief Executive Officer 1995 275,000 362,900 30,000
James M. Callaghan 1997 300,000 30,000 15,000
Vice President 1996 250,000 10,000 --
1995 180,000 16,400 15,000
</TABLE>
7
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<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-----------------------
Securities Underlying
Name and Principal Position Year Salary Bonus Options(#)
- --------------------------- -------- ----------- ------- -----------------------
<S> <C> <C> <C> <C>
Barry S. Kaplan 1997 280,000 -- 15,000
Vice President 1996 225,000 -- 50,000
1995 27,692 -- 20,000
Stephen E. Lerch 1997 193,000 15,000 30,000
Executive Vice President and 1996 -- -- --
Chief Financial Officer 1995 -- -- --
Paul A. Ficalora 1997 155,500 -- 6,000
Executive Vice President of 1996 146,250 10,000 --
Transmedia Restaurant Company Inc. 1995 130,673 30,000 10,000
</TABLE>
Employment Agreements
In December of 1997, the Company and Mr. Chasen entered into an
agreement (i) pursuant to which Mr. Chasen's employment with the Company will
terminate on September 15, 1998; (ii) his Amended and Restated Consulting
Agreement was terminated; (iii) his right to receive $1,000,000 in the event of
the sale of a control block of stock of the Company was extinguished; and (iv)
he agreed to a five-year non-competition covenant and a confidentiality
agreement with the Company. In return, (i) Mr. Chasen received a payment of
$2,750,000 on December 30, 1997; (ii) the Company agreed that any of his stock
options which are unvested as of the termination of his employment will vest and
that all his stock options will be exercisable through December 31, 1998; (iii)
his indebtedness to the Company in the amount of $134,900 was canceled; (iv) the
Company agreed to purchase a new car for him of similar style and quality to the
leased automobile which the Company currently provides him (estimated to cost
approximately $60,000); (v) Mr. Chasen and his wife will receive health
insurance coverage for the remainder of their respective lives (currently
costing approximately $6,700 per year); and (vi) he will be reimbursed for his
reasonable accounting and legal expenses (approximately $22,000) incurred in
connection with such negotiations. For the Fiscal Year ended September 30, 1997,
Mr. Chasen received a base salary of $350,000 and did not receive a bonus. In
Fiscal Year 1998, Mr. Chasen will receive a base salary of $375,000 and be
eligible for a bonus, not to exceed $700,000 for Fiscal Year 1998.
The Company's Amended and Restated Employment Agreement with Mr.
Callaghan provides for a base salary of $300,000 in fiscal year 1997, $315,000
in fiscal year 1998, $335,000 in fiscal year 1999 and a bonus not to exceed
one-half of his salary during each year of the term of the Employment Agreement.
The Amended and Restated Employment Agreement terminates September 30, 1999. The
Company has agreed to maintain in force a $500,000 life insurance policy on Mr.
Callaghan, with his estate listed as beneficiary during the term of the
Employment Agreement, which will be transferred to Mr. Callaghan, without cost,
at the end of the employment term (whether or not he becomes disabled during the
term). If Mr. Callaghan becomes disabled during the employment term, he will
receive his full compensation during the first six
8
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months of disability, and thereafter will be paid 75% of his salary for the
remaining term of the agreement and pro rata bonus only with respect to the
portion of the fiscal year ending at the end of the first six months of
disability. The Company may terminate the Employment Agreement for certain
enumerated causes. The Employment Agreement restricts Mr. Callaghan from
competing against the Company for a two-year period following termination.
The Company's Amended and Restated Employment Agreement with Mr. Kaplan
provides for a base salary of $280,000 in fiscal year 1997, $315,000 in fiscal
year 1998, $335,000 for fiscal year 1999 and a bonus not to exceed one-half
of his base salary for each year of the term of the Employment Agreement. The
Amended and Restated Employment Agreement terminates on September 30, 1999. The
Company has agreed to maintain in force a $500,000 life insurance policy on Mr.
Kaplan, with his estate listed as beneficiary during the term of the Employment
Agreement, which will be transferred to Mr. Kaplan, without cost, at the end of
the employment term (whether or not he becomes disabled during the term). If Mr.
Kaplan becomes disabled during the employment term, he will receive his full
compensation during the first six months of disability, and thereafter will be
paid 75% of his salary for the remaining term of the Agreement and pro rata
bonus only with respect to the portion of the fiscal year ending at the end of
the first six months of disability. The Company may terminate the Employment
Agreement for certain enumerated causes. The Employment Agreement restricts Mr.
Kaplan from competing against the Company for a two-year period following the
termination of his employment.
Effective February 1, 1997, the Company entered into a letter agreement with Mr.
Stephen E. Lerch, pursuant to which Mr. Lerch was elected Executive Vice
President of the Company. Pursuant to this letter agreement, Mr. Lerch will
receive (i) a base salary of $200,000 per annum, (ii) a minimum bonus of $15,000
for Fiscal Year 1997 and (iii) a signing incentive of $60,000 that has already
been paid. As compensation for services rendered to the Company, it also granted
Mr. Lerch ten year options to purchase 10,000 shares of Common Stock at an
exercise price of $5.25 per share. The letter agreement also provides that Mr.
Lerch will be entitled to receive a lump sum payment of $500,000 in the event of
a change of control of the Company in which he was not offered a comparable
position of comparable salary. The letter agreement has no term and does not
define a "change of control." In the event Mr. Lerch ceases to be an employee of
the Company and unless the Compensation Committee decides otherwise, his
options will generally remain exercisable for a period of 90 days (one year in
the case of his death or disability) following the termination of his
employment.
Options Granted
The following table sets forth, as to the executive officers named in
the Summary Compensation Table, with respect to the fiscal year ended September
30, 1997, information relating to the grants of stock options pursuant to the
1996 Plan and otherwise:
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Percent of Annual Rates of
Number of Total Options Stock Price
Securities Granted to Appreciation
Underlying Employees Exercise of for Option Term
Date of Options In Fiscal Base Price Expiration -------------------------
Name Grant Granted Year ($/sh)(1) Date 5% 10%
- ---- ------- ---------- ------------- ---------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Barry S. Kaplan April 14, 1997 15,000 7.25% $4.3750 April 14, 2007 $106,896.15 $170,214.30
Stephen E. Lerch February 10, 1997 10,000 9.67% $5.2500 February 10, 2007 $171,034.00 $272,343.00
Stephen E. Lerch April 14, 1997 20,000 4.84% $4.3750 April 14, 2007 $71,264.10 $113,476.20
Melvin Chasen April 14, 1997 20,000 9.67% $4.3750 April 14, 2007 $171,034.00 $272,343.00
James E. Callaghan April 14, 1997 15,000 7.25% $4.3750 April 14, 2007 $106,896.15 $170,214.30
Paul A. Ficalora April 14, 1997 6,000 2.90% $4.3750 April 14, 2007 $42,758.46 $68,085.72
</TABLE>
- --------------
(1) All options were granted at 100% of the underlying Common Stock price on
the date of grant.
10
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Option Grants/Exercises in 1997
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended December 31, 1997 to the named
executive officers.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-The-
Unexercised Options Money Options at
Shares Value Held at Fiscal Year-End (#) Fiscal Year-End ($) (1)
Acquired on Realized ------------------------------- ------------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Melvin Chasen -- -- 297,500 -- -- --
James M. Callaghan -- -- 142,500 28,125 -- --
Barry S. Kaplan -- -- 22,500 85,000 -- --
Stephen E. Lerch -- -- -- 30,000 -- --
Paul A. Ficalora 16,875 $88,593.75 20,750 11,000 -- --
</TABLE>
- ---------------
(1) Based on the closing sale price of the Company's Common Stock on the
New York Stock Exchange of $4.1875 per share on September 30, 1997.
Directors' Remuneration
The Company pays each director who is not a full-time employee an
annual stipend of $10,000 in quarterly installments in arrears on January 1,
April 1, July 1 and October 1 of each fiscal year, and an attendance fee of
$1,000 for each meeting of the Board that the director attends. Full-time
employees of the Company who also serve as directors do not receive compensation
for attending board meetings. The Company also pays each member of the Audit
Committee and the Compensation Committee an attendance fee of $1,000 for each
meeting of the respective committee attended by such member.
Compensation Committee Report on Executive Compensation
The Company's executive compensation program is designed to help
attract, retain, and motivate the highly qualified personnel needed to manage
the Company's business and affairs. To meet these goals, the Company has
implemented a compensation program with the following components:
o Base salaries that reflect the scope and responsibilities of
the position, as well as the skills, knowledge, experience,
abilities, and contributions of each individual executive.
o Short-term incentives that are based on the financial performance
of the Company.
o Long-term incentives that balance the executive officer's
short-and long-term perspectives and provide rewards
consistent with stockholder returns.
11
<PAGE>
Compensation decisions are made following an assessment of the
individual's contributions to the Company's success, any significant changes in
the individual's role or responsibility, and internal equity of the Company's
compensation relationships.
The competitiveness of the Company's total compensation
program--incorporating base salaries, short-term incentives, and long-term
incentives--is reviewed, and where appropriate, with the assistance of outside
compensation consultants. In fiscal 1996, the Company retained William M.
Mercer, Incorporated ("Mercer") to evaluate the Company's compensation program.
Based on Mercer's report, the Company concluded that the compensation paid to
its executives is fair and reasonable. In general, the Company believes that the
overall compensation levels for the executive group should reflect competitive
levels of compensation for comparable positions in similarly sized companies
over the long term.
The Company believes that it is essential to link executive
compensation and Company performance. To meet this objective, the Company
maintains a stock option program which provides option grants on a regular,
though not necessarily annual, basis to provide participants with an opportunity
to share in the Company's performance. Stock option grants reflect the past
contributions of the individual, the individual's ability to affect the Company
profitability, the scope of the individual's responsibilities, the need to
retain the individual's services over time and management's assessments and
recommendations. All executive officers, including the chief executive officer,
are eligible to participate in this program.
The Company's policy of awarding cash bonuses is designed to
specifically relate executive pay to Company and individual performance. As a
pay-for-performance program, cash bonuses provide financial rewards for
achievement of substantive Company and personal objectives. Actual awards paid
are based primarily on actual Company performance. During the fiscal year 1997,
no cash performance bonuses were awarded to executive officers of the Company
and none were required under the terms of their employment arrangements with the
Company, with the exception that Mr. Lerch received an incentive upon commencing
employment with the Company as provided under the terms of his employment. The
Committee did not review Mr. Lerch's employment arrangements with the Company.
COMPENSATION COMMITTEE
Jack Africk
Irwin Hochberg
Henry Seiden
Herbert M. Gardner
December 26, 1997
12
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Stock Performance Graph
Stock Performance Graph and Table
Comparison of Five-Year
Cumulative Total Returns Among Transmedia Network Inc.,
S&P Composite Index and the S&P Financial Index
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Company 09/30/92 09/30/93 09/30/94 09/30/95 09/30/96 09/30/97
- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Transmedia Network Inc. ......................... 100 122 187 142 82 60
S&P Composite.................................... 100 110 111 140 165 227
S&P Financial Index.............................. 100 133 120 165 201 310
</TABLE>
13
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Compensation Committee Interlocks and Insider Participation
For the fiscal year ended September 30, 1997, the Board of Directors
has a Compensation Committee which performed the functions of a board
compensation committee. No executive officers served on the Compensation
Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of December 24,
1997 regarding ownership of the Company's Common Stock by each person who is
known by the Company to own beneficially more than 5% of its Common Stock.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power with respect to the shares beneficially owned by him.
<TABLE>
<CAPTION>
Prior to Giving Effect After Giving Effect
to the Investment to the Investment
------------------------------ ----------------------------
Amount of Amount of
Common Stock Common Stock
Beneficially Percent of Beneficially Percent of
Name and Address Owned Class Owned Class
- ---------------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Melvin Chasen.......................... 1,147,231(1) 10.83% 1,147,231 8.02%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Transmedia Investors, L.L.C.; 1,348,009(2) 13.04% 5,048,009(3) 35.96%
Samstock, L.L.C........................
c/o Samstock, L.L.C.
Two North Riverside Plaza
Chicago, Illinois 60606
</TABLE>
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 24, 1997, by each
director and nominee for director of the Company, the executive officers named
in the Summary Compensation Table and the executive officers and directors as a
group and includes options and warrants to purchase shares of Common Stock which
will become exercisable by February 24, 1998. Except as otherwise indicated,
each such stockholder has sole voting and investment power with respect to the
shares beneficially owned by such stockholder.
14
<PAGE>
<TABLE>
<CAPTION>
Amount of Options and
Common Stock Warrants
Beneficially Exercisable Percent of
Name and Address Owned Within 60 Days Total Class
- ---------------- ------------ -------------- ------- ----------
<S> <C> <C> <C> <C>
Melvin Chasen.......................... 849,731 297,500 1,147,231(1) 10.83%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
James M. Callaghan..................... 85,662 142,500 228,162(4) 2.19%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Herbert M. Gardner..................... 297,661 28,750 326,411(5) 3.16%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Irwin Hochberg......................... 10,937 28,750 39,687(6) 0.38%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Henry Seiden........................... 139,280 28,750 168,030(7) 1.63%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Jack Africk............................ 63,830 28,750 92,580(8) 0.90%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Paul A. Ficalora....................... 186,035 20,750 206,785(9) 2.01%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Barry S. Kaplan........................ 32,800 35,000 67,800(10) 0.66%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Gregory R. Borges...................... 18,625 9,250 27,875(11) 0.27%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Amount of Options and
Common Stock Warrants
Beneficially Exercisable Percent of
Name and Address Owned Within 60 Days Total Class
- ---------------- ------------ -------------- ------- ----------
<S> <C> <C> <C> <C>
Kathryn M. Ferara...................... 657 5,125 5,782(12) 0.06%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Stephen E. Lerch....................... -- -- -- --
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
All directors and executive officers as 1,685,218 596,375 2,281,593 20.95%
a group (11 persons)..............
</TABLE>
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(1) Includes for Mr. Chasen (i) 139,600 shares owned by a family
partnership for which Mr. Chasen exercises voting and investment
authority, (ii) options to purchase 135,000 shares at a price of
$4.8333 per share, which options were granted outside the 1987 Stock
Option and Rights Plan (the "1987 Plan") and expire in May 2002, (iii)
options to purchase 67,500 shares of Common Stock of the Company at an
exercise price of $7.4445 per share, which options were granted outside
the 1987 Plan and expire in September 1998, (iv) options to purchase
33,750 shares at a price of $15.00 per share, which options were
granted under the 1987 Plan and expire in March 2004, (v) options to
purchase 15,000 shares at a price of $12.25 per share, which options
were granted under the 1987 Plan and expire in March 2005 and (vi)
options to purchase 46,250 shares, which were granted under the 1987
and 1996 Plans and are now exercisable subsequent to the agreement Mr.
Chasen executed with the Company on December 29, 1997. All of such
options are presently exercisable. Does not include (i) 200,778 shares
held by Iris Chasen, the wife of Mr. Chasen, or (ii) 55,000 shares held
by Mr. Chasen's three adult children, as of clauses (i) and (ii) of
which Mr. Chasen disclaims beneficial ownership. Subject to the terms
of the Transaction Documents, Mr. Chasen's beneficially owned shares
are subject to shared voting power with the Purchasers.
(2) Includes 1,348,009 shares which are owned by Melvin Chasen and Iris
Chasen, but which are subject to the proxy in favor of the Purchasers
contained in the Agreement Among Stockholders.
(3) Includes (i) 2,500,000 shares pursuant to the Purchase Agreement, (ii)
warrants to purchase 1,200,000 shares at exercise prices in equal parts
at $6.00 per share, $7.00 per share, and $8.00 per share, which
warrants expire on the fifth anniversary of the closing of the
Investment, and (iii) 1,348,009 shares which are owned by Melvin Chasen
and Iris Chasen, but which are subject to the voting and disposition
restrictions in favor of Purchasers contained in the Agreement Among
Stockholders.
(4) Includes for Mr. Callaghan (i) 5,038 shares held in Mr. Callaghan's
Individual Retirement Account, (ii) options to purchase 84,375 shares
of Common Stock at an exercise price of $4.8333 per share, which
options were granted under the 1987 Plan and expire in May 2002, (iii)
options to purchase 33,751 shares at an exercise price of $7.4445 per
share, which were granted under the 1987 Plan and expire in September
2003, (iv) options to purchase 16,875 shares at an exercise price of
$15.00 per share, which options were granted under the 1987 Plan and
expire in March 2004, and (v) options to purchase 7,500 shares at a
price of $12.25 per share, which options were granted under the 1987
Plan, and expire in March 2005. All of such options are presently
exercisable. Does not include (i) options issued under the 1987 and
1996 Plans to purchase 28,125 shares, which are not exercisable within
60 days of December 24, 1997, or (ii) 5,724 shares held in the
Individual
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<PAGE>
Retirement Account of Mr. Callaghan's wife, as to all of which shares
Mr. Callaghan disclaims beneficial ownership.
(5) Includes for Mr. Gardner (i) 137,439 shares held by Herbert M. Gardner
(Keogh), (ii) 4,260 shares held by The Gardner Family Foundation, Inc.
of which Mr. Gardner is President, (iii) options to purchase 11,250
shares of Common Stock of the Company at an exercise price of $7.4445
per share, which options were granted outside the 1987 Plan and expire
in September 1998, (iv) options to purchase 7,500 shares of Common
Stock at an exercise price of $15.00 per share, which options were
granted under the 1987 Plan and expire in March 2004, and (v) options
to purchase 5,000 shares of Common Stock at an exercise price of $12.25
per share, which options were granted under the 1987 Plan and expire in
March 2005 and (vi) options to purchase 5,000 shares of Common Stock at
an exercise price of $7.875, which options were granted under the 1996
Plan and expire in March 2006. All of such options are presently
exercisable. Does not include (i) 3,834 shares held by Mr. Gardner's
wife individually or as custodian for their children and (ii) options
to purchase 5,500 shares at an exercise price of $4.375, which are not
exercisable within 60 days of December 24, 1997, as to all of which
shares Mr. Gardner disclaims beneficial ownership.
(6) Includes for Mr. Hochberg (i) options to purchase 11,250 shares of
Common Stock of the Company at an exercise price of $7.4445 per share,
which options were granted outside the 1987 Plan and expire in
September 1998, and (ii) options to purchase 7,500 shares of Common
Stock at an exercise price of $15.00 per share which options were
granted under the 1987 Plan and expire in March 2004, and (iii) options
to purchase 5,000 shares of Common Stock at an exercise price of $12.25
per share, which options were granted under the 1987 Plan and expire in
March 2005, and (iv) options to purchase 5,000 shares of Common Stock
at an exercise price of $7.875, which options were granted under the
1996 Plan and expire in March 2006. All of such options are presently
exercisable. Does not include (i) options to purchase 5,500 shares,
which were granted under the 1996 Plan and are not exercisable within
60 days of December 24, 1997; (ii) 4,362 shares owned by Mrs. Hochberg
and (iii) 10,500 shares owned by Mr. Hochberg's children and
grandchildren, as to all of which Mr. Hochberg disclaims beneficial
ownership.
(7) Includes for Mr. Seiden (i) options to purchase 11,250 shares of Common
Stock of the Company at an exercise price of $7.4445 per share, which
options were granted outside the 1987 Plan and expire in September
1998, (ii) options to purchase 7,500 shares of Common Stock at an
exercise price of $15.00 per share, which options were granted under
the 1987 Plan and expire in March 2004, and (iii) options to purchase
5,000 shares of Common Stock at an exercise price of $12.25 per share,
which options were granted under the 1987 Plan and expire in March 2005
and (iv) options to purchase 5,000 shares of Common Stock at an
exercise price of $7.875, which options were granted under the 1996
Plan and expire in March 2006. All of such options are presently
exercisable. Does not include options to purchase 5,500 shares, which
were granted under the 1996 Plan and are not exercisable within 60 days
of December 24, 1997.
(8) Includes for Mr. Africk (i) 63,830 shares owned by a family corporation
for which Mr. Africk exercises voting and investment authority, (ii)
options to purchase 11,250 shares of Common Stock of the Company at an
exercise price of $7.4445 per share, which options were granted outside
the 1987 Plan and expire in September 1998, and (iii) options to
purchase 7,500 shares of Common Stock at an exercise price of $15.00
per share, which options were granted under the 1987 Plan and expire in
March 2004 and (iv) options to purchase 5,000 shares of Common Stock at
an exercise price of $12.25 per share, which options were granted under
the 1987 Plan and expire in March 2005 and (v) options to purchase
5,000 shares of Common Stock at an exercise price of $7.875, which
options were granted under the 1996 Plan and expire in March 2006. All
of such options are presently exercisable. Does not include options to
purchase 5,500 shares, which were granted under the 1996 Plan and are
not exercisable within 60 days of December 24, 1997.
(9) Includes for Mr. Ficalora (i) options to purchase 15,750 shares at an
exercise price of $7.4445 per share, which options were granted under
the 1987 Plan and expire in September 2003, and (ii) options to
purchase 5,000 shares at an exercise price of $12.25, which options
were granted under the 1987 Plan and expire in March 2005. All of such
options are presently exercisable. Does not include (i) options to
purchase 10,000 shares, which were granted under the 1987 and 1996
Plans and are not exercisable within 60 days of November 20,
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<PAGE>
1997, (ii) 6,075 shares held by Mrs. Ficalora, and (iii) 1,350 shares
held by Mr. Ficalora's child, as to all of which shares Mr. Ficalora
disclaims beneficial ownership.
(10) Includes for Mr. Kaplan, (i) options to purchase 10,000 shares at an
exercise price of $9.25 per share, which options were granted under the
1987 Plan and expire in August 2005, and (ii) options to purchase
12,500 shares at an exercise price of $10.00 per share, which options
were granted under the 1987 Plan and expire in December 2005. All of
such options are presently exercisable. Does not include options issued
under the 1987 and 1996 Plans to purchase 62,500 shares, which are not
exercisable within 60 days of December 24, 1997.
(11) Includes for Mr. Borges (i) options to purchase 6,750 shares at an
exercise price of $7.4445 per share, which options were granted under
the 1987 Plan and expire in September 2003, and (ii) options to
purchase 2,500 shares at an exercise price of $12.25 per share, which
options were granted under the 1987 Plan and expire in March 2005. All
of such options are presently exercisable. Does not include options to
purchase 7,500 shares, which were granted under the 1987 and 1996 Plans
and are not exercisable within 60 days of December 24, 1997.
(12) Includes for Ms. Ferara (i) options to purchase 3,375 shares at an
exercise price of $7.4445 per share, which options were granted under
the 1987 Plan and expire in September 2003 and (ii) options to purchase
1,750 shares at an exercise price of $12.25 per share, which options
were granted under the 1987 Plan and expire in March 2005. All of such
options are presently exercisable. Does not include options to purchase
6,750 shares, which were granted under the 1987 and 1996 Plans and are
not exercisable within 60 days of December 24, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1997, the Company and Mr. Chasen entered into an agreement (i)
pursuant to which Mr. Chasen's employment with the Company will terminate on
September 15, 1998; (ii) his Amended and Restated Consulting Agreement was
terminated; (iii) his right to receive $1,000,000 in the event of the sale of a
control block of stock of the Company was extinguished; and (iv) he agreed to a
five-year non-competition covenant and a confidentiality agreement with the
Company. In return, (i) Mr. Chasen received a payment of $2,750,000 on December
30, 1997; (ii) the Company agreed that any of his stock options which are
unvested as of the termination of his employment will vest and that all his
stock options will be exercisable through December 31, 1998; (iii) his
indebtedness to the Company in the amount of $134,900 was canceled; (iv) the
Company agreed to purchase a new car for him of similar style and quality to the
leased automobile which the Company currently provides him (estimated to cost
approximately $60,000); (v) Mr. Chasen and his wife will receive health
insurance coverage for the remainder of their respective lives (currently
costing approximately $6,700 per year); and (vi) he will be reimbursed for his
reasonable accounting and legal expenses (approximately $22,000) incurred in
connection with such negotiations. As originally negotiated with Mr. Chasen
(approved by the Board of Directors by a vote of five to one, with Mr. Chasen
abstaining) the agreement provided that the Company would provide Mr. Chasen
an office and secretary services, on the Company's premises or at an off-site
location (at Mr. Chasen's option), for five years following the end of his
employment and a leased automobile for such five year period, but did not
provide for the debt forgiveness. The Company has treated the termination of
Mr. Chasen's Amended and Restated Employment Agreement and his Amended and
Restated Consulting Agreement as a one-time, non-operating pretax charge of
approximately $3.1 million in the first quarter ended December 31, 1997.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to its
Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, New York, on the 28th day of January, 1998.
TRANSMEDIA NETWORK INC.
By: /s/ Melvin Chasen
---------------------------
Name: Melvin Chasen
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment to the Annual Report has been signed below by the following persons on
behalf of the Registrant, Transmedia Network Inc., in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Capacity In
Signature Which Signed Date
--------- ------------ ----
<S> <C> <C>
/s/ Melvin Chasen Chairman of the Board, January 28, 1998
------------------------- President, Chief Executive
Melvin Chasen Officer and Director
/s/ Stephen E. Lerch Executive Vice President January 28, 1998
------------------------- and Chief Financial Officer
Stephen E. Lerch
/s/Jack Africk Director January 28, 1998
-------------------------
Jack Africk
/s/Barry S. Kaplan Director January 28, 1998
-------------------------
Barry S. Kaplan
/s/Henry Seiden Director January 28, 1998
-------------------------
Henry Seiden
</TABLE>
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