<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
TRANSMEDIA NETWORK INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.02 PER SHARE
(Title of Class of Securities)
893767103
(CUSIP Number)
SUSAN OBUCHOWSKI
EQUITY GROUP INVESTMENTS, L.L.C.
TWO NORTH RIVERSIDE PLAZA, SUITE 600
CHICAGO, ILLINOIS 60606
(312) 454-0100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
SEPTEMBER 7, 1999
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this Schedule because of Rule 13d-1(b)(3) or (4), check the following box [__].
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SCHEDULE 13D
CUSIP NO. 893767103 PAGE 2 OF 5 PAGES
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EGI-Transmedia Investors, L.L.C.
FEIN#: 36-4192415
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
4,697,449*
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
476,647
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,444,541
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,697,449*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
* Represents the number of shares which are beneficially owned by all
members of the group, in the aggregate, and which are subject to voting
arrangements set forth more fully in Items 3 and 4 below. This filing shall
not be construed as an admission that such reporting person is the
beneficial owner of all of such shares.
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SCHEDULE 13D
CUSIP NO. 893767103 PAGE 2 OF 5 PAGES
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock, L.L.C.
FEIN: 36-4156890
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
4,697,449*
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
2,776,261
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
1,444,541
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,697,449*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
* Represents the number of shares which are beneficially owned by all
members of the group, in the aggregate, and which are subject to voting
arrangements set forth more fully in Items 3 and 4 below. This filing
shall not be construed as an admission that such reporting person is the
beneficial owner of all such shares.
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SCHEDULE 13D
CUSIP NO. 893767103
---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Halmostook Limited Partnership
FEIN#: 830319692
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Wyoming
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
4,697,449*
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
604,532
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,697,449*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
* Represents the number of shares which are beneficially owned by all members
of the group, in the aggregate, and which are subject to voting
arrangements set forth more fully in Items 3 and 4 below. This filing
shall not be construed as an admission that such reporting person is the
beneficial owner of all of such shares.
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This Amendment No. 2 to Schedule 13D relates to the common stock, par value
$.02 per share ("Common Stock"), of Transmedia Network Inc. (the "Issuer").
Items 2, 3, 4, 5, 6 and 7 of the Schedule 13D are hereby amended to read in
their entirety as follows:
ITEM 2. IDENTITY AND BACKGROUND
(a-c) This Statement is being filed by the following beneficial owners of
Common Stock: EGI-Transmedia Investors, L.L.C., a Delaware limited liability
company ("TMI"), Samstock, L.L.C., a Delaware limited liability company
("Samstock"), and Halmostock Limited Partnership, a Wyoming limited partnership
("Halmostock"). (TMI, Samstock and Halmostock are referred to herein,
individually, as a "Stockholder" and, collectively, as the "Stockholders.") The
sole managing member of TMI is Samstock. The sole member of Samstock is SZ
Investments, L.L.C., a Delaware limited liability company ("SZI"). The managing
member of SZI is Zell General Partnership, Inc., an Illinois corporation
("ZGP"). The general partner of Halmostock is Halmos Investments-Western, Inc.,
a Wyoming corporation ("HIW"). Additional information concerning SZI, ZGP and
HIW is set forth in Appendix A hereto.
The principal business of TMI is investment in the securities of the
Issuer. The principal business of Samstock, SZI and ZGP is general investments.
The business address of TMI, Samstock, SZI and ZGP is Two North Riverside Plaza,
Chicago, Illinois, 60606. The principal business of Halmostock is investment in
the securities of the Issuer and the principal business of HIW is general
investments. The business address of Halmostock and HIW is 21 W. Las Olas
Boulevard, Fort Lauderdale, Florida, 33301.
(d) and (e) Neither the Stockholders nor, to the best knowledge of the
Stockholders, any of SZI, ZGP or HIW, or any of the persons listed in Appendix A
hereto, have during the last five years (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was, or is, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a Stock Purchase and Sale Agreement dated as of November 6,
1997 among TMI, Samstock and the Issuer (the "Stock Purchase Agreement"), TMI
and Samstock agreed to acquire in the aggregate (i) 2,500,000 newly issued
shares of Common Stock (the "Shares") and (ii) warrants to purchase an
additional 1,200,000 shares of Common Stock (the "Warrant Shares"), subject to
the satisfaction of certain conditions precedent. The Stock Purchase Agreement
was attached as Exhibit 1 to the original Schedule 13D and is incorporated
herein by reference.
Pursuant to an Assignment Agreement dated as of March 3, 1998 (the "Initial
Investment Closing Date") among the Stockholders and the Issuer (the "Assignment
Agreement"), effective contemporaneously with the closing under the Stock
Purchase Agreement, TMI and Samstock assigned to Halmostock the right to acquire
352,941 of the Shares and 169,412 of the Warrant Shares. The Assignment
Agreement was attached as Exhibit 2 to Amendment Number 1 to Schedule 13D and is
incorporated herein by reference. In addition, Halmostock is the beneficial
owner of 92,000 shares of Common Stock, which 92,000 shares were contributed to
Halmostock by Steven J. Halmos prior to the Initial Investment Closing Date.
On the Initial Investment Closing Date, TMI acquired 322,059 of the Shares
and 154,588 of the Warrant Shares and Samstock acquired 1,825,000 of the Shares
and 876,000 of the Warrant Shares, for a total aggregate consideration of
$9,125,000.75, the source of which was capital contributions to TMI and Samstock
by the members of TMI and Samstock, respectively. In addition, on the Initial
Investment Closing Date, Halmostock acquired 352,941 Shares and 169,412 Warrant
Shares for a total aggregate consideration of $1,499,999.25 paid to the Issuer,
the source of which was a loan of $1,534,999.25 from an affiliate of Halmostock,
which affiliate is a Wyoming limited partnership the general partner of which is
HIW. The loan was made pursuant to a note dated March 2, 1998, is payable on
demand, and bears interest at a rate of 8% per annum. The acquisition of the
Shares and Warrant Shares by TMI, Samstock and Halmostock described in this
paragraph are referred to herein collectively as the "Initial Investment."
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Effective as of the Initial Investment Closing Date, immediately after the
closing of the Initial Investment, Samstock sold to Robert M. Steiner, as
trustee under the declaration of trust dated March 9, 1983, as amended,
establishing the Robert M. Steiner Revocable Trust ("Steiner Trust"), 40,364 of
the Shares and 19,375 of the Warrant Shares for a purchase price in cash in the
amount of $171,547.00, and Halmostock sold to the Steiner Trust 6,636 of the
Shares and 3,185 of the Warrant Shares, for a purchase price in cash of
$28,203.00.
In connection with the Initial Investment, TMI, Samstock, the Issuer,
Melvin Chasen and Iris Chasen (Melvin Chasen and Iris Chasen being referred to
herein, together, as the "Chasens") have also entered into an Amended and
Restated Agreement Among Stockholders dated as of March 3, 1998 (the "Amended
Agreement Among Stockholders"), which amends, restates and supersedes an
Agreement Among Stockholders dated as of November 6, 1997 among the same
parties. Pursuant to the Amended Agreement Among Stockholders, TMI and
Samstock acquired the sole power to vote or to direct the vote of all of the
shares of Common Stock held by the Chasens (the "Chasen Shares"), whether now
owned or hereafter acquired, subject to certain limitations in the Investment
Agreement described below. There are currently 840,009 Chasen Shares issued and
outstanding known to the Reporting Persons, representing 6.3% of the issued and
outstanding Common Stock.
The Amended Agreement Among Stockholders also provides that, subject to
certain limitations, TMI and Samstock have a right of first refusal on all sales
of the Chasen Shares, and the Chasen Shares are subject to "co-sale" and "drag
along" provisions if TMI and Samstock sell any shares they may own. On September
7, 1999, Samstock exercised its right of first refusal on a portion of the
Chasen Shares, thereby acquiring from the Chasens 135,000 of the Chasen Shares
for an aggregate purchase price of $472,500 in cash, the source of which was
Samstock's working capital.
The Amended Agreement Among Stockholders will terminate if Stockholders and
their affiliates (the "Stockholder Group") cease to own in the aggregate at
least 5% of the Issuer's Common Stock (or other securities of the Issuer
entitled to vote generally for the election of directors or securities
convertible into or exchangeable for Common Stock or such voting securities or
other options or rights to acquire Common Stock or such voting securities)
(collectively, the "Voting Securities"). The Amended Agreement Among
Stockholders was attached as Exhibit 3 to Amendment Number 1 to Schedule 13D and
is incorporated herein by reference.
Also in connection with the Initial Investment, the Stockholders and the
Issuer have entered into a Stockholders' Agreement dated as of March 3, 1998
(the "Stockholders Agreement"), pursuant to which TMI and Samstock acquired the
sole power to vote or to direct the vote of all of the shares of Common Stock
held by Halmostock (the "Halmostock Shares"), whether now owned or hereafter
acquired, subject to certain limitations in the Investment Agreement described
below. There are currently 438,305 Halmostock Shares issued and outstanding,
representing 3.3% of the issued and outstanding Common Stock. In addition,
Halmostock owns warrants in respect of the 166,227 Warrant Shares which,
together with the 438,305 issued and outstanding Halmostock Shares, represent
4.5% of the Common Stock, including the 166,227 Warrant Shares.
Like the Amended Agreement Among Stockholders, the Stockholders Agreement
also provides that, subject to certain limitations, TMI and Samstock have a
right of first refusal on all sales of the Halmostock Shares, and the Halmostock
Shares are subject to "co-sale" and "drag along" provisions if TMI and Samstock
sell any shares they may own. The Stockholders Agreement will terminate if the
Stockholder Group ceases to own in the aggregate at least 5% of the Issuer's
Voting Securities. The Stockholders Agreement was attached as Exhibit 4 to
Amendment Number 1 to Schedule 13D and is incorporated herein by reference.
The summary contained in this Statement of certain provisions of each of
the Stock Purchase Agreement, the Assignment Agreement, the Amended Agreement
Among Stockholders and the Stockholders Agreement is not intended to be complete
and is qualified in its entirety by reference to the Stock Purchase Agreement,
the Assignment Agreement, the Amended Agreement Among Stockholders and the
Stockholders Agreement, each of which was attached as an exhibit to the original
Schedule 13D or Amendment Number 1 to Schedule 13D and is incorporated herein by
reference.
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ITEM 4. PURPOSE OF THE TRANSACTION
The Stockholders' acquisition of the Shares and the Warrant Shares and
Samstock's acquisition of 135,000 of the Chasen Shares, and TMI's and Samstock's
acquisition of the sole power to vote or to direct the vote of the Chasen Shares
and the Halmostock Shares, were effected for the purpose of investing in the
Issuer.
The purchase price upon exercise of the warrants in respect of the Warrant
Shares is equal to a specified price (the "Exercise Price") multiplied by the
number of shares of Common Stock that TMI, Samstock, or Halmostock, as the case
may be, is then purchasing upon exercise of the warrants. The Exercise Price is
$6.00 per share for one third of the Warrant Shares purchased, $7.00 per share
for another third of the Warrant Shares, and $8.00 per share for the final third
of the Warrant Shares. The warrants may be exercised at any time and will expire
on the fifth anniversary of the date of the Initial Investment Closing Date.
In June 1999, the Issuer entered into a $10 million loan agreement (the
"GAMI Loan Agreement") with GAMI Investments, Inc. ("GAMI"), an affiliate of
Samstock. The Issuer drew down the entire $10 million principal amount available
under the GAMI Loan Agreement on June 30, 1999 (the "GAMI Loan"). The GAMI Loan
Agreement obligates the Issuer to conduct a $10,000,000 rights offering (the
"Rights Offering") for shares of a newly created series of convertible preferred
stock (the "Series A Preferred Stock") described in the Issuer's preliminary
proxy statement filed with the Securities Exchange Commission on August 10,
1999. The GAMI Loan Agreement is attached hereto as Exhibit 6 and is
incorporated herein by reference. The summary contained in this Statement of
certain provisions of the GAMI Loan Agreement is not intended to be complete and
is qualified in its entirety by reference to the GAMI Loan Agreement attached as
an exhibit hereto and incorporated herein by reference.
In connection with the Rights Offering, Samstock and the Issuer have
entered into a Standby Purchase Agreement dated as of June 30, 1999 (the
"Standby Purchase Agreement"), whereby Samstock has agreed to act as a standby
purchaser to ensure that $10 million in proceeds are raised in the Rights
Offering. The Issuer is required to use all proceeds of the Rights Offering to
repay the outstanding principal amount of the GAMI Loan. Under the Standby
Purchase Agreement, Samstock is obligated to exercise its basic subscription
privilege in full and to purchase, at the subscription price, all shares of
Series A Preferred Stock offered pursuant to the Rights Offering which are not
subscribed for by other stockholders (including pursuant to any overscription
privilege). The obligation of Samstock under the Standby Purchase Agreement is
subject to various conditions, including (1) approval by the Issuer's
stockholders of Proposals 1 and 2 set forth in the Preliminary Proxy Statement,
(2) the expiration or termination of any required waiting period applicable to
the transactions contemplated by the Standby Purchase Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and (3) the accuracy and
completeness of the Issuer's representations and warranties contained in the
Standby Purchase Agreement, among others. The Standby Purchase Agreement is
attached hereto as Exhibit 7 and is incorporated herein by reference.
In consideration of Samstock's commitment under the Standby Purchase
Agreement and of the provision of the GAMI Loan by GAMI, the Issuer has agreed
to issue to Samstock, at the closing of the transactions contemplated by the
Standby Purchase Agreement, a non-transferable five-year warrant (the "Rights
Offering Warrant") to purchase 1,000,000 shares of the Issuer's common stock
(the "Rights Offering Warrant Shares"). A copy of the form of the Rights
Offering Warrant is attached as an exhibit to the Standby Purchase Agreement,
which is attached as an exhibit hereto. The exercise price per share of the
Rights Offering Warrant will be equal to the average of the closing prices of
the common stock for the 20 trading days preceding the closing of the Rights
Offering. The summary contained in this Statement of certain provisions of the
Standby Purchase Agreement is not intended to be complete and is qualified in
its entirety by reference to the Standby Purchase Agreement attached as an
exhibit hereto and incorporated herein by reference.
In connection with the Initial Investment, the Stockholders and the
Issuer entered into an Amended and Restated Investment Agreement dated as of
March 3, 1998 (the "First Amended Investment Agreement"), which amended,
restated and superseded an Investment Agreement dated as of November 6, 1997
among TMI, Samstock and the Issuer. The Steiner Trust joined the First Amended
Investment Agreement only for purposes of Section 5 thereof in connection with
its purchase of a portion of the Samstock Shares and Halmostock Shares described
above. In connection with the GAMI Loan and the Standby Purchase Agreement, the
Stockholders (other than Halmostock), the Issuer, and for purposes of Section 5
thereof only, the Steiner Trust, entered into a Second Amended and Restated
Investment Agreement dated as of June 30, 1999 (the "Second Amended
Investment Agreement"), which amends, restates and supersedes the First Amended
Investment Agreement, only with respect to the rights and obligations of each of
the parties to the First Amended Investment Agreement other than Halmostock.
The First Amended and Restated Investment Agreement continues in full force and
effect with respect to the rights and obligations of Halmostock thereunder
vis a vis each of the other Stockholders and the Issuer. The Second Amended
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Investment Agreement contains agreements as to certain aspects of the
relationship among the Stockholders other than Halmostock and the Issuer. The
Second Amended Investment Agreement is attached hereto as Exhibit 8 and is
incorporated herein by reference. The First Amended Investment Agreement and the
Second Amended Investment Agreement read together are collectively referred to
herein as the "Investment Agreement."
Pursuant to the Amended Investment Agreement, the Stockholders agreed that
the members of the Stockholder Group will not take any of the following actions
(collectively, the "Standstill Provisions") prior to the fifth anniversary of
the Initial Investment Closing Date, without the approval of a majority of the
Issuer's disinterested directors, subject to specified limited exceptions: (a)
increase their ownership of Voting Securities beyond the combined voting power
of all Voting Securities represented by the Shares, the Warrant Shares, the
Series A Preferred Stock or the Rights Offering Warrant Shares or subject to the
Amended Agreement Among Stockholders or Stockholders Agreement; provided,
however, that the foregoing limitation shall not prohibit the purchase of Voting
Securities directly from the Issuer pursuant to exercise of the warrants and any
rights, oversubscription rights or standby purchase obligations in connection
with rights offerings by the Issuer or exercise of any stock options granted by
the Issuer; (b) solicit proxies, assist any other person in the solicitation of
proxies, become a "participant" in a "solicitation" or assist any such
"participant" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Securities Exchange Act of 1934, as amended) in opposition to the
recommendation of a majority of disinterested directors, or submit any proposal
for the vote of Issuer's stockholders; (c) form, join or participate in any
other way in a partnership, pooling agreement, syndicate, voting trust or other
"group", or enter into any agreement or arrangement or otherwise act in concert
with any other person, for the purpose of acquiring, holding, voting or
disposing of Voting Securities of the Issuer; provided, however, that the
members of the Stockholder Group may engage in any of such activities among
themselves and with any stockholder of the Issuer who is a party to the Amended
Agreement Among Stockholders or the Stockholders Agreement; (d) engage in
certain specified takeover actions or take any other actions, alone or in
concert with any other person, to seek control of the Issuer; or (e) take any
action to seek to circumvent any of the foregoing limitations.
Pursuant to the Investment Agreement, at all times prior to the fifth
anniversary of the date of the Initial Investment Closing Date, Samstock is
entitled to designate two representatives, reasonably acceptable to the
independent directors of the Issuer, to serve on the Board of Directors of the
Issuer (the "Board") as long as the Stockholders together beneficially own at
least 15% of the combined voting power of the Issuer's Voting Securities
(including, for these purposes, the Warrant Shares and the Rights Offering
Warrant Shares issuable upon exercise of the warrants until such time as the
warrants expire) and, in the event that the Stockholders together beneficially
own less than 15%, but at least 5%, of the combined voting power of the Issuer's
Voting Securities, Samstock shall be entitled to designate one representative,
reasonably acceptable to the independent directors of the Issuer, to serve on
the Issuer's Board. The Issuer agreed that it will not increase the size of the
Board beyond seven members as long as Samstock is entitled to designate one or
two Board representatives, except in furtherance of the exercise by Samstock of
its rights under the Investment Agreement, and further agreed that,
notwithstanding the agreements contained in the Amended Agreement Among
Stockholders, the chief executive officer of the Issuer shall not count as a
designee of Samstock.
Pursuant to the Investment Agreement, in addition to any other rights to
designate directors of the Issuer thereunder, in the event Samstock, pursuant to
the Standby Purchase Agreement, purchases more than 25% of the total number of
shares of Series A Preferred Stock issued by the Issuer in the Rights Offering
(exclusive of those shares of Series A Preferred Stock purchased by Samstock
pursuant to its basic subscription privilege or its obligation to purchase
shares of Series A Preferred Stock not purchased by TMI or TMI's members
pursuant to its or their basic subscription privileges), Samstock shall have the
right to designate one additional director of the Issuer, which individual may
be designated in Samstock's sole discretion without obtaining the acceptance or
approval of the Issuer's disinterested directors or any other person or entity,
to serve for a period of three years or, if earlier, until the time when the
Stockholders together beneficially own less than 15% of the combined voting
power of the Issuer's Voting Securities.
Pursuant to the Investment Agreement, in addition to any other rights to
designate directors of the Issuer thereunder, upon the occurrence of any Event
of Default (as defined in the GAMI Loan Agreement), and at any time thereafter
during the continuance thereof, Samstock shall have the right to designate such
additional number of directors of the Issuer (which individuals may be
designated in Samstock's sole discretion without obtaining the acceptance or
approval of the Issuer's disinterested directors or any other person or entity),
and the Issuer shall take all necessary or appropriate action to increase the
number of directors constituting the Issuer's Board of Directors and/or use its
reasonable best efforts to obtain resignations of individuals then serving as
directors (other than directors designated by Samstock), and assist in the
nomination and election as directors such additional designees of Samstock, such
that, after taking such actions into account, the number of
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individuals designated by Samstock under the Investment Agreement serving as
directors of the Issuer shall constitute at least a majority of the total number
of the Issuer's directors.
Pursuant to the Investment Agreement, automatically upon the occurrence of
an Event of Default (as defined in the GAMI Loan Agreement) and the expiration
of any and all cure periods, if any, applicable thereto, without further action
or notice by any party, the Standstill Provisions shall lapse in their entirety
and no longer be of any force or effect with respect to Samstock and TMI, but
shall continue in full force with respect to Halmostock.
Pursuant to the Investment Agreement, the Stockholders agreed that, except
to the extent otherwise provided in the Investment Agreement, the Stockholders
would vote their Voting Securities with respect to the election or removal of
directors of the Issuer either (a) in accordance with the recommendations of a
majority of the disinterested directors of the Issuer or (b) in the same
proportions (including abstentions) as the holders of record of the Issuer's
Voting Securities, other than those beneficially owned by the Stockholders, vote
their securities; provided that the Stockholders may vote in favor of the
election or retention of the one or two directors designated by Samstock as
described in the preceding paragraph.
Pursuant to the Investment Agreement and subject to certain exceptions, the
Issuer granted to the Stockholders and certain other parties certain shelf
registration rights in connection with certain permitted sales of shares of
Common Stock. In particular, pursuant to such registration rights, the Issuer
has prepared and filed with the SEC a shelf registration statement (including
pledgees of any selling stockholder) with respect to all Shares and Warrant
Shares and caused such shelf registration statement to become effective and has
agreed to use its reasonable efforts keep such registration statement effective
until such time as all Shares and Warrant Shares have been sold or otherwise
disposed of. The purpose of such shelf registration is to facilitate the ability
of each of TMI, Samstock and their affiliates to margin its stock and does not
represent any present intention on behalf of any Stockholder to dispose of any
Shares or Warrant Shares covered thereby.
Pursuant to the Investment Agreement and subject to certain exceptions, the
Issuer granted to Samstock and certain other parties certain shelf registration
rights in connection with certain permitted sales of shares of Series A
Preferred Stock and Common Stock. In particular, the Issuer agreed to prepare
and file with the SEC a shelf registration statement (which shall include
pledgees of any selling stockholder) with respect to the Series A Preferred
Stock, Common Stock issuable upon conversion of the Series A Preferred Stock and
the Rights Offering Warrant Shares as soon as practicable after the closing of
the Rights Offering, and to use its reasonable efforts to cause such shelf
registration statement to become effective and keep such registration statement
effective until such time as all Series A Preferred Stock, Common Stock issuable
upon conversion of the Series A Preferred Stock or the Rights Offering Warrant
Shares have been sold or otherwise disposed of. The purpose of any such shelf
registration put in effect pursuant to the Investment Agreement is to facilitate
the ability of Samstock and its affiliates to margin its stock and does not
represent any present intention on behalf of any Stockholder to dispose of any
Series A Preferred Stock, Common Stock issuable upon conversion of the Series A
Preferred Stock or the Rights Offering Warrant Shares to be covered thereby.
The summary contained in this Statement of certain provisions of the
Investment Agreement is not intended to be complete and is qualified in its
entirety by reference to the First Amended Investment Agreement and the Second
Amended Investment Agreement attached as exhibits to Amendment Number 1 to
Schedule 13D or hereto and incorporated herein by reference.
Each Stockholder intends to continue to review its investment in Common
Stock and, subject to the limitations of the Investment Agreement described
above, from time to time depending upon certain factors, including without
limitation the financial performance of the Issuer, the availability and price
of shares of Common Stock and other general market and investment conditions,
may determine to acquire through open market purchases or otherwise additional
shares of Common Stock or Series A Preferred Stock, or may determine to sell
through the open market or otherwise.
Except as stated above, none of the Stockholders has any plans or proposals
of the types referred to in clauses (a) through (j) of Item 4 of Schedule 13D,
as promulgated by the Securities and Exchange Commission.
Page 9
<PAGE> 10
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b) To the best knowledge of the Stockholders, there are 13,352,709
shares of Common Stock outstanding as of the date hereof. As of the date hereof,
the aggregate 3,520,009 shares of Common Stock beneficially owned by the
Stockholders represent approximately 26.4% of the Common Stock issued and
outstanding and, together with the 1,177,440 Warrant Shares, represent 32.3% of
the Common Stock, including the Warrant Shares. Such Common Stock and Warrants
are held as follows:
<TABLE>
<CAPTION>
ISSUED AND
HOLDER OUTSTANDING SHARES WARRANT SHARES
- ------ ------------------ --------------
<S> <C> <C>
Samstock 1,919,636 856,625
TMI 322,059 154,588
Halmostock 438,305 166,227
Chasens (1) 840,009
-------------- -------------
Total 3,520,009 1,177,440
</TABLE>
- --------------
(1) As described in Item 3 above and as set forth more fully in this Item 5,
TMI and Samstock have shared voting power and shared dispositive power in
respect of the Chasen Shares.
Pursuant to the Amended Agreement Among Stockholders, and subject to the
limitations of the Investment Agreement, TMI and Samstock have the shared power
to vote or to direct the vote of the 840,009 Chasen Shares beneficially owned by
them. Pursuant to the Stockholders Agreement, and subject to the limitations of
the Investment Agreement, TMI and Samstock have the shared power to vote or to
direct the vote of the 604,532 Halmostock Shares beneficially owned by it. In
addition, each of the Stockholders has agreed to vote its shares of Common Stock
in accordance with certain provisions of the Investment Agreement.
Each Stockholder has the power to dispose of or to direct the disposition
of such Stockholder's shares of Common Stock, subject to the following
limitations, which are described more fully in Item 3 above. Pursuant to the
"drag along" provisions of the Amended Agreement Among Stockholders, TMI and
Samstock have the shared power, together with the Chasens, to dispose of or to
direct the disposition of the Chasen Shares. Similarly, pursuant to the "drag
along" provisions of the Stockholders Agreement, TMI and Samstock have the
shared power, together with Halmostock, to dispose of or to direct the
disposition of the Halmostock Shares.
For purposes of this Statement the Stockholders are being treated as a
group which, in the aggregate, beneficially owns all of the shares of Common
Stock listed above. This filing shall not be construed as an admission that any
reporting person is the beneficial owner of all of such shares of Common Stock.
At the date hereof, neither the Stockholders, nor to the best knowledge of
the Stockholders, any of SZI, ZGP, HIW or any of the persons listed in Appendix
A hereto owns any shares of Common Stock other than shares of Common Stock
beneficially owned by the Stockholders, as described herein, of which one or
more of such other persons may be deemed to have beneficial ownership pursuant
to Rule 13d-3 of the Exchange Act.
(c) During the last sixty days, the only transaction in the Common Stock
effected by the Stockholders, or to the best knowledge of the Stockholders, by
SZI, ZGP or HIW or any of the persons listed in Appendix A hereto, was the
acquisition on September 7, 1999, by Samstock of 135,000 Chasen Shares, as
described in Item 3 hereof.
(d) No person other than a Stockholder has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of
the Common Stock beneficially owned by such Stockholders, except for the
Chasens, in the case of the Chasen Shares.
(e) Not applicable.
Page 10
<PAGE> 11
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except for the matters described herein, no Stockholder or, to the best
knowledge of the Stockholders, any of SZI, ZGP or HIW or any of the persons
listed in Appendix A hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
Exhibit 1 - Stock Purchase Agreement*
Exhibit 2 - Assignment Agreement*
Exhibit 3 - Amended Agreement Among Stockholders*
Exhibit 4 - Stockholders Agreement*
Exhibit 5 - First Amended Investment Agreement*
Exhibit 6 - GAMI Loan Agreement**
Exhibit 7 - Standby Purchase Agreement**
Exhibit 8 - Second Amended Investment Agreement**
Exhibit 9 - Power of Attorney dated February 26, 1998**
</TABLE>
* Previously filed.
** Filed herewith.
Page 11
<PAGE> 12
APPENDIX A SCHEDULE 13D/A CUSIP NUMBER 893767103
SZ Investments, L.L.C., A Delaware Limited Liability Company: SZI's managing
member is Zell General Partnership, Inc., and its non-managing members are
Alphabet Partners and ZFT Partnership.
Zell General Partnership, Inc., An Illinois Corporation: ZGP's sole shareholder
is the Samuel Zell Revocable Trust and its sole director is Samuel Zell.
Samuel Zell: Mr. Zell is Chairman of the Board of Directors of Equity Group
Investments, L.L.C. ("EGI"). EGI is a privately owned investment management
firm. Mr. Zell is a citizen of the United States of America.
Alphabet Partners, An Illinois General Partnership: Alphabet Partners is
composed of three trusts created for the benefit of Mr. Zell and his family.
Chai Trust Company, L.L.C., an Illinois limited liability company, is the sole
trustee of the three trusts.
ZFT Partnership, An Illinois General Partnership: ZFT Partnership is composed of
four trusts created for the benefit of Mr. Zell and his family. Chai Trust
Company, L.L.C., an Illinois limited liability company, is the sole trustee of
the four trusts.
Halmos Investments-Western, Inc.: HIW's sole shareholder and sole director is
Steven J. Halmos. Mr. Halmos is a citizen of the United States of America.
Page 12
<PAGE> 13
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
DATED: September 17, 1999
EGI-TRANSMEDIA INVESTORS, L.L.C.
By: /s/ Donald J. Liebentritt
----------------------------
Name: Donald J. Liebentritt
Title: Vice President
SAMSTOCK, L.L.C.
By: /s/ Donald J. Liebentritt
----------------------------
Name: Donald J. Liebentritt
Title: Vice President
HALMOSTOCK LIMITED PARTNERSHIP
by Halmos Investments-Western, Inc.,
its general partner
By: /s/ *
----------------------------
Name: Steven J. Halmos, President
* By: /s/ Donald J. Liebentritt
----------------------------
Donald J. Liebentritt
Attorney-in-fact
Page 13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
1 Stock Purchase and Sale Agreement dated as of
November 6, 1997*
2 Assignment Agreement dated as of March 3, 1998*
3 Amended and Restated Agreement Among Stockholders dated
as of March 3, 1998*
4 Stockholders' Agreement dated as of March 3, 1998*
5 First Amended Investment Agreement dated as of
March 3, 1998*
6 GAMI Loan Agreement dated as of June 30, 1999**
7 Standby Purchase Agreement dated as of June 30, 1999**
8 Second Amended Investment Agreement dated as of
June 30, 1999**
9 Power of Attorney dated February 26, 1998**
* Previously filed.
** Filed herewith.
Page 14
<PAGE> 1
U.S. $10,000,000
CREDIT AGREEMENT
BY AND BETWEEN
GAMI INVESTMENTS, INC.
Two North Riverside Plaza
CHICAGO, ILLINOIS 60606
AND
TRANSMEDIA NETWORK, INC.,
TRANSMEDIA RESTAURANT COMPANY, INC.,
TRANSMEDIA SERVICE COMPANY, INC., AND
TMNI INTERNATIONAL INCORPORATED
11900 Biscayne Boulevard
MIAMI, FLORIDA 33181
DATED AS OF June 30, 1999
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS AND INTERPRETATIONS..................................................................1
SECTION 1.01 DEFINED TERMS...............................................................................1
SECTION 1.02. ACCOUNTING TERMS............................................................................7
SECTION 1.03. INTERPRETATION..............................................................................7
SECTION 1.04. RECITALS, SCHEDULES AND EXHIBITS............................................................8
ARTICLE II THE LOAN.........................................................................................8
SECTION 2.01. THE LOAN....................................................................................8
SECTION 2.02. THE NOTE....................................................................................8
SECTION 2.03. INTEREST RATE...............................................................................8
SECTION 2.04. INTEREST ON OVERDUE AMOUNTS.................................................................9
SECTION 2.05. BORROWING PROCEDURES........................................................................9
SECTION 2.06. PAYMENTS OF PRINCIPAL AND INTEREST..........................................................9
SECTION 2.07. APPLICATION OF PAYMENTS; REINSTATEMENT......................................................9
SECTION 2.08. ADDITIONAL AMOUNTS..........................................................................9
SECTION 2.09. TAXES ON PAYMENTS..........................................................................10
SECTION 2.10. INITIAL FEE AND RIGHTS OFFERING WARRANT....................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................................................11
SECTION 3.01. ORGANIZATION; CORPORATE POWERS.............................................................11
SECTION 3.02. AUTHORIZATION..............................................................................11
SECTION 3.03. GOVERNMENTAL APPROVAL......................................................................11
SECTION 3.04. ENFORCEABILITY.............................................................................11
SECTION 3.05. FINANCIAL MATTERS..........................................................................11
SECTION 3.06. NO MATERIAL ADVERSE CHANGE.................................................................12
SECTION 3.07. LITIGATION.................................................................................12
SECTION 3.08. COMPLIANCE WITH LAWS.......................................................................12
SECTION 3.09. ENVIRONMENTAL PROTECTION...................................................................12
SECTION 3.10. AGREEMENTS.................................................................................12
SECTION 3.11. FEDERAL RESERVE REGULATIONS................................................................13
SECTION 3.12. TAXES......................................................................................13
SECTION 3.13. EMPLOYEE BENEFIT PLANS.....................................................................13
SECTION 3.14. INVESTMENT COMPANY ACT.....................................................................13
SECTION 3.15. PATENTS, TRADEMARKS, ETC...................................................................13
SECTION 3.16. SUBSIDIARIES...............................................................................13
SECTION 3.17. SOLVENCY...................................................................................13
SECTION 3.18. LABOR DISPUTES.............................................................................14
SECTION 3.19. COMPLETE DISCLOSURE........................................................................14
SECTION 3.20. VOTE REQUIRED..............................................................................14
SECTION 3.21. TAKEOVER STATUS............................................................................14
SECTION 3.22. REPORTING COMPANY; FORM S-3................................................................14
SECTION 3.23. TRADING ON NYSE............................................................................14
ARTICLE IV CONDITIONS TO THE LOAN..........................................................................14
SECTION 4.01. CONDITIONS TO LOAN CLOSING.................................................................14
ARTICLE V AFFIRMATIVE COVENANTS...........................................................................16
SECTION 5.01. EXISTENCE..................................................................................16
SECTION 5.02. BUSINESSES AND PROPERTIES; COMPLIANCE WITH LAWS............................................16
SECTION 5.03. INSURANCE..................................................................................16
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 5.04. OBLIGATIONS AND TAXES......................................................................16
SECTION 5.05. FINANCIAL STATEMENTS; REPORTS..............................................................17
SECTION 5.06. LITIGATION AND OTHER NOTICES...............................................................18
SECTION 5.07. ERISA......................................................................................18
SECTION 5.08. MAINTAINING RECORDS; ACCESS AND INSPECTIONS................................................18
SECTION 5.09. USE OF PROCEEDS............................................................................19
SECTION 5.10. RIGHTS OFFERING COVENANTS..................................................................19
SECTION 5.11. NET WORTH..................................................................................19
ARTICLE VI NEGATIVE COVENANTS............................................................................19
SECTION 6.01. INDEBTEDNESS...............................................................................20
SECTION 6.02. NEGATIVE PLEDGE............................................................................20
SECTION 6.03. SALE OF ASSETS.............................................................................21
SECTION 6.04. LIQUIDATIONS, CONSOLIDATIONS, MERGERS OR PURCHASES OF ASSETS...............................21
SECTION 6.05. INVESTMENTS, LOANS AND ADVANCES............................................................21
SECTION 6.06. RESTRICTED PAYMENTS........................................................................21
SECTION 6.07. TRANSACTIONS WITH AFFILIATES...............................................................22
SECTION 6.08. LINE OF BUSINESS...........................................................................22
SECTION 6.09 CERTAIN DOCUMENTS..........................................................................22
ARTICLE VII DEFAULTS......................................................................................22
SECTION 7.01. EVENTS OF DEFAULT..........................................................................22
SECTION 7.02. REMEDIES UPON DEFAULT......................................................................24
ARTICLE VIII MISCELLANEOUS.................................................................................25
SECTION 8.01. NOTICES....................................................................................25
SECTION 8.02. SURVIVAL OF AGREEMENT......................................................................26
SECTION 8.03. SUCCESSORS AND ASSIGNS.....................................................................26
SECTION 8.04. EXPENSES OF THE LENDER; INDEMNITY..........................................................26
SECTION 8.05. RIGHT OF SETOFF............................................................................27
SECTION 8.06. APPLICABLE LAW.............................................................................27
SECTION 8.07. WAIVERS....................................................................................28
SECTION 8.08. AMENDMENTS.................................................................................28
SECTION 8.09. SEVERABILITY...............................................................................28
SECTION 8.10. COUNTERPARTS...............................................................................28
SECTION 8.11. HEADINGS...................................................................................28
SECTION 8.12. CONSENT TO JURISDICTION....................................................................28
SECTION 8.13. WAIVER OF JURY TRIAL.......................................................................28
SECTION 8.14. INTEREST LIMITATION........................................................................29
SECTION 8.15. LOAN DOCUMENTS.............................................................................29
SECTION 8.16. JOINT AND SEVERAL LIABILITY................................................................29
</TABLE>
(ii)
<PAGE> 4
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT Form of Promissory Note
EXHIBIT Form of Borrowing Request
EXHIBIT Form of Opinion of Counsel
EXHIBIT D Form of Rights Offering Warrant
EXHIBIT E Second Amended and Restated Investment Agreement
EXHIBIT F Form of Standby Purchase Agreement
EXHIBIT G Preferred Stock Designation
SCHEDULES
SCHEDULE 1.01 Existing Investments
SCHEDULE 3.06 Subsidiaries
SCHEDULE 3.07 Litigation
SCHEDULE 3.10 Burdensome Contracts; Defaults
SCHEDULE 6.01 Existing Indebtedness
SCHEDULE 6.02 Existing Liens
(iii)
<PAGE> 5
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT") is entered into as of June 30,
1999, between GAMI INVESTMENTS, INC., its successors and assigns (the "LENDER"),
and TRANSMEDIA NETWORK, INC., a Delaware corporation ("TMN"), TRANSMEDIA
RESTAURANT COMPANY, INC., a Delaware corporation ("RESTAURANT"), TRANSMEDIA
SERVICE COMPANY, INC., a Delaware corporation ("SERVICE") and TMNI INTERNATIONAL
INCORPORATED, a Delaware corporation ("TMNI" -- TMN, Restaurant, Service and
TMNI are each referred to herein individually as a "BORROWER" and collectively
as "Borrowers").
RECITALS
A. The Borrowers have requested that the Lender extend credit to
the Borrowers in order to enable the Borrowers to borrow, on the date hereof, a
maximum aggregate principal amount of $10,000,000 (the "LOAN") for the purpose
of providing working capital and for other general corporate purposes from time
to time on a nonrevolving credit basis.
B. Each of Restaurant, Service and TMNI are wholly-owned
Subsidiaries of TMN.
C The Lender is willing to make the Loan to the Borrowers, and
the Borrowers are willing to borrow from the Lender, subject to the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the Recitals and the mutual
covenants and agreements herein set forth and other consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.01 DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ACQUISITION" shall mean the acquisition by the Borrowers from
SignatureCard, Inc. of certain assets related to the membership program operated
under the Dining A La Card trade name and service mark in accordance with the
terms of the Asset Purchase Agreement.
"AFFILIATE" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
(a) to direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, membership
interests, by contract, or otherwise, or (b) to vote ten percent (10%) or more
of the securities (on a fully diluted basis) having ordinary voting power for
election of directors, managing general partners or similar officials of the
other Person.
<PAGE> 6
"AGREEMENT" shall mean this Credit Agreement as from time to
time amended, supplemented, restated or otherwise modified and in effect.
"ASSET PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement dated as of March 17, 1999 executed by TMN and SignatureCard, Inc., as
amended, supplemented or modified.
"BACK-END FEE" shall mean $500,000, payable by Borrowers to
Lender in accordance with the terms of SECTION 2.10 below.
"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or legal holiday in the States of Illinois and Florida on which banks are
open for business in Chicago, Illinois and Miami, Florida.
"CLOSING DATE" shall mean the date hereof.
"CHASE BRIDGE LOAN FACILITY" shall mean that certain
$35,000,000 senior secured revolving credit facility made available to TMN by
The Chase Manhattan Bank of even date herewith to fund the Acquisition.
"COMMON STOCK" shall mean TMN's common stock, par value $.02
per share.
"DEFAULT" shall mean any event that with notice or lapse of
time or both would constitute an Event of Default.
"DOLLARS" and the symbol "$" shall mean the lawful currency of
the United States of America.
"EGI-TRANSMEDIA" shall mean EGI-Transmedia Investors, L.L.C.,
a Delaware limited liability company.
"ENVIRONMENTAL LAWS" shall mean all laws relating to
environmental, health or safety matters, including those relating to fines,
orders, injunctions, penalties, damages, contribution, cost recovery,
compensation, losses or injuries resulting from the release or threatened
release of hazardous substances or materials and to the generation, use,
storage, transportation, or disposal of hazardous substances or materials, in
any manner applicable to the Borrowers or their respective Subsidiaries or their
respective properties, each as heretofore and hereafter amended or supplemented,
and any analogous future or present local, state or federal statutes, rules and
regulations promulgated thereunder or pursuant thereto, and any other present or
future law, ordinance, rule, regulation, permit or permit condition or order
addressing environmental, health or safety issues of or by the federal
government, any state or any political subdivision thereof, or any agency, court
or body of the federal government, any state or any political subdivision
thereof, exercising executive, legislative, judicial, regulatory or
administrative functions which are applicable to the Borrowers or their
respective Subsidiaries or their respective properties.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any corporation, trade or
business that is along with any Borrower a member of a controlled group of
trades or businesses, or a member of any group of organizations within the
meaning of Sections 414(b) or (c) of the Internal Revenue Code of 1986, as
amended,
2
<PAGE> 7
and any and all regulations thereunder, or is otherwise treated as a
single employer with any Borrower pursuant to Section 4001(b)(1) of ERISA, and
any and all regulations thereunder.
"EVENT OF DEFAULT" shall mean the Events of Default specified
in SECTION 7.01.
"EXISTING WARRANT" shall mean collectively those certain
warrants to purchase an aggregate of 1,200,000 shares of TMN's Common Stock,
dated as of March 3, 1998 and expiring March 3, 2003, held by Samstock,
EGI-Transmedia, Halmostock Limited Partnership and Robert M. Steiner, as
Trustee.
"FINANCIAL OFFICER" shall mean either the President or the
Chief Financial Officer of a Borrower.
"GUARANTY" shall mean any obligation, contingent or otherwise,
of any Person guarantying or having the economic effect of guarantying any
Indebtedness of any other Person in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, or (c) to maintain working
capital, equity capital or other financial condition of the primary obligor so
as to enable the primary obligor to pay such Indebtedness (including any
obligation to make capital contributions, loans or other payments pursuant to a
keep well guaranty or similar instrument); provided, however, that the term
"Guaranty" shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, all (a) obligations of such Person for borrowed money, (b)
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) obligations of such Person upon which interest charges are
contractually specified, (d) obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person, (e) obligations of such Person issued or assumed as the deferred
purchase price of property or services (other than trade payables and accrued
expenses incurred in the ordinary course of business not yet due and payable),
(f) Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) Guaranties of such Person,
(h) capital lease obligations of such Person, (i) obligations of such Person
under interest rate protection agreements, and (j) obligations of such Person
under or with respect to letters of credit and bankers' acceptances.
"INITIAL FEE" shall mean $500,000, payable by Borrowers to
Lender on the Closing Date.
"INTELLECTUAL PROPERTY" shall mean all copyrights, patents,
trademarks, tradenames, and all applications and licenses therefor.
"INTEREST PAYMENT DATE" shall mean the first Business Day of
each calendar month.
"INVESTMENT" shall mean, with respect to any Person, all
advances, loans or extensions of credit to any other Person, all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any investment in any other Persons, including
partnerships or joint ventures.
3
<PAGE> 8
"INVESTMENT AGREEMENT AMENDMENT" shall mean that certain
Second Amended and Restated Investment Agreement of even date herewith executed
by TMN, Samstock, EGI-Transmedia and Halmostock Limited Partnership, in the form
of EXHIBIT E, as amended from time to time.
"LIEN" shall mean, with respect to any asset, any lien,
mortgage, security interest, charge or encumbrance of any kind, including the
rights of a vendor, lessor, or similar party under any conditional sale
agreement or other title retention agreement or lease substantially equivalent
thereto.
"LOAN" shall mean the Loan defined in RECITAL A.
"LOAN DOCUMENTS" shall mean collectively this Agreement, the
Note, and the reports, certificates, financial statements and other agreements
and instruments executed and delivered by the Borrowers in connection herewith
or therewith.
"MANAGEMENT FEE" shall mean the quarterly fee for
management services payable by TMN to Equity Group Investments, L.L.C. in the
quarterly amount of $62,500.00.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U of the Board.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect upon the business, operations, properties, assets, liabilities, operating
results, cash flows or condition (financial or otherwise) of the Borrowers and
their respective Subsidiaries, taken as a whole or (b) a material impairment of
the ability of the Borrowers to perform the obligations to, or the validity or
enforceability of, or impairment of the rights or remedies of, or benefits to,
the Lender under the Loan Documents.
"MATURITY DATE" shall mean the earliest to occur of (a)
December 30, 1999, (b) the date all Obligations shall be due and payable
hereunder, whether by acceleration or otherwise, and (c) the Rights Offering
Closing Date.
"MULTIEMPLOYER PLAN" shall mean a plan described in Section
3(37) or 4001(a)(3) of ERISA that is maintained for employees of either a
Borrower or any ERISA Affiliate or to which contributions are or have been made
by a Borrower or any ERISA Affiliate.
"NOTE" shall mean the Promissory Note to be executed and
delivered by the Borrowers on the Closing Date, in substantially the form
contained in EXHIBIT A.
"OBLIGATIONS" shall mean (a) (i) the principal and interest
(including interest accruing after the commencement of any proceeding against or
with respect to a Borrower under the Bankruptcy Code, 11 U.S.C. ss. 101 et seq.,
or any other federal or state bankruptcy, insolvency, receivership or similar
law, at the rate specified herein) on the Loan, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment, or
otherwise, and (ii) all other monetary obligations of the Borrowers to the
Lender under this Agreement and the other Loan Documents, whether now existing
or hereafter arising, and (b) all other obligations of the Borrowers under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising.
"PENSION PLAN" shall mean any Plan and any Multiemployer Plan
that is subject to the provisions of Section 302 of ERISA or Title IV of ERISA.
"PERMITTED INVESTMENTS" shall mean (a) the purchase of direct
obligations of the government of the United States of America, or any agency
thereof, or obligations unconditionally
4
<PAGE> 9
guaranteed by the United States of America; (b) certificates of deposit of any
bank organized or licensed to conduct a banking business under the laws of the
United States of America or any State thereof having capital, surplus and
undivided profits of not less than $100,000,000; (c) Investments in commercial
paper which, at the time of acquisition, is accorded the highest rating by
Standard & Poor's Corporation, Moody's Investors Services, Inc. or any other
nationally recognized credit rating agency of similar standing; (d) other
Investments existing as of the date of execution hereof as shown on SCHEDULE
1.01 hereof, including Investments in the Subsidiaries listed thereon; (e)
ordinary course advances made by a Borrower to another Borrower; (f) Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers, customers or other debtors or in settlement of
delinquent obligations arising in the ordinary course of business; (g)
promissory notes or other debt obligations received in connection with asset
dispositions permitted hereunder; and (h) loans and advances to any employee or
officer of any Borrower in the ordinary course of business not to exceed
$300,000 in the aggregate principal amount at any one time outstanding.
"PERSON" shall mean and include natural persons, corporations
(business, municipal or not-for-profit), limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PLAN" shall mean any employee benefit plan (within the
meaning of Section 3(3) of ERISA), that is maintained for employees of, or
sponsored, participated in or contributed to by a Borrower or any ERISA
Affiliate.
"PREFERRED STOCK" shall mean the Series A senior convertible
redeemable preferred stock of TMN issued and sold pursuant to the Rights
Offering.
"PREFERRED STOCK DESIGNATION" shall mean the Certificate of
Designation of Preferred Stock covering the Preferred Stock to be filed by TMN
with the Secretary of State of Delaware in substantially the form of EXHIBIT G.
"PRIME RATE" shall mean on any date the rate of interest
designated by The Chase Manhattan Bank or its successor from time to time as its
prime rate, base rate or reference rate. The Prime Rate is not necessarily
intended to be the lowest rate of interest charged by such Person in connection
with extensions of credit. Changes in the rate of interest on the Loan shall
take effect simultaneously with each change in the Prime Rate. If The Chase
Manhattan Bank or its successor shall cease to report a Prime Rate, then Prime
Rate shall be deemed to be the average prime rate, base rate or reference rate
reported by the three (3) largest (measured by total assets) banking
institutions in the continental United States then announcing such an interest
rate. The applicable Prime Rate shall be determined by the Lender, and such
determination shall be conclusive absent manifest error.
"PROXY PROPOSALS" shall mean each of the following: (a) the
issuance of the Rights Offering Warrant, (b) the proposed increase in the
authorized shares of TMN's Common Stock and preferred stock, and (c) any other
matter submitted for the approval by TMN's stockholders in connection with the
Rights Offering, the Rights Offering Warrant, and related matters.
"REGISTRATION STATEMENT" shall mean that certain registration
statement of TMN on Form S-2 registering the Rights, the Preferred Stock and the
Common Stock into which the Preferred Stock is convertible.
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<PAGE> 10
"REGULATION G, T, U OR X" shall mean Regulation G, T, U or X
of the Board, as each of the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"REPORTABLE EVENT" shall mean any Reportable Event within the
meaning of Section 4043(b) of Title IV of ERISA or the regulations issued
thereunder.
"RESTRICTED PAYMENTS" shall mean the Restricted Payments
specified in SECTION 6.06.
"RIGHTS" shall mean the nontransferable rights offered to
stockholders of TMN pursuant to the Rights Offering.
"RIGHTS OFFERING" shall mean that certain offering of
nontransferable rights to stockholders of TMN to purchase an aggregate of up to
$10,000,000 newly issued Series A senior convertible redeemable preferred stock
of TMN, par value $.10 per share, on terms and conditions acceptable to Lender.
"RIGHTS OFFERING CLOSING DATE: shall mean the date on which
the Preferred Stock is issued and sold by TMN to Samstock and such other
stockholders of TMN as have elected to purchase Preferred Stock pursuant to
the Rights Offering.
"RIGHTS OFFERING DEFAULT EVENT" shall mean the occurrence of
any of the following: (a) failure by the required percentage of TMN's
stockholders to approve each of the Proxy Proposals upon presentation thereof to
a vote of TMN's stockholders, (b) failure by TMN or its Board of Directors to
recommend that TMN's stockholders vote in favor of the Proxy Proposals or the
withdrawal by TMN or its Board of Directors of such recommendation or any
modification of such recommendation which could reasonably be expected to
adversely affect such approval by TMN's stockholders, or (c) failure by any
stockholder of TMN who is a member of either senior management or the Board of
Directors of TMN to vote in favor of the Proxy Proposals.
"RIGHTS OFFERING EVENT" shall mean each of the following: (a)
the preparation for filing of an initial draft with the Securities and Exchange
Commission of (i) a proxy statement containing the Proxy Proposals, and (ii) the
Registration Statement , (b) the execution and delivery of the Standby Purchase
Agreement (or, subject to Lender's approval, preparation of the final form of
the Standby Purchase Agreement) and the Investment Agreement Amendment, (c) the
preparation for filing with the Secretary of State of Delaware of the Preferred
Stock Designation, and (d) the preparation of the final form of the Rights
Offering Warrant, in each of the foregoing cases, in form and substance
reasonably satisfactory to the Lender.
"RIGHTS OFFERING PROCEEDS" shall mean all cash proceeds
received by the Borrowers from the Rights Offering.
"RIGHTS OFFERING WARRANT" shall mean the warrant issued by TMN
to Samstock, upon receipt of the necessary stockholder approval, and the closing
of the Rights Offering, to purchase an aggregate of 1,000,000 shares of TMN's
Common Stock substantially in the form of EXHIBIT D (with such modifications as
Lender and Borrowers shall approve).
"SAMSTOCK" shall mean Samstock, L.L.C., a Delaware limited
liability company.
"STANDBY PURCHASE AGREEMENT" shall mean that certain Standby
Purchase Agreement by and between TMN and Samstock in a form substantially
similar to EXHIBIT F (with such modifications as Lender and Borrowers shall
approve), as amended from time to time.
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"SUBSIDIARY" shall mean, as to any Person (a) any corporation,
more than fifty percent (50%) of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person and/or
one or more Subsidiaries of such Person and (b) any partnership, association,
joint venture, limited liability company or other entity in which such Person
and/or one or more Subsidiaries of such Person has greater than a fifty percent
(50%) equity interest at the time.
"TAXES" shall mean the Taxes defined in SECTION 2.09.
"TRANSACTION FEE" shall mean the fee approved by the board of
directors of TMN payable by TMN to Equity Group Investments, L.L.C. on the
closing of the Acquisition in the amount of one percent (1%) of the value of the
Acquisition.
"TRANSACTIONS" shall mean, collectively, the execution,
delivery and performance by the Borrowers of this Agreement and each of the
other Loan Documents, the borrowing of the Loan by the Borrowers hereunder, the
issuance of the Rights Offering Warrant, the Rights Offering (and completion of
the transactions contemplated in the Standby Purchase Agreement), the Investment
Agreement Amendment and all other transactions contemplated by this Agreement,
the other Loan Documents and the Standby Purchase Agreement.
SECTION 1.02 ACCOUNTING TERMS. Except as otherwise herein
specifically provided: (a) each accounting term used herein shall have the
meaning given it under generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis; and
(b) each reference to generally accepted accounting principles shall mean
generally accepted accounting principles in effect in the United States of
America from time to time applied on a consistent basis.
SECTION 1.03 INTERPRETATION. In this Agreement and each other Loan
Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and
vice versa;
(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if
such successors and assigns are permitted by the Loan
Documents, and reference to a Person in a particular
capacity excludes such Person in any other capacity;
(c) reference to either gender includes the other gender;
(d) reference to any agreement (including this Agreement
and the Schedules and Exhibits hereto, and the other
Loan Documents), document or instrument means such
agreement, document or instrument as amended,
supplemented, restated or modified and in effect from
time to time in accordance with the terms thereof
and, if applicable, the terms hereof and the other
Loan Documents, and reference to any promissory note
includes any promissory note which is an extension or
renewal thereof or a substitute or replacement
therefor;
(e) reference to any law, rule, regulation, order,
decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified,
replaced or
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<PAGE> 12
reenacted, in whole or in part, and in
effect on the determination date, including rules and
regulations promulgated thereunder;
(f) reference to any Article, Section, Schedule, or
Exhibit means such Article or Section of this
Agreement, or Schedule or Exhibit to this Agreement;
(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement
as a whole and not to any particular Article, Section
or other provision hereof;
(h) "including" (and with correlative meaning "include")
means including without limiting the generality of
any description preceding such term; and
(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to
but excluding".
SECTION 1.04 RECITALS, SCHEDULES AND EXHIBITS. The Recitals,
Schedules and Exhibits in and to this Agreement are incorporated in and
expressly made a part of this Agreement.
ARTICLE II
THE LOAN
SECTION 2.01 THE LOAN. Subject to the terms and conditions of this
Agreement, the Lender shall make available to the Borrowers on the Closing Date
a term loan in an aggregate maximum principal amount of $10,000,000.
Repayments and prepayments of the Loan shall not be subject to reborrowing.
SECTION 2.02 THE NOTE. The Loan shall be evidenced by the Note. At
the Lender's option, the Lender may, and is hereby authorized by the Borrowers
to, endorse on the schedules attached to the Note, or otherwise record in the
Lender's internal records, an appropriate notation evidencing the date and
amount of the Loan, each payment of principal of any portion of the Loan, each
payment of interest on the Loan and the other information provided for on such
schedule; provided, however, that the failure of the Lender to make such a
notation or any error in such a notation shall not affect the obligation of the
Borrowers to repay the Loan in accordance with the terms of the Note and this
Agreement.
SECTION 2.03 INTEREST RATE. Except as set forth in SECTION 2.04
below, the Borrowers shall pay the Lender interest on the outstanding principal
balance of the Loan from time to time at a rate equal to the Prime Rate plus
4.0% per annum. The records of the Lender as to the interest rate applicable to
the Loan shall be binding and conclusive absent manifest error. Interest shall
be payable from the Closing Date to the day of repayment of the Loan. Interest
and all fees owing hereunder shall be computed on the basis of the actual number
of days elapsed on the basis of a year consisting of 360 days, and shall be
payable as provided in SECTIONS 2.04, 2.06 AND 2.11 below.
SECTION 2.04 INTEREST ON OVERDUE AMOUNTS. If the Borrowers shall
default in the payment when due of the principal of or interest on the Loan or
any other amount becoming due hereunder, by scheduled maturity, acceleration or
otherwise, or if there shall otherwise occur an Event of Default, the Borrowers
shall on demand from time to time from the Lender pay interest, to the extent
permitted by law, on such defaulted amount from the day after the due date
thereof to the date of actual payment (after as well as before judgment) (or on
the amount otherwise outstanding hereunder from the date of Default into which
matured such Event of Default until the date such Event of Default is cured or
otherwise no longer exists),
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at a rate per annum computed on the basis of the actual number of days elapsed
on the basis of a year consisting of 360 days, equal to the Prime Rate plus 8.0%
per annum.
SECTION 2.05 BORROWING PROCEDURES. On the Closing Date, Borrower
shall deliver to Lender a request for borrowing in the form attached hereto as
EXHIBIT B. The request for borrowing pursuant to this SECTION 2.05 shall be
deemed to be a representation that all of the representations and warranties of
the Borrowers contained in this Agreement and the other Loan Documents are true
and correct in all material respects as if made on such date, except to the
extent that such representations and warranties expressly related to an earlier
date, and that no Default or Event of Default shall have occurred and be
continuing.
SECTION 2.06 PAYMENTS OF PRINCIPAL AND INTEREST. If not sooner
paid, the outstanding principal amount of the Loan, together with all accrued
and unpaid interest thereon and all other amounts owing hereunder, shall be due
and payable on the Maturity Date. All principal payments of the Loan shall be
accompanied by accrued interest on the principal amount being repaid to the date
of payment. Interest on the Loan shall be due and payable monthly in arrears on
each Interest Payment Date. The Borrowers shall pay to the Lender upon the
Borrowers' receipt thereof all Rights Offering Proceeds, which amounts shall be
applied by the Lender pursuant to SECTION 2.07 below. All payments by the
Borrowers pursuant to this Agreement, the Note or any other Loan Document,
whether in respect of principal, interest, or otherwise, shall be made without
setoff or counterclaim (other than reimbursement or offset of the Initial Fee to
the extent required pursuant to SECTION 2.10 below) in same day funds by the
Borrowers to the Lender. The Borrowers shall have the right at any time and from
time to time to prepay the advances under the Loan in whole or in part without
premium or penalty upon at least one (1) Business Day's prior written notice to
the Lender. All payments required to be made to the Lender shall be made not
later than 11:00 a.m., Chicago time, on the date due by wire transfer to such
account as the Lender shall specify from time to time by notice to the
Borrowers. Funds received after that time shall be deemed to have been received
by the Lender on the next following Business Day. Whenever any payment to be
made shall otherwise be due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest, if any, in connection with such
payment.
SECTION 2.07 APPLICATION OF PAYMENTS; REINSTATEMENT. The Lender
shall, at its option, apply all payments received hereunder first to all fees,
expenses and other costs due hereunder and under the other Loan Documents, next
to accrued but unpaid interest on the Loan, and next to the outstanding
principal balance of the Loan. To the extent that the Borrowers make a payment
or payments to the Lender, which payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the extent of such payment received, the Obligations or part thereof intended to
be satisfied shall be revived and shall continue in full force and effect, as if
such payments had not been received by the Lender.
SECTION 2.08 ADDITIONAL AMOUNTS. If the implementation of or any
change in any law or regulation or in the interpretation by any court or
administrative or governmental authority charged with their administration shall
impose on the Lender any condition not existing on the date of this Agreement
regarding this Agreement, the Loan or the Note, and the result shall be to: (i)
increase the cost to the Lender of making or maintaining the Loan, or (ii)
reduce any amounts payable by the Borrowers hereunder, then, within thirty (30)
days after written demand by the Lender, the Borrowers shall pay to the Lender,
from time to time as specified by the Lender, additional amounts which shall be
sufficient to compensate the Lender for such increased cost or reduction in
payment. If any such amount is not paid within thirty (30) days after written
demand by the Lender, the Borrowers shall pay the Lender interest at the
interest
9
F
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rate specified in SECTION 2.04 above on each such amount from the date
when payment was due until paid in full.
SECTION 2.09 TAXES ON PAYMENTS. All payments made by the Borrowers
under the Note or this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any future income, stamp or other
taxes, levies, imposts, deductions, charges, or withholdings imposed, assessed,
levied or collected by the United States of America or any political subdivision
or taxing authority thereof or therein, but excluding taxes imposed on net
income of the Lender by the United States of America or any state or any
political subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, deduction, charges or withholdings being
hereinafter called "TAXES"). If any Taxes are required to be withheld from any
amounts so payable to the Lender hereunder or under the Note, the amounts so
payable to the Lender shall be increased to the extent necessary to yield to the
Lender (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in the Note or this
Agreement. Whenever any Tax is paid by the Borrowers, as promptly as possible
thereafter, the Borrowers shall send to the Lender a certified copy of any
original official receipt received by the Borrowers showing payment thereof. If
the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority, the Borrowers shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure.
SECTION 2.10 INITIAL FEE AND RIGHTS OFFERING WARRANT. As
consideration for execution of this Agreement and the Standby Purchase
Agreement, and the Lender or its Affiliates entering into and consummating the
Transactions, and the Lender's making the Loan available to the Borrowers, the
Borrowers have agreed to pay to Lender the Initial Fee (subject to reimbursement
or offset as set forth below) and to issue to Samstock the Rights Offering
Warrant, each of which Initial Fee and Rights Offering Warrant shall be deemed
fully earned on the Closing Date regardless of whether the Loan is disbursed in
whole or in part. Upon receipt of the necessary approval of TMN's stockholders
of the Proxy Proposals, the closing of the Rights Offering, the issuance of the
Rights Offering Warrant and the payment in full of the Obligations, Lender shall
reimburse (or offset against the Obligations) to Borrowers the Initial Fee. If
the Proxy Proposals are not approved by the stockholders of TMN, or the Rights
Offering Warrant is not issued for any reason, or the Rights Offering is
withdrawn or canceled by TMN for any reason or there occurs an Event of Default,
Borrowers shall immediately pay to Lender the Back-End Fee, which shall be
deemed fully earned on the Closing Date (but only payable as aforesaid)
regardless of whether the Loan is disbursed in whole or in part.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lender to execute this Agreement and perform its
obligations hereunder, each Borrower represents and warrants to the Lender as
follows:
SECTION 3.01 ORGANIZATION; CORPORATE POWERS. Such Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or formed, has the requisite power and
authority, including all material licenses, registrations, permits, franchises,
consents and approvals, to own its property and assets and to carry on its
business as now conducted and is qualified to do business and in good standing
in every jurisdiction where such qualification is required, except where failure
to so qualify would not reasonably be likely to have a Material Adverse Effect.
Such Borrower has all requisite corporate power and authority to consummate the
Transactions.
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<PAGE> 15
SECTION 3.02 AUTHORIZATION. The execution and delivery of this
Agreement and the other Loan Documents, and the consummation of the
Transactions: (a) have been duly authorized by all requisite corporate action of
such Borrower (other than the approval of the Proxy Proposals by TMN's
stockholders), including, without limitation, the approval by a majority of the
Disinterested Directors of TMN (within the meaning of Section 3.1 of the Amended
and Restated Investment Agreement dated March 3, 1998 by and among TMN,
Samstock, EGI-Transmedia, and Halmostock Limited Partnership); and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation or the
certificate or articles of incorporation or the by-laws of such Borrower, (B)
any order of any court, or any rule, regulation or order of any other agency of
government binding upon such Borrower or any of its Subsidiaries, or (C) any
provisions of any material indenture, agreement or other instrument to which
such Borrower or any of its Subsidiaries is a party or by which such Borrower or
any of its Subsidiaries or any of their respective properties or assets are or
may be bound; (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any material
indenture, agreement or other instrument referred to in (b)(i)(C) above; or
(iii) result in the creation or imposition of any Lien upon any property or
assets of such Borrower or any of its Subsidiaries.
SECTION 3.03 GOVERNMENTAL APPROVAL. No registration or filing with
or consent or approval of, or other action by, any federal, state or other
governmental agency, authority or regulatory body or any other Person is or will
be required in connection with the execution or delivery of this Agreement or
the other Loan Documents, or the consummation of the Transactions other than (a)
the filing with the Securities and Exchange Commission of (i) a proxy statement
containing the Proxy Proposals, and (ii) the Registration Statement (and the
declaration of its effectiveness by the Securities and Exchange Commission), (b)
the filing of the Certificate of Amendment to TMN's Certificate of Incorporation
and the Preferred Stock Designation with the Delaware Secretary of State and (c)
those which such Borrower has obtained and/or made.
SECTION 3.04 ENFORCEABILITY. This Agreement constitutes, and each
of the other Loan Documents when duly executed and delivered by such Borrower
will constitute, legal, valid and binding obligations of such Borrower, in each
case enforceable in accordance with their respective terms.
SECTION 3.05 FINANCIAL MATTERS. The audited consolidated financial
statements of the Borrowers and their Subsidiaries dated September 30, 1998, and
the unaudited consolidated financial statements of the Borrowers and their
Subsidiaries dated March 31, 1999, and the related consolidated statements of
income or operations, stockholders' equity and cash flows for the fiscal periods
ended on such dates:
(a) were prepared in accordance with generally accepted
accounting principals consistently applied
throughout the periods covered thereby, except as
otherwise expressly noted therein;
(b) fairly present the financial condition of the
Borrowers and their Subsidiaries as of the dates
thereof and results of operations for the periods
covered thereby (subject, in the case of such
unaudited financial statements, to the absence of
footnotes and to normal year-end adjustments); and
(c) show all material indebtedness and other
liabilities, direct or contingent, of the
Borrowers and their Subsidiaries as of the dates
thereof, including liabilities for taxes, material
commitments and material contingent obligations.
<PAGE> 16
SECTION 3.06 NO MATERIAL ADVERSE CHANGE. Since March 31, 1999,
there has been no change that could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.07 LITIGATION. Except as listed on SCHEDULE 3.07, there
are no actions, suits or proceedings at law or in equity or by or before any
arbitrator or any governmental instrumentality or other agency or regulatory
authority now pending or, to the best of such Borrower's knowledge, threatened
against or affecting such Borrower or its Subsidiaries, or the businesses,
assets or rights of such Borrower or its Subsidiaries: (a) which involve this
Agreement or any of the other Loan Documents or any of the transactions
contemplated hereby or thereby; or (b) as to which, if adversely determined,
could individually or in the aggregate have a Material Adverse Effect.
SECTION 3.08 COMPLIANCE WITH LAWS. Such Borrower is not in
violation of any law, including any Environmental Law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, where such violation or default
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.09 ENVIRONMENTAL PROTECTION. Neither such Borrower nor
any of its Subsidiaries has received: (a) any claim or notice of violation,
lien, complaint, suit, order or other claim or notice to the effect that it is
or may be liable to any Person as a result of the (i) environmental condition of
such Borrower's or any Subsidiary's property or any other property or (ii) the
release or threatened release of any hazardous substances or materials; or (b)
any letter or request for information under any Environmental Law; and, to the
best of such Borrower's knowledge, none of the operations of such Borrower nor
any of its Subsidiaries are the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any hazardous substance or material at such Borrower's
property or at any other location, including any location to which such Borrower
or any Subsidiaries has transported, or arranged for the transportation of, any
hazardous substances or materials.
SECTION 3.10 AGREEMENTS. Except as listed on SCHEDULE 3.10,
neither such Borrower nor any of its Subsidiaries is a party to any agreement or
instrument or subject to any restriction that has or could have a Material
Adverse Effect. Except as listed on SCHEDULE 3.10, neither such Borrower nor any
of its Subsidiaries is in default in any material manner in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party.
SECTION 3.11 FEDERAL RESERVE REGULATIONS. Such Borrower is not
engaged principally, or as of one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of the Loan will be used, whether directly or indirectly,
and whether immediately, incidentally or ultimately: (a) to purchase or carry
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying Margin Stock or to refund indebtedness originally incurred for such
purpose; or (b) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of Regulations of the Board, including
Regulations G, T, U or X thereof.
SECTION 3.12 TAXES. Such Borrower has filed or caused to be filed
all federal, state and local tax returns which are required to be filed by it,
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which such Borrower is contesting in good faith by
appropriate proceedings, and with respect to which such Borrower shall have set
aside on its books adequate reserves.
SECTION 3.13 EMPLOYEE BENEFIT PLANS. Such Borrower and each Plan
is in compliance with those provisions of ERISA, the Internal Revenue Code of
1986, as amended, and the Age
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Discrimination in Employment Act, as amended, and
the regulations and published interpretations thereunder which are applicable to
such Borrower or such Plan, except where failure to so comply is not reasonably
likely to result in a Material Adverse Effect. As of the date hereof, no
Reportable Event has occurred or is reasonably likely to occur with respect to
any Pension Plan as to which such Borrower was required to file a report with
the Pension Benefit Guaranty Corporation. No Pension Plan (other than a
Multiemployer Plan) has any material amount of unfunded benefit liabilities
(within the meaning of Section 4001(a)(18) of ERISA) or any accumulated funding
deficiency (within the meaning of Section 302(a)(2) of ERISA), whether or not
waived, and neither such Borrower nor any ERISA Affiliate has incurred or
expects to incur any material withdrawal liability under Subtitle E of Title IV
of ERISA to a Multiemployer Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
could result in a Material Adverse Effect.
SECTION 3.14 INVESTMENT COMPANY ACT . Such Borrower is not an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or a company controlled by such an "investment
company".
SECTION 3.15 PATENTS, TRADEMARKS, ETC. To the best of such
Borrower's knowledge, such Borrower and its Subsidiaries have obtained and
protected all Intellectual Property necessary to own their respective properties
and assets and carry on and operate their respective businesses as heretofore
and hereafter anticipated to be conducted. To the best of such Borrower's
knowledge, (a) no event is threatened or has occurred which permits, or after
notice or lapse of time, would permit, the revocation or termination of such
properties, and (b) there is no past, present or threatened occurrence that is
reasonably likely to preclude or materially impair such Borrower's and such
Subsidiaries' ability to retain or obtain any authorization necessary for the
operation of their respective businesses.
SECTION 3.16 SUBSIDIARIES. Such Borrower does not have any
Subsidiaries other than as listed on SCHEDULE 3.16, and is not a partner or
joint venturer in any partnerships or joint ventures.
SECTION 3.17 SOLVENCY Such Borrower has capital sufficient to
carry on its business and all businesses and transactions in which it plans to
engage and is now solvent and able to pay its debts as they mature. As of the
date of this Agreement, such Borrower owns property having a value, both at fair
valuation and at present fair salable value, greater than the amount required to
pay such Borrower's debts.
SECTION 3.18 LABOR DISPUTES. Such Borrower is not a party to any
labor dispute which could have, individually or in the aggregate, a Material
Adverse Effect. There are no strikes or walkouts relating to any labor contracts
to which such Borrower is subject. Such Borrower is not party to any collective
bargaining agreement to the benefit of which any of its employees is entitled.
SECTION 3.19 COMPLETE DISCLOSURE All factual information furnished
by or on behalf of such Borrower or its Subsidiaries to the Lender for purposes
of or in connection with this Agreement or the Transactions is, and all other
such factual information hereafter furnished by or on behalf of such Borrower or
its Subsidiaries will be, true and accurate in all material respects on the date
as of which such information is furnished and not incomplete by omitting to
state any material fact necessary to make such information not materially
misleading at such time in light of the circumstances under which such
information was provided.
SECTION 3.20 VOTE REQUIRED. (a) No vote of the holders of any
class or series of capital stock or other securities of TMN or any other
Borrower is required to approve or effect this Agreement, the other Loan
Documents, any Rights Offering Event, any Transaction or any transactions
contemplated hereby and thereby, including without limitation under applicable
law, applicable stock
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<PAGE> 18
exchange rules or regulations, the certificate of incorporation (including
without limitation Article Seventh of TMN's Certificate of Incorporation) or the
by-laws of TMN or any other Borrower or any contract, agreement or permit of any
kind whatsoever applicable to TMN, any other Borrower or their assets, except
that the Proxy Proposals identified in clauses (a) and (b) of the definition of
"Proxy Proposals" under Section 1.01 of this Agreement require the approval of
TMN's stockholders as referenced in SECTION 3.20(B) below.
(b) The affirmative vote of the holders of no more than a majority
of the outstanding shares of TMN's Common Stock is the only vote of the holders
of any class or series of capital stock or other securities of TMN or any other
Borrower necessary to approve the Proxy Proposals.
SECTION 3.21 TAKEOVER STATUS. The requirements of Section 203 of
the Delaware General Corporation Law are not applicable to TMN or any other
Borrower in connection with the transactions contemplated by this Agreement, the
other Loan Documents, any Rights Offering Event, or any other Transactions.
SECTION 3.22 REPORTING COMPANY; FORM S-3. TMN is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and
its Common Stock is registered under Section 12 thereof. TMN is eligible to
register for resale shares of its Common Stock to be sold by parties other than
TMN on a registration statement on Form S-3 under the Securities Act of 1933, as
amended.
SECTION 3.23 TRADING ON NYSE. TMN's Common Stock is listed for
trading on The New York Stock Exchange, and trading in TMN's Common Stock on The
New York Stock Exchange has not been suspended as of the date hereof.
ARTICLE IV
CONDITIONS TO THE LOAN
SECTION 4.01 CONDITIONS TO LOAN CLOSING. The obligation of the
Lender to make the Loan hereunder is subject to the following conditions
precedent, all of which shall be in form and substance satisfactory to the
Lender in its sole and absolute discretion:
(a) LEGAL OPINION. The Lender shall have received a
written opinion of counsel for each Borrower, in
substantially the form contained in EXHIBIT C.
(b) AUTHORIZATION AND ORGANIZATIONAL DOCUMENTATION. The
Lender shall have received: (i) a copy of the
certificate of incorporation of each Borrower,
certified by the Secretary of State of the state of its
incorporation as of a recent date, and a certificate
as to the good standing of each Borrower from such
Secretary of State, dated as of a recent date; (ii) a
certificate of the Secretary or an Assistant Secretary
of each Borrower, dated the Closing Date and
certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Borrower, as in
effect on the date of such certificate, (B) that
attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of
such Borrower, authorizing the execution, delivery
and performance of this Agreement and the other Loan
Documents, the borrowing by such Borrower hereunder,
and, subject to receipt of stockholder approval of
the Proxy Proposals, the consummation of the
Transactions, and that such resolutions have not been
modified, rescinded or
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amended and are in full force and effect, (C) that the
certificate or articles of incorporation of such
Borrower, have not been amended since the date of
the certification thereto furnished pursuant to (i)
above, and (D) as to the incumbency and specimen
signature of each officer of such Borrower, executing
this Agreement and the other Loan Documents; and (iii)
such other documents as the Lender or its counsel may
reasonably request.
(c) NOTE. The Lender shall have received the Note, duly
executed and delivered by the Borrowers, payable to
the order of the Lender and otherwise complying with
the provisions of SECTION 2.02 above.
(d) INSURANCE. The Lender shall have received
satisfactory evidence of the insurance required by
SECTION 5.03 below.
(e) CERTIFICATION. The Lender shall have received a
certificate, dated as of the Closing Date, whereby the
Borrowers certify that: (i) the representations and
warranties set forth in ARTICLE III are true and
correct in all material respects with the same effect as
though made on and as of the date hereof, except to the
extent they expressly relate to an earlier date (in
which case they shall be true and correct in all
material respects on and as of such date), and (ii) the
Borrowers are in compliance in all material respects
with all the terms and provisions contained herein and
in the other Loan Documents on their part to be observed
or performed, and at the time of and immediately after
such borrowing of the Loan, no Default or Event of
Default shall have occurred and be continuing.
(f) SEARCHES. The Lender shall have received recently
dated judgment and state and federal tax lien search
reports for each Borrower.
(g) ACQUISITION. The Lender shall have received
satisfactory evidence of the consummation of the
Acquisition and the closing of the Chase Bridge Loan
Facility.
(h) RIGHTS OFFERING EVENTS. The Lender shall have
received satisfactory evidence of the completion and
occurrence of each of the Rights Offering Events.
(i) WAIVER. The Lender shall have received satisfactory
evidence of the waiver of the "Early Amortization
Event" specified in Section 14(x) of the Security
Agreement dated as of December 1, 1996 among TNI
Funding Company I, L.L.C., The Chase Manhattan Bank,
TNI Funding I, Inc. and TMN.
(j) FEES. The Lender shall have received the fees and
reimbursement of expenses to be paid on the Closing
Date pursuant to the terms of this Agreement and the
Standby Purchase Agreement, including without
limitation the Initial Fee and the Transaction Fee.
(k) FURTHER ASSURANCES. The Lender shall have received
all further documents, notifications and other
assurances reasonably required by the Lender in
connection with the Loan.
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ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on the
Note, or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, it shall, and it shall cause each
of its Subsidiaries to:
SECTION 5.01 EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and qualify and remain qualified in each jurisdiction where
qualification is necessary or desirable in view of its business operations or
ownership of its properties, except where the failure to so qualify would not
reasonably be likely to have a Material Adverse Effect.
SECTION 5.02 BUSINESSES AND PROPERTIES; COMPLIANCE WITH LAWS. At
all times, maintain and operate its business in substantially the manner in
which it is presently conducted and operated; comply in all material respects
with all laws and regulations applicable to the operation of such business,
including all Environmental Laws, whether now in effect or hereafter enacted and
with all other applicable laws and regulations; take all action which may be
reasonably required to obtain, preserve, renew and extend all franchises,
registrations, licenses, permits and other authorizations which may be material
to the operation of such business; and at all times maintain, preserve and
protect all property material to the conduct of such business and keep its
property in good repair, working order and condition (ordinary wear and tear
excepted) and from time to time make, or cause to be made, all reasonably
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
SECTION 5.03 INSURANCE. Maintain insurance (with financially sound
and responsible insurance carriers), to such extent and against such risks, loss
or damage to, or liability in connection with, its property, business, persons
and such other contingencies, as is customary with companies of established
reputations similarly situated and in the same or similar business.
SECTION 5.04 OBLIGATIONS AND TAXES. Pay and discharge promptly
when due all Indebtedness, and taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to liens or charges upon such properties or any part thereof;
provided, however, that such Borrower shall not be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings and such Borrower shall have set aside on its books
adequate reserves with respect thereto.
SECTION 5.05 FINANCIAL STATEMENTS; REPORTS. Furnish (or cause to be
furnished) to the Lender:
(a) within ninety (90) days after the end of each fiscal
year of such Borrower, the audited, consolidated and
consolidating balance sheets and statements of
income, retained earnings, and cash flows, together
with supporting schedules (which shall include, upon
the reasonable request of the Lender with respect to
matters which it desires to review, the working
papers with respect to such Borrower's financial
statements) of such Borrower, all in reasonable
detail and accompanied by an unqualified opinion
thereon by KPMG Peat Marwick or such other firm or
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independent certified public accountants of
recognized standing selected by such Borrower and
reasonably acceptable to the Lender;
(b) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first
three (3) quarterly periods of each fiscal year of
such Borrower, the management prepared unaudited,
consolidated and consolidating financial statements of
such Borrower, including a balance sheet of such
Borrower as at the end of such fiscal quarter and
related unaudited statements of income, retained
earnings, and cash flows, all for the period from
the beginning of such fiscal year to the end of such
fiscal quarter, setting forth in each case
corresponding figures for the like period of the
preceding fiscal year; all in reasonable detail,
prepared in accordance with generally accepted
accounting principles applied on a basis consistently
maintained throughout the period involved and with
prior periods, subject to normal year-end audit
adjustments, and certified by a Financial Officer of
such Borrower;
(c) concurrently with the delivery of the items referred
to in clauses (a) and (b) above, a certificate of the
Financial Officer of such Borrower (i) stating that,
to the best of his or her knowledge, no condition or
event which would constitute a Default or Event of
Default has occurred and is continuing, or if such a
condition or event has occurred, the certificate
shall specifically state such condition or event, and
(ii) demonstrating compliance, as of the dates of the
financial statements being furnished at such time,
with the covenant set forth in SECTION 5.11 hereof;
(d) promptly after the same are sent or otherwise
publicly available, copies of all proxy statements,
financial statements and reports which such Borrower
sends to its stockholders, and promptly after the
same are filed, copies of all regular, periodic and
special reports (including reports on Forms 10-K,
10-Q and 8-K), and all registration statements which
such Borrower files with the Securities and Exchange
Commission or any governmental authority which may be
substituted therefore, or with any national
securities exchange; and
(e) promptly, from time to time, such other information
regarding the operations, business, affairs, and
financial condition of such Borrower and any of its
Subsidiaries as the Lender may reasonably request.
All financial statements required to be furnished to the Lender under this
SECTION 5.05 shall be prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the accounting practices of the
Borrowers reflected in its financial statements referred to in SECTION 3.05
hereof, or to the extent such treatment has changed, with a reconciliation
thereof.
SECTION 5.06 LITIGATION AND OTHER NOTICES. Give the Lender prompt
written notice of the following:
(a) ORDERS; INJUNCTIONS. The issuance by any court or
governmental agency or authority of any injunction,
order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the
Loan or the initiation of any litigation or similar
proceeding seeking any such injunction, order or
other restraint.
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(b) LITIGATION. The filing or commencement of any action,
suit or proceeding against such Borrower or its
Subsidiaries whether at law or in equity or by or
before any court or any federal, state, municipal or
other governmental agency or authority and which, if
adversely determined against such Borrower or its
Subsidiaries, could have a Material Adverse Effect.
(c) ENVIRONMENTAL MATTERS. Any violation by such Borrower
or its Subsidiaries of any Environmental Law which
could have a Material Adverse Effect or which, to
such Borrower's knowledge, is the subject of an
investigation or enforcement action by any
governmental authority or other third party.
(e) DEFAULT. Any Default or Event of Default, specifying
the nature and extent thereof and the action (if any)
which is proposed to be taken with respect thereto.
(f) MATERIAL ADVERSE EFFECT. Any development in the
business or affairs of such Borrower or its
Subsidiaries which could have a Material Adverse
Effect.
SECTION 5.07 ERISA. Comply with the applicable provisions of ERISA
and the provisions of the Internal Revenue Code of 1986 relating thereto, except
where failure to so comply is not reasonably likely to result in a Material
Adverse Effect, and: (a) furnish to the Lender as soon as possible, and in any
event within 30 days after such Borrower knows or has reason to know thereof,
notice of: (i) the establishment by such Borrower or any ERISA Affiliate of any
Pension Plan; (ii) the commencement by such Borrower of contributions to a
Multiemployer Plan; (iii) any failure by such Borrower or any ERISA Affiliate to
make contributions required by Section 302 of ERISA (whether or not such
requirement is waived pursuant to Section 303 of ERISA); and (iv) the occurrence
of any Reportable Event with respect to any Pension Plan for which the reporting
requirement is not waived, together with a statement of a Financial Officer of
such Borrower setting forth details as to such Reportable Event and the action
which such Borrower proposes to take with respect thereto, together with a copy
of the notice of such Reportable Event given to the Pension Benefit Guaranty
Corporation if any notice is required to be so given; (b) promptly after receipt
thereof, a copy of any notice such Borrower or any Subsidiary may receive from
the Pension Benefit Guaranty Corporation relating to its intention to terminate
any Pension Plan, or to appoint a trustee to administer any Pension Plan; and
(c) promptly after receipt thereof, a copy of any notice of withdrawal liability
from any Multiemployer Plan.
SECTION 5.08 MAINTAINING RECORDS; ACCESS AND INSPECTIONS. Maintain
financial records in accordance with generally accepted practices and, upon
reasonable notice, at all reasonable times and as often as the Lender may
reasonably request, permit any authorized representative designated by the
Lender to visit and inspect the properties and financial records of such
Borrower and its Subsidiaries and make extracts from such financial records at
such Borrower's expense, and permit any authorized representative designated by
the Lender to discuss the affairs, finances and condition of such Borrower and
its Subsidiaries with such Borrower's chief financial officer and such other
officers as such Borrower shall deem appropriate and such Borrower's independent
public accountants, and such Borrower will use its best efforts to make such
officers and accountants promptly available for such discussions.
SECTION 5.09 USE OF PROCEEDS. Use the proceeds of the Loan only for
working capital and general corporate purposes.
SECTION 5.10 RIGHTS OFFERING COVENANTS. As promptly as practicable
after the Closing Date, the Borrowers and TMN shall commence and diligently
pursue to completion each of the following:
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(a) Prepare and file with the Securities and Exchange
Commission (i) a proxy statement containing the Proxy
Proposals, and (ii) the Registration Statement, and
use their best efforts to cause the Registration
Statement to be declared effective as soon after
filing such statement as practicable and to remain
effective through the Rights Offering Closing Date
and to cover the issuance and sale of the Preferred
Stock pursuant to the Rights Offering;
(b) take all necessary action in accordance with
applicable law and TMN's Certificate of Incorporation
and By-laws to (i) amend TMN's Certificate of
Incorporation and By-laws to the extent necessary to
increase the number of authorized shares of preferred
stock and Common Stock, and to make such other
necessary amendments, in order to effectuate the
Transactions, (ii) mail to TMN's stockholders the
proxy statement referred to in the defined term
"Rights Offering Event", (iii) recommend to TMN's
stockholders a vote in favor of each Proxy Proposal,
(iv) duly convene a meeting of TMN's stockholders for
the purpose of voting on the Proxy Proposals, and
(v) file with the Secretary of State of Delaware the
Preferred Stock Designation;
(c) use their best efforts to (i) ensure that the
Preferred Stock (and the Common Stock into which it is
convertible) and the Common Stock underlying the
Rights Offering Warrant are listed on The New York
Stock Exchange, and (ii) effectuate the Transactions;
and
(d) deliver to Lender, on or before the date on which the
Registration Statement is declared effective by the
Securities and Exchange Commission, a fully executed
Standby Purchase Agreement.
SECTION 5.11 NET WORTH. The Borrowers and their consolidated
Subsidiaries shall at all times have and maintain an aggregate net worth of at
least $20,000,000.00.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on the
Note, or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, it will not, and it will not
permit any of its Subsidiaries to, either directly or indirectly:
SECTION 6.01 INDEBTEDNESS. Incur, create, assume or permit to
exist any Indebtedness, except: (a) Indebtedness incurred pursuant to this
Agreement and the other Loan Documents; (b) Indebtedness incurred in the
ordinary course of business with respect to customer deposits, trade payables
and other unsecured current liabilities not the result of borrowing and not
represented by any note or other evidence of Indebtedness; (c) Indebtedness
existing on the date hereof and listed on SCHEDULE 6.01 attached hereto; (d)
Indebtedness secured by the Liens permitted under SECTION 6.02(E) below; (e)
Indebtedness incurred pursuant to the Chase Bridge Loan Facility; (f)
Indebtedness incurred pursuant to interest rate protection agreements entered
into in the ordinary course of business and not for speculation; (g) a
securitized receivables purchase transaction (referred to as the PARCO Facility
under the Chase Bridge Loan Facility documents) entered into by the Borrowers
and a special purpose subsidiary of TMN secured by rights to receive and related
assets, which obligations related thereto are not recourse to any of the
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Borrowers, (h) unsecured Indebtedness of the Borrowers incurred in connection
with the acquisition of franchises of a Borrower in an aggregate principal
amount not exceeding $8,000,000 at any time outstanding, provided, that the
terms of such Indebtedness and the related acquisitions of such franchises must
conform to the following conditions: (i) any such unsecured Indebtedness shall
be expressly subordinate to all of the Borrowers' and their Subsidiaries'
obligations under the Chase Bridge Loan Facility and the Obligations, (ii) such
unsecured Indebtedness shall not require the payment of any interest or other
similar charges to any creditor of the Borrowers or their Subsidiaries prior to
the repayment in full of all of the Obligations hereunder, (iii) such unsecured
Indebtedness shall have a maturity equal to or greater than four (4) years, (iv)
the aggregate of the purchase prices for all such acquisitions of franchises
shall not exceed $12,000,000, and (v) any such acquisition of a franchise by the
Borrowers or their Subsidiaries and the related incurrence of Indebtedness will
be subject to the prior written approval of Lender (which approval shall not be
unreasonably withheld); and (i) additional unsecured Indebtedness in an
aggregate principal amount not exceeding $500,000.00 at any time outstanding.
SECTION 6.02 NEGATIVE PLEDGE. Incur, create, assume or permit to
exist any Lien on any property or assets now owned or hereafter acquired by it,
including inventory, fixed assets and intangible assets, or on any income or
rights in respect of any thereof, except: (a) deposits or pledges to secure
payment of workers' compensation, unemployment insurance, old age pensions, or
other social security laws, or to secure statutory obligations; (b) Liens for
property taxes, assessments or other governmental charges or taxes due and
payable, the validity or amount of which in good faith is being contested or
litigated; (c) mechanics', carriers', workmen's, repairmen's, or other like
liens arising in the ordinary course of business securing obligations which are
not overdue for a period of sixty (60) days or more or which are in good faith
being contested or litigated; (d) existing Liens reflected in the financial
statements referred to in SECTION 3.05 hereof, or additional existing Liens
listed in SCHEDULE 6.02 attached hereto and made a part hereof; (e) Liens
granted to the Person financing the acquisition of property, plant or equipment
or other property acquired by such Borrower or its Subsidiaries, including Liens
related to capitalized lease obligations if (i) limited to the particular assets
acquired, (ii) the debt secured by the Lien does not exceed the acquisition cost
of a particular asset for which the Lien is granted, (iii) such transaction does
not otherwise violate this Agreement, and (iv) the aggregate amount of all
Indebtedness secured by Liens permitted under this clause (e) does not exceed
$250,000 at any one time outstanding; (f) Liens arising out of attachments,
judgments or awards as to which an appeal or other appropriate proceedings for
contest or review are timely commenced (and as to which foreclosure and other
enforcement proceedings shall not have been commenced unless fully bonded or
otherwise effectively stayed) and as to which appropriate reserves have been
established in accordance with generally accepted accounting principles; (g)
possessory Liens which (i) occur in the ordinary course of business, (ii) secure
normal trade debt which is not yet due and payable, and (iii) do not secure
Indebtedness for borrowed money; (h) Liens arising by virtue of any statutory or
common law provision relating to banker's liens, rights of setoff or similar
rights with respect to deposit accounts of such Borrower or any of its
Subsidiaries; (i) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar encumbrances on real property which do
not materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of business of such Borrower and its
Subsidiaries; (j) licenses, leases and subleases granted by a Borrower in the
ordinary course of its business; (k) any Lien existing on any asset prior to a
Borrower's acquisition thereof; provided, that (i) such Lien is not created in
contemplation of or in connection with such acquisition, (ii) such Lien shall
not apply to any other assets of any Borrower and (iii) such Lien shall secure
only those obligations which it secures on the date of such acquisition; (l)
Liens securing the Chase Bridge Loan Facility; (m) Liens securing the Revolving
Securitization receivables purchase transaction identified on SCHEDULE 6.01; and
(n) Liens securing the securitized receivables purchase transaction permitted
under SECTION 6.01(G) above.
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SECTION 6.03 SALE OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its assets or properties,
including the equity interest in any Subsidiary, except: (a) sales of assets
necessary to consummate the Revolving Securitization receivables purchase
transaction identified on SCHEDULE 6.01 and the securities receivable purchase
transaction permitted under SECTION 6.01(G) above and (b) sales, leases,
assignments, transfers or other dispositions of assets by a Borrower to another
Borrower or by a Subsidiary of a Borrower to a Borrower.
SECTION 6.04 LIQUIDATIONS, CONSOLIDATIONS, MERGERS OR PURCHASES OF
ASSETS. Liquidate, dissolve (whether voluntarily or involuntarily), merge into
or consolidate or combine with any other Person, or purchase, lease or otherwise
acquire (in one transaction or a series of related transactions) all or
substantially all of the property or assets of any Person (other than purchases
or other acquisitions of inventory, materials, leases, property and equipment in
the ordinary course of business), except: (a) a Borrower may merge into another
Borrower so long as TMN is the survivor if TMN is involved in the merger, (b) a
Subsidiary of a Borrower may merge into that Borrower, so long as the Borrower
is the surviving entity, (c) a Subsidiary of a Borrower may be dissolved if the
Board of Directors of the applicable Borrower determines such dissolution is in
the best efforts of the applicable Borrower and such dissolution is not
reasonably likely to result in a Material Adverse Effect, and (d) for
acquisitions of franchises of Borrowers pursuant to the terms and subject to the
limitations set forth in SECTION 6.01(H) above.
SECTION 6.05 INVESTMENTS, LOANS AND ADVANCES. Make or suffer to
exist any Investments except for (a) Permitted Investments, and (b) Investments
permitted under or made in compliance with the Revolving Securitization
receivables purchase transactions identified on SCHEDULE 6.01 or permitted under
SECTION 6.01(G) with excess funds received in connection therewith.
SECTION 6.06 RESTRICTED PAYMENTS. Declare or pay, directly or
indirectly, any dividends or make any other distribution, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any partnership interests or capital accounts
or any shares of capital stock, warrants, options or any of its other
securities, or directly or indirectly redeem, purchase, retire or otherwise
acquire for a consideration, any partnership interests or capital accounts or
any shares of any class of capital stock, warrants, options or any of its other
securities, or set apart any sum for the aforesaid purposes (collectively
"RESTRICTED PAYMENTS"), except that (a) a Borrower's Subsidiaries may make
Restricted Payments to such Borrower and to the Borrowers' other Subsidiaries,
(b) a Borrower may make Restricted Payments to another Borrower, (c) a Borrower
may declare and pay dividends with respect to its capital stock payable solely
in shares of its common stock, (d) a Borrower may make Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of that Borrower consistent with past practice, and (e)
TMN may make Restricted Payments required, contemplated, or permitted by the
terms of the Preferred Stock Designation, the Rights Offering Warrant and the
Existing Warrant.
SECTION 6.07 TRANSACTIONS WITH AFFILIATES. Sell or transfer any
assets to, or purchase or acquire any assets of, or otherwise engage in any
material transaction with, or permit any Affiliate to sell or transfer assets
to, or purchase or acquire any assets of, or otherwise engage in any other
material transaction with any other Affiliate, except, in each case, in the
ordinary course of such Borrower's or such Subsidiaries business and upon fair
and reasonable terms no less favorable to such Borrower or Subsidiary than would
be obtained in a comparable arm's-length transaction with a Person other than an
Affiliate, provided that this SECTION 6.07 shall not apply to (a) the
Transactions, (b) the Rights Offering (including the purchase, redemption or
conversion of the Preferred Stock issued pursuant thereto, and the payment of
distributions on such Preferred Stock), (c) the Revolving Securitization
receivables purchase transactions identified on SCHEDULE 6.01 and permitted
under SECTION 6.01(G) above, (d) payment of the Management Fee, (e) payment of
the Transaction Fee, or (f) the exercise of rights under the Existing Warrant.
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SECTION 6.08 LINE OF BUSINESS. Engage, directly or indirectly, in
any business other than the businesses in which it is engaged on the Closing
Date and businesses reasonably related thereto.
SECTION 6.09 CERTAIN DOCUMENTS. Except as contemplated by the
Proxy Proposals, amend, modify, terminate or waive: any material term or
provision of its certificate or articles of incorporation or by-laws, or other
organizational or investment documents or agreements, without in each case, the
prior written consent of the Lender, which shall not be unreasonably withheld or
delayed, provided that this SECTION 6.09 shall not apply to any such amendments,
modification and waivers necessary to effectuate the Transactions.
ARTICLE VII
DEFAULTS
SECTION 7.01 EVENTS OF DEFAULT. Each of the following events
shall constitute events of default ("EVENTS OF DEFAULT") hereunder:
(a) any representation or warranty made by or on behalf
of any Borrower in connection with this Agreement or
the other Loan Documents or any Transaction shall
prove to have been false or misleading in any
material respect when made, and to the extent capable
of being remedied, the condition giving rise to such
representation or warranty being incorrect or untrue
shall continue unremedied for thirty (30) days after
written notice thereof from the Lender to Borrowers;
(b) default shall be made in the payment of any principal
on the Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest
on the Loan or any other amount (other than an amount
referred to in clause (b) above) due under this
Agreement or the other Loan Documents, within five
(5) Business Days after the same shall become due and
payable;
(d) default shall be made in the due observance of any
covenant, condition or agreement on the part of the
Borrower contained in SECTION 5.01, 5.05, 5.10 OR
5.11 or ARTICLE VI;
(e) default shall be made in the due observance or
performance of any other covenant, condition or
agreement to be observed or performed by the Borrower
pursuant to the terms of this Agreement or any other
Loan Document (other than those covered in clauses
(b) - (d) above) and such default shall continue
unremedied for a period of thirty (30) days after the
earlier of: (i) written notice from the Lender of
such default; or (ii) actual knowledge by a Borrower
of such default;
(f) any Borrower or any of any Borrower's Subsidiaries
shall: (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the
United States Code or any other federal or state
bankruptcy, insolvency or similar law; (ii) consent to
the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding
or the filing of any such petition; (iii) apply
for or consent to the appointment of a receiver,
trustee, custodian,
22
<PAGE> 27
sequestrator or similar official for such Borrower or
such Subsidiary or for a substantial part of their
respective properties or assets; (iv) file an answer
admitting the material allegations of a petition filed
against it in any such proceeding; (v) make a general
assignment for the benefit of creditors; (vi) become
unable generally, or admit in writing its inability, to
pay its debts as they become due; (vii) suspend the
transaction of all or a substantial portion of its usual
business; or (viii) take corporate action for the
purpose of effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of
competent jurisdiction seeking: (i) relief in respect of
any Borrower or any of any Borrower's Subsidiaries of a
substantial part of any of their respective properties
or assets, under Title 11 of the United States Code or
any other federal or state bankruptcy, insolvency or
similar law; (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for
any Borrower or any of any Borrower's Subsidiaries or
for a substantial part of their respective properties;
or (iii) the winding-up or liquidation of any Borrower
or any of any Borrower's Subsidiaries; and such
proceeding or petition shall continue undismissed for
sixty (60) days or an order or decree approving or
ordering any of the foregoing shall continue unstayed
and in effect for sixty (60) days;
(h) a default shall be made with respect to any Indebtedness
of any Borrower or any of any Borrower's Subsidiaries,
if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any
such Indebtedness (or any trustee or agent on behalf of
such holder or obligee) to accelerate (with or without
notice or lapse of time or both) the maturity of the
Indebtedness in an aggregate amount of $1,000,000 or
more; or any payment of principal or interest,
regardless of amount, on any Indebtedness of any
Borrower or any of any Borrower's Subsidiaries in an
aggregate principal amount of $1,000,000 or more, shall
not be paid when due, whether at maturity, by
acceleration or otherwise (after giving effect to any
applicable cure period specified in the instrument
evidencing or governing such Indebtedness);
(i) a Reportable Event shall have occurred with respect to
any Pension Plan or a notice of intent to terminate a
Pension Plan shall have been furnished to the affected
parties (as provided in Section 4041(c)(1) of ERISA); or
the Pension Benefit Guaranty Corporation shall have
instituted proceedings to terminate any Pension Plan, or
a trustee shall have been appointed by a United States
District Court to administer any Pension Plan, if in any
such case such Pension Plan then has an amount of
unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) or any Borrower or any
ERISA Affiliate incurs withdrawal liability which could
reasonably be expected to result in a Material Adverse
Effect;
(j) a final judgment or judgments for the payment of money
in excess of $2,000,000 in the aggregate shall be
rendered by a court or other tribunal against any
Borrower or Borrowers or any of their Subsidiaries and
shall remain undischarged for a period of thirty (30)
consecutive days during which execution of such judgment
shall not have been stayed effectively;
23
<PAGE> 28
(k) any Loan Document shall cease to be in full force and
effect, enforceable in accordance with its terms, or
any Borrower shall assert the invalidity of any such
instrument;
(l) there occurs a default or event of default by any
Borrower under or in connection with the Chase Bridge
Loan Facility, the Investment Agreement Amendment or
the Standby Purchase Agreement (or any document
executed by any Borrower pursuant to the Standby
Purchase Agreement), which remains uncured after the
expiration of any applicable cure period;
(m) there shall occur a Rights Offering Default Event;
and
(n) there shall occur a Purchase Termination Event or
Potential Purchase Termination Event under or in
connection with the existing Revolving Securitization
receivables purchase transaction identified on
SCHEDULE 6.01, or a Termination Event or Potential
Termination Event under or in connection with the
securitized receivables purchase transaction
permitted under SECTION 6.01(G) or the Chase Bridge
Loan Facility.
SECTION 7.02 REMEDIES UPON DEFAULT. Upon the occurrence of any
Event of Default (other than an event described in SECTION 7.01 (F) or (G)), and
at any time thereafter during the continuance of such event, the Lender may, by
written or telegraphic notice to the Borrowers, declare the Note to be forthwith
due and payable, whereupon the principal of the Note, together with accrued
interest thereon and all other liabilities of the Borrowers accrued hereunder
and under the other Loan Documents, shall become forthwith due and payable both
as to principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in any Note to the contrary notwithstanding. Upon
the occurrence of any event described in SECTION 7.01 (F) OR (G), the principal
amount outstanding under the Note, together with all accrued interest thereon
and all other liabilities of the Borrowers accrued hereunder and under the other
Loan Documents, shall automatically become due and payable, both as to principal
and interest, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrowers, anything contained
herein or in the Note to the contrary notwithstanding. Without limitation to the
foregoing, upon the occurrence of an Event of Default, Lender shall be entitled
to all rights and remedies available to it hereunder, under the other Loan
Documents, under the Standby Purchase Agreement, under the Investment Agreement
Amendment, at law or in equity. Notwithstanding anything to the contrary
contained above in this SECTION 7.02, and without limitation to the Lender's
ability to take the actions set forth above in this SECTION 7.02, upon the
occurrence of any Event of Default, at any time thereafter during the
continuance of such event, in addition to any other rights to designate
directors of Lender under Article IV of the Investment Agreement Amendment
(other than Section 4.7 thereof), Samstock shall have the right to designate
such additional number of directors (which individuals may be designated in
Samstock's sole discretion without obtaining the acceptance of approval of the
Disinterested Directors (as defined in the Investment Agreement Amendment) or
any other person or entity), and TMN shall take all necessary or appropriate
action to increase the number of directors constituting TMN's Board of Directors
and/or obtain resignations of individuals then serving as directors (other than
directors designated by Samstock), and assist in the nomination and election as
directors of such additional designees of Samstock, such that, after taking all
of the same into account, the number of individuals designated by Samstock under
this SECTION 7.02 and Article IV of the Investment Amendment serving as
directors of TMN shall constitute at least a majority of the total number of
directors of TMN, effective as soon as practicable, but in any event no later
than five (5) Business Days after Lender notifies TMN in writing of its intent
to exercise the right provided herein and the identity of the individuals
Samstock desires to so designate (and, if applicable, the
24
<PAGE> 29
individuals Samstock desires to resign). With respect to the foregoing, the
Borrowers and TMN acknowledge and agree that (I) the provisions of this SECTION
7.02 are reasonable and necessary to protect the proper and legitimate interests
of the Lender, and (II) the Lender would be irreparably damaged in the event any
of the provisions of this SECTION 7.02 were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the Lender shall be entitled to preliminary and permanent injunctive relief to
prevent breaches of the provisions of this SECTION 7.02 by the Borrowers or TMN
without the necessity of proving actual damages or of posting any bond, and to
enforce specifically the terms and provisions hereof, which rights shall be
cumulative and in addition to any other remedy to which the Lender may be
entitled hereunder, under any other Loan Documents or at law or in equity.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01NOTICES. (a) Notices and other communications
provided for herein and in the other Loan Documents shall be in writing and
shall be delivered personally or mailed, by certified or registered mail,
postage prepaid (or in the case of facsimile communication, delivered by telex,
graphic scanning or other facsimile communications equipment) or delivered by
overnight courier addressed:
IF TO THE LENDER:
GAMI Investments, Inc.
Two North Riverside Plaza, Suite 600
Chicago, Illinois 60606
Attention: Greg Robitaille
Telephone: (312) 466-3215
Facsimile: (312) 454-9678
WITH A COPY TO:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza, Suite 1600
Chicago, Illinois 60606
Attention: Marc S. Brenner
Telephone: (312) 446-3933
Facsimile: (312) 454-0335
IF TO THE BORROWERS:
Transmedia Network, Inc.
Transmedia Restaurant Company, Inc.
Transmedia Service Company, Inc.
TMNI International Incorporated
11900 Biscayne Boulevard
Miami, Florida 33181
Attention: Gene Henderson
Telephone: (305) 892-3306
Facsimile: (305) 892-3342
25
<PAGE> 30
WITH A COPY TO:
Morgan, Lewis & Bockius, LLP
101 Park Avenue
New York, New York 10178
Attention: Stephen Farrell
Telephone: (212) 309-6050
Facsimile: (212) 309-6273
(b) All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt, in each case addressed to such party as provided
in this SECTION 8.01 or in accordance with the latest unrevoked direction from
such party.
SECTION 8.02 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the other
Loan Documents shall be considered to have been relied upon by the Lender and
shall survive the making by the Lender of the Loan and the execution and
delivery to the Lender of the Note evidencing the Loan and shall continue in
full force and effect until the Note and all accrued interest thereon and all
other Obligations then due and payable have been fully paid and performed and
the Lender has no further commitment to lend hereunder.
SECTION 8.03 SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrowers or the Lender that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns. The Borrowers may not assign or transfer any of their
rights or obligations hereunder without the prior written consent of the Lender.
The Lender shall have the right to make assignments of the Loan to an Affiliate
of the Lender.
SECTION 8.04 EXPENSES OF THE LENDER; INDEMNITY. (a) Each Borrowers
agrees to pay (on the Closing Date) all reasonable costs and expenses incurred
by the Lender (including the reasonable fees and expenses of the Lender's
counsel) in connection with the preparation and administration of this Agreement
and the other Loan Documents, and with any amendments, modifications or waivers
of the provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Lender (including the
reasonable fees and expenses of the Lender's counsel) in connection with the
enforcement of its rights and remedies in connection with this Agreement or the
other Loan Documents. Each Borrower further agrees that it shall indemnify the
Lender from and hold it harmless against any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution and
delivery of this Agreement or any of the other Loan Documents.
(b) Each Borrower agrees to indemnify the Lender and its
Affiliates, directors, officers, employees and agents against, and to hold the
Lender and such Persons harmless from, any and all losses, claims, damages,
liabilities, penalties, actions, judgments, investigations, proceedings,
litigation, suits, costs, and related expenses (collectively, "INDEMNIFIED
LIABILITIES"), including legal fees and expenses, incurred by or asserted
against the Lender or any such Persons arising out of, in any way connected
with, or as a result of: (i) this Agreement or the other Loan Documents; (ii)
the performance by the parties hereto and thereto of their respective rights and
obligations hereunder and thereunder; (iii) consummation of the Transactions;
(iv) the environmental condition or operation of such Borrower's and its
Subsidiaries' properties, including the release, presence, spillage, disposal,
discharge, transporting, emission or leakage of hazardous materials, which is
at, in, on, under, about, from or affecting such properties, including any
damage or injury resulting from any such hazardous materials to or affecting
such Borrower's or its Subsidiaries' properties or the soil, water, air,
vegetation, buildings, personal property, persons or animals
26
<PAGE> 31
located on such properties or on any other property or otherwise; or (v) any
violation of any Environmental Laws. The foregoing indemnity includes the cost
of remedial action to the extent required to cause such Borrower's or it's
Subsidiaries' properties to be in compliance with all applicable Environmental
Laws. Notwithstanding the foregoing, this indemnity shall not apply to any such
Indemnified Liabilities arising solely and directly from the gross negligence or
willful misconduct of the Lender.
(c) The provisions of this SECTION 8.04 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement or the other Loan Documents, the consummation of the Transactions
contemplated hereby, the repayment of any of the Loan, the invalidity or
unenforceability of any term or provision of this Agreement or any of the other
Loan Documents, or any investigation made by or on behalf of the Lender. All
amounts due under this SECTION 8.04 shall be payable within thirty (30) days
after written demand in reasonable detail therefor.
SECTION 8.05 RIGHT OF SETOFF. The Lender is hereby authorized at
any time and from time to time after the occurrence and during the continuance
of an Event of Default to setoff and apply any and all indebtedness and other
obligations at any time owing by the Lender or its Affiliates to or for the
credit or the account of any Borrower or any Borrower's Affiliates to amounts
then due and payable under this Agreement and the other Loan Documents,
irrespective of whether or not the Lender shall have made any demand under this
Agreement or any of the other Loan Documents. The rights of the Lender under
this SECTION 8.05 are in addition to other rights and remedies (including other
rights of setoff) which the Lender may have under applicable law.
SECTION 8.06 APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 8.07 WAIVERS. No failure or delay of the Lender in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder and under the
other Loan Documents, and under or in connection with the Rights Offering
Warrant, the Rights Offering, and the Transactions, are cumulative and not
exclusive of any rights or remedies which it would otherwise have. No waiver of
any provision of this Agreement, the Note or the other Loan Documents, or
consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be authorized as provided in SECTION 8.08, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on any Borrower in any case
shall entitle such Borrower or any other Borrower to any other or further notice
or demand in similar or other circumstances.
SECTION 8.08 AMENDMENTS. Neither this Agreement nor any other Loan
Document, nor any provision hereof or thereof, may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Lender.
SECTION 8.09 SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement, the Note or the other Loan Documents
should be held invalid, illegal or unenforceable
27
<PAGE> 32
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected or
impaired thereby.
SECTION 8.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which when taken together shall constitute but one contract.
SECTION 8.11 HEADINGS. Article and Section headings and the Index
used herein are for convenience of reference only and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 8.12 CONSENT TO JURISDICTION. Each Borrower hereby
irrevocably agrees that any suit, action, proceeding or claim against it arising
out of or in any way relating to this Agreement or any of the other Loan
Documents, or any judgment entered by any court in respect thereof, may be
brought or enforced in the state or federal courts located in Cook County,
Illinois or New York County, New York, and each Borrower consents, for itself
and in respect to its property, to the non-exclusive jurisdiction of these
courts, and each Borrower hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the venue
of any proceeding brought in Cook County, Illinois, or New York County, New
York, and further irrevocably waives any claims that any such proceeding has
been brought in an inconvenient forum.
SECTION 8.13 WAIVER OF JURY TRIAL. EACH BORROWER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR UNDER OR IN CONNECTION WITH ANY AMENDMENT,
INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, AND AGREES THAT ANY SUCH ACTION
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE TERMS AND PROVISIONS OF
THIS SECTION 8.13 CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.
SECTION 8.14 INTEREST LIMITATION. Anything in this Agreement, the
Note or any other Loan Document to the contrary notwithstanding, the Borrowers
shall never be required to pay interest at a rate in excess of the highest
lawful rate, and if the effective rate of interest that would otherwise be
payable under this Agreement, the Note or any other Loan Document would exceed
the highest lawful rate, or if any holder of the Note shall receive monies that
are deemed to constitute interest which would increase the effective rate of
interest payable under this Agreement, the Note or any other Loan Document to a
rate in excess of the highest lawful rate, then: (a) the amount of interest that
would otherwise be payable under this Agreement, the Note and the other Loan
Documents shall be reduced to the amount allowed under applicable law; and (b)
any interest paid in excess of the highest lawful rate shall, at the option of
the holders of the Note, be either refunded to the payor or credited on the
principal of the Note. If at any time the effective rate of interest which would
otherwise be payable under this Agreement, the Note, or any other Loan Document
exceeds the highest lawful rate, the rate of interest to accrue under this
Agreement, the Note and the other Loan Documents shall be limited to the highest
lawful rate, but any subsequent reductions in such interest rate shall not
become effective to reduce such interest rate below the highest lawful rate
until the total amount of interest accrued hereunder and under the Note and the
other Loan Documents equals the total amount of interest that would have accrued
if interest had been computed without giving effect to this SECTION 8.14.
28
<PAGE> 33
SECTION 8.15 LOAN DOCUMENTS. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and those of
any other Loan Document, the terms and provisions of this Agreement shall govern
and control to the extent of such conflict or inconsistency.
SECTION 8.16 JOINT AND SEVERAL LIABILITY. The obligations and
liability of the Borrowers under this Agreement and the other Loan Documents
shall be joint and several.
29
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
<TABLE>
<S> <C>
TRANSMEDIA NETWORK, INC., a Delaware corporation
Attest: . By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
TRANSMEDIA RESTAURANT COMPANY, INC., a Delaware
corporation
Attest: By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
TRANSMEDIA SERVICE COMPANY, INC., a Delaware
corporation
Attest: By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
TMNI INTERNATIONAL INCORPORATED,
a Delaware corporation
Attest: By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
GAMI INVESTMENTS, INC.
By:
--------------------------------------------
Its:
--------------------------------------------
</TABLE>
30
<PAGE> 35
EXHIBIT A
Form of Promissory Note
A-1
<PAGE> 36
EXHIBIT B
Form of Borrowing Request
B-1
<PAGE> 37
EXHIBIT C
Form of Opinion of Counsel
C-1
<PAGE> 38
EXHIBIT D
Form of Rights Offering Warrant
<PAGE> 39
EXHIBIT E
Second Amended and Restated Investment Agreement
<PAGE> 40
EXHIBIT F
Form of Standby Purchase Agreement
<PAGE> 41
EXHIBIT G
Preferred Stock Designation
<PAGE> 42
SCHEDULE 1.01
Existing Investments
[TO BE ATTACHED]
<PAGE> 43
SCHEDULE 3.07
Litigation
[TO BE ATTACHED]
<PAGE> 44
SCHEDULE 3.10
Burdensome Contracts; Defaults
[TO BE ATTACHED]
<PAGE> 45
SCHEDULE 3.06
Subsidiaries
Borrower Subsidiaries
TMN Restaurant
Service
TMNI
TNI Funding Company I, L.L.C.
Restaurant None
Service None
TMNI None
<PAGE> 46
SCHEDULE 6.01
Existing Indebtedness
[TO BE ATTACHED]
<PAGE> 47
SCHEDULE 6.02
Existing Liens
None.
<PAGE> 1
EXHIBIT 7
STANDBY PURCHASE AGREEMENT
This Standby Purchase Agreement (as the same may be amended or
modified from time to time, the "Agreement"), made and entered into as of June
30, 1999 by and between Transmedia Network Inc., a Delaware corporation (the
"Company"), and Samstock, L.L.C., a Delaware limited liability company
("Samstock"; and in its capacity as standby purchaser, the "Standby Purchaser").
WITNESSETH:
WHEREAS, under the terms of that certain Credit Agreement
dated as of June 30, 1999 by and between the Company and GAMI Investments, Inc.,
a Delaware corporation and an affiliate of the Standby Purchaser ("Lender") (the
"Loan Agreement"), Lender has loaned to the Company the aggregate principal
amount of $10 million (the "Loan");
WHEREAS, in accordance with the terms of the Loan Agreement,
the Company is implementing a rights offering (the "Rights Offering") pursuant
to which it is anticipated that the Company will distribute to stockholders of
record of the Company ("Stockholders") on a record date to be determined, rights
(each, a "Right" and collectively, the "Rights") to subscribe for shares of
Series A senior convertible redeemable preferred stock of the Company (the
"Series A Preferred Shares"), at a subscription price per share to be determined
(which shall represent approximately 70% of the market price of the Common Stock
as of the pricing date calculated as described in the registration statement
covering the Rights Offering) (the "Subscription Price"), not to exceed $10
million in the aggregate;
WHEREAS, in order to help assure the success of the Rights
Offering, and the receipt by the Company of sufficient proceeds therefrom to
repay all outstanding amounts under the Loan upon its maturity, Samstock is
willing to, and hereby does, agree to serve as Standby Purchaser for a specified
number of Series A Preferred Shares available for purchase upon the expiration
of unexercised Rights, and the Company has agreed with Samstock to sell such
securities to the Standby Purchaser, all as more particularly set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Standby
Purchaser do hereby agree as follows:
Section 1. Standby Purchase Commitment.
1.1 The Standby Purchaser agrees that it will exercise in full
the basic subscription privileges offered to it in connection with the Rights
Offering and, to the extent that EGI-Transmedia Investors, L.L.C., a Delaware
limited liability company, or its successors or distributees ("TNI") elects or
elect not to exercise its or their basic subscription privileges in full, to
purchase such additional number of Series A Preferred Shares that TNI or its
successors or distributees would have
<PAGE> 2
been entitled to purchase if it or they had exercised its or their basic
subscription privileges in full. Subject to the terms and conditions set forth
in this Agreement, the Company agrees to issue and sell to the Standby
Purchaser, and the Standby Purchaser agrees to purchase from the Company, such
number of Series A Preferred Shares not (i) subscribed for by it or TNI (or its
successors or distributees) pursuant to their basic subscription privileges or
by it pursuant to the preceding sentence or (ii) subscribed for by other
Stockholders of the Company (the "Other Stockholders") in the Rights Offering,
including pursuant to any oversubscription privilege, as may be necessary so
that all of the Series A Preferred Shares offered for sale in the Rights
Offering will be sold in the Rights Offering (the "Standby Shares").
1.2 The purchase price of the Standby Shares sold pursuant to
this Agreement to the Standby Purchaser shall be at the price and terms offered
to the Other Stockholders pursuant to the Rights Offering; provided that the
aggregate gross purchase price for all Series A Preferred Shares offered and
sold to all Stockholders, including all Standby Shares offered and sold to the
Standby Purchaser, shall not exceed $10 million.
1.3 In consideration of the Standby Purchaser's obligations
under this Agreement and Lender's obligations under the Loan Agreement, the
Company agrees to issue to the Standby Purchaser (or as the Standby Purchaser
shall direct) a warrant (the "Warrant"), substantially in the form of Exhibit A
hereto, to purchase an aggregate of 1,000,000 shares (the "Warrant Shares") of
the Company's common stock, $.02 par value per share (the "Common Stock"). The
Warrant shall be issued and delivered to the Standby Purchaser at the Closing
(as hereinafter defined), upon repayment to the Company of the cash fee (or at
Lender's option, upon offset of the amount of said cash fee against obligations
owing to Lender under the Loan Agreement) previously paid to Lender or a portion
thereof, to the extent required by, and otherwise in accordance with, Section
2.10 of the Loan Agreement.
Section 2. Determination of Standby Shares.
2.1 As soon as practicable following the expiration of the
exercise period of the Rights (as the same may be extended) and promptly
following its determination of the number of Series A Preferred Shares validly
subscribed for through the exercise of the Rights in accordance with the terms
of the Rights Offering (including the exercise of any oversubscription options
or privileges), the Company shall notify the Standby Purchaser in writing of the
number of Standby Shares, if any, to be purchased by it pursuant to Section 1.
Section 3. Closing.
3.1 The delivery of and payment for the Standby Shares shall
take place at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New
York, New York 10178 at 10:00 a.m., New York City time, on the date of the sale
of the Series A Preferred Shares to the subscribing Stockholders in the Rights
Offering (such time and date being referred to as the "Closing Time," the date
of the Closing Time being referred to as the "Closing Date" and the consummation
of the transaction being referred to as the "Closing").
3.2 At the Closing:
-2-
<PAGE> 3
(a) the Company shall deliver to the Standby Purchaser (i)
stock certificates representing the Standby Shares to be purchased by
the Standby Purchaser hereunder, registered in the name of the Standby
Purchaser or such of its nominees as it may specify at least three
business days prior to the Closing Date, for the Standby Purchaser's
account, and (ii) the Warrant, in each case free and clear of all
liens, claims or encumbrances of any kind, and
(b) the Standby Purchaser shall deliver the Subscription Price
for each Standby Share purchased by it in immediately available funds
in the form of a wire transfer to an account designated by the Company
at least one business day prior to the Closing Date.
Section 4. Representations and Warranties.
4.1 The Company represents and warrants to, and covenants with,
the Standby Purchaser, as of the date hereof and again as of the Closing Date,
as follows:
(a) As soon as practicable, the Company shall file with the
Securities and Exchange Commission (the "Commission") a registration
statement on Form S-2 to register under the Securities Act of 1933 (the
Securities Act") such number of Rights, Series A Preferred Shares and
shares of Common Stock into which the Series A Preferred Shares may,
from time to time, be convertible in relation to the Rights Offering
such that the gross proceeds thereof, assuming full subscription, shall
be $10 million. The Company will file such amendments to the
registration statement as may be necessary to permit the registration
statement, as so amended, to become effective. Such registration
statement as amended at the time it becomes effective (the "Effective
Date"), including all exhibits and all documents incorporated therein
by reference, is herein called the "Registration Statement." The
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Securities Act of 1933 (the "Securities Act") is herein
called the "Prospectus."
(b) On the Effective Date and at the time when the Prospectus
is first filed with the Commission pursuant to Rule 424(b), the
Registration Statement and the Prospectus will comply in all material
respects with the provisions of the Securities Act and the rules and
regulations promulgated thereunder, and on the Effective Date neither
the Registration Statement nor the Prospectus will contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; except that the foregoing does not apply to statements or
omissions in the Registration Statement or the Prospectus made in
reliance upon information furnished by the Standby Purchaser to the
Company expressly for use therein.
(c) The documents incorporated by reference in the Prospectus
(the "Incorporated Documents"), at the time they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations of the Commission promulgated
thereunder, and, when read together with the other information in the
Prospectus, will not contain an
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<PAGE> 4
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company
included in the Incorporated Documents comply as to form in all
material respects with applicable accounting requirements and the rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as
may be indicated in notes thereto) and fairly present the consolidated
financial position of the Company and its subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth
in the Incorporated Documents, neither the Company nor any of its
subsidiaries has any obligation or liability of any nature whatsoever
(direct or indirect, matured or unmatured, absolute, accrued,
contingent or otherwise) either (1) required by generally accepted
accounting principles to be set forth on a consolidated balance sheet
of the Company and its subsidiaries or in the notes thereto or (ii)
which, individually or in the aggregate, could reasonably be expected
to have a material adverse effect (or any development which could
reasonably be expected to have a material adverse effect) on the
business, operations, assets, financial or other condition, results of
operations or prospects of the Company and its subsidiaries, taken as a
whole, whether or not required by generally accepted accounting
principles to be provided or reserved against on a balance sheet
prepared in accordance with generally accepted accounting principles,
other than liabilities and obligations reflected or reserved against in
the consolidated financial statements of the Company and its
consolidated subsidiaries included in the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 1999, or incurred since the
date of the balance sheet included in such financial statements in the
ordinary course of business which are not individually or collectively
material to the Company and its subsidiaries taken as a whole.
(d) As soon as practicable, the Company shall file with the
Commission a Proxy Statement in preliminary form relating to a special
meeting of stockholders (the "Stockholders Meeting") to be duly called
and convened for the purpose of considering and taking action upon the
Proxy Proposals (as defined in the Registration Statement). The Company
will use its reasonable efforts to cause the Proxy Statement to be
mailed to stockholders as promptly as practicable after the
Registration Statement is declared effective under the Securities Act.
At the time it is first mailed to stockholders, the Proxy Statement
will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; except
that the foregoing does not apply to statements or omissions in the
Proxy Statement made in reliance upon information furnished by the
Standby Purchaser to the Company expressly for use therein.
(e) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by the
Company of this Agreement (including the issuance of the Warrant) have
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<PAGE> 5
been duly and validly authorized by the Board of Directors of the
Company (the "Board") and have been approved by a majority of the
Disinterested Directors of the Company (within the meaning of Section
3.1 of the Amended and Restated Investment Agreement dated March 3,
1998 by and among the Company, Samstock, TNI and Halmostock), and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance by the Company of
this Agreement, other than Stockholder Approval (as defined below). The
Board has approved this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the
issuance to the Standby Purchaser of the Standby Shares, the Warrant
and the Warrant Shares, so as to render inapplicable thereto the
restrictions contained in Article Seventh of the Certificate of
Incorporation of the Company, and the restrictions contained in Section
203 of the Delaware General Corporation Law.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and is the valid and binding obligation of the
Company and is enforceable against the Company by the Standby Purchaser
in accordance with its terms.
(g) The Rights, the Series A Preferred Shares offered by the
Company to the Stockholders upon exercise of Rights, and the Standby
Shares to be sold by the Company under this Agreement have been duly
authorized by the Company and will be included in the Registration
Statement. Upon the approval of the Proxy Proposals by the requisite
vote of the stockholders of the Company at the Stockholders Meeting in
accordance with the Delaware General Corporation Law, the applicable
rules of the New York Stock Exchange and the provisions of the
Company's Certificate of Incorporation and By-laws (the "Stockholder
Approval") and the filing by the Company of the Certificate of
Amendment, in substantially the form attached hereto as Exhibit B, and
the Certificate of Designations, in substantially the form attached
hereto as Exhibit C, with the Secretary of State of the State of
Delaware (together, the "Delaware Filings"), the Standby Shares and any
shares of Common Stock into which the Standby Shares may be convertible
shall have been reserved for issuance by the Company and the Standby
Shares, when issued and delivered by the Company against payment
therefor as provided in this Agreement, will be validly issued, fully
paid and nonassessable, and the Standby Purchaser shall acquire good
and valid title to the Standby Shares (and any shares of Common Stock
into which they may be convertible) and the Warrant, free and clear of
all Liens. Upon exercise of the Warrant, in whole or, from time to
time, in part, and upon payment of the exercise price therefor, in
accordance with the terms of the Warrant, the Standby Purchaser will
acquire good and valid title to the Warrant Shares, free and clear of
all Liens, and such Warrant Shares shall be validly issued, fully paid
and nonassessable. For purposes of this paragraph (g), "Lien" means any
preemptive or similar rights of any third party, purchase options,
calls, proxies, voting trusts, voting agreements, judgments, pledges,
charges, assessments, levies, escrows, rights of first refusal or first
offer, transfer restrictions, mortgages, indentures, claims, liens,
equities, mortgages, deeds of trust, deeds to secure debt, security
interests and other encumbrances of every kind and nature whatsoever,
whether arising by agreement, operation of law or otherwise, other than
any created by the Standby Purchaser or pursuant to this Agreement. No
vote of the holders of any class or series of capital stock or other
securities of the Company or any subsidiary of the Company is required
to approve or effect this Agreement or any transaction contemplated
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<PAGE> 6
hereby, including, without limitation, under applicable law, applicable
stock exchange rules or regulations, the certificate or articles of
incorporation (including, without limitation, Article Seventh of the
Company's Certificate of Incorporation) or by-laws of the Company or
any subsidiary of the Company or any agreement of any kind applicable
to the Company, any subsidiary of the Company, or their assets, except
that the Proxy Proposals require Stockholder Approval. The affirmative
vote of the holders of no more than a majority of the outstanding
shares of the Company's Common Stock is the only vote of the holders of
any class or series of capital stock or other securities of the Company
or any subsidiary of the Company necessary to obtain Stockholder
Approval of the Proxy Proposals.
(h) The execution, delivery and performance of this Agreement
will not (i) conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company or
any of its subsidiaries pursuant to the terms of, or constitute a
default under, any material agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or (ii) upon receipt
of the Stockholder Approval and making the Delaware Filings, result in
a violation of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries or any order, rule or regulation of
any court or governmental agency having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties.
Except for the Delaware Filings and as required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"),
the Securities Act, the Securities Exchange Act of 1934 (the "Exchange
Act"), and applicable state securities law, no consent, authorization
or order of, or filing or registration with, any court or governmental
agency is required for the execution, delivery and performance of this
Agreement.
4.2 The Standby Purchaser represents and warrants to, and
covenants with, the Company as follows:
(a) The Standby Purchaser shall receive from the Company and
carefully review a copy of the registration statement, the Incorporated
Documents, and the Proxy Statement, in the form in which they are filed
with the Commission and the information relating to the Standby
Purchaser contained therein furnished by the Standby Purchaser to the
Company expressly for use therein shall not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Standby Purchaser understands and acknowledges that
neither the Warrant nor the Warrant Shares have been registered under
Section 5 of the Securities Act and may not be sold or otherwise
transferred unless so registered or pursuant to a valid exemption
therefrom. The Standby Purchaser further agrees that it will not sell,
transfer, hypothecate or dispose of (i) any Series A Preferred Shares,
(ii) any shares of Common Stock into which the Series A Preferred
Shares are convertible, (iii) the Warrant, or (iv) any Warrant Shares
except in compliance with the Securities Act and applicable state
securities laws.
(c) The Standby Purchaser has all necessary corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by the
Standby Purchaser of this Agreement have been duly and
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<PAGE> 7
validly authorized by the Managing Member of the Standby Purchaser, and
no other proceedings on the part of the Standby Purchaser are necessary
to authorize the execution, delivery and performance by the Standby
Purchaser of this Agreement. The Managing Member has approved this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the purchase by the Standby Purchaser of
the Standby Shares.
(d) This Agreement has been duly authorized, executed and
delivered by the Standby Purchaser and is the valid and binding
obligation of the Standby Purchaser and is enforceable against the
Standby Purchaser by the Company in accordance with its terms.
(e) On the Closing Date, the Standby Purchaser will have
sufficient cash funds on hand to purchase the Standby Shares on the
terms and conditions contained in this Agreement.
4.3 The Standby Purchaser and the Company shall file or cause to
be filed promptly following their mutual determination to do so with the Federal
Trade Commission (the "FTC") and the Department of Justice (the "DOJ") all
requisite notification and report forms and documentary materials which comply
with the provisions of the HSR Act and the rules thereunder, and will cooperate
and coordinate with each other to file promptly any additional information
requested as soon as practicable after receipt of a request from the FTC or the
DOJ. The Standby Purchaser and the Company shall use their respective best
efforts to obtain early termination of the applicable waiting period under the
HSR Act and to overcome any objection made by either the FTC or the DOJ in
connection therewith. All of the fees and costs of filing any such notification
and report forms by either the Standby Purchaser or the Company (including the
expenses of legal, financial or other professionals engaged to provide services
in respect of such filing) and related materials incurred by either the Standby
Purchaser or the Company shall be borne or reimbursed by the Company.
Section 5. Conditions to Closing.
5.1 The obligation of the Standby Purchaser to purchase the
Standby Shares as set forth in this Agreement is subject to the following
conditions:
(a) The Registration Statement shall have been declared
effective by the Commission. No order suspending the effectiveness of
the Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the Commission
and any requests for additional information by the Commission (to be
included in the Registration Statement, in the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the
Standby Purchaser.
(b) The Standby Shares shall have been approved for listing on
the New York Stock Exchange.
(c) The Stockholder Approval shall have been obtained.
(d) Any required waiting period applicable to the transactions
contemplated by this Agreement under the HSR Act shall have terminated
or expired.
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<PAGE> 8
(e) The representations and warranties of the Company
contained herein shall be true and correct in all material respects as
of the Closing Date, the Company shall have performed all covenants and
agreements herein required to be performed on its part at or prior to
the Closing Date and the Standby Purchaser shall receive a certificate
to such effect dated the Closing Date and executed by either the
President or a Vice President of the Company.
(f) The Warrant shall have been issued and delivered to the
Standby Purchaser (or its designees) concurrently with the Closing;
(g) Purchaser shall have received an opinion of Morgan, Lewis
& Bockius LLP, counsel to the Company, in substantially the form
attached hereto as Exhibit D .
(h) In the event that Samstock is entitled to designate an
additional director to the Board pursuant to Section 4.6 of the Second
Amended and Restated Investment Agreement, and shall have so designated
an individual to serve as such additional director, such individual
shall have been elected to the Board to serve commencing upon the
Closing.
(i) Concurrently with the Closing, the gross proceeds of the
Rights Offering shall have been paid to Lender against the Company's
obligations under the Loan Agreement (net of amounts owing to the
Company in accordance with Section 2.10 of the Loan Agreement).
5.2 The obligation of the Company to issue and sell the
Standby Shares as set forth in this Agreement is subject to the following
conditions:
(a) The Company shall not have withdrawn or canceled the
Rights Offering prior to the Expiration Time (as defined in the
Registration Statement).
(b) The Standby Shares shall have been approved for listing on
the New York Stock Exchange.
(c) The Stockholder Approval shall have been obtained.
(d) Any required waiting period applicable to the transactions
contemplated by this Agreement under the HSR Act shall have terminated
or expired.
(e) The representations and warranties of the Standby
Purchaser contained herein shall be true and correct in all material
respects as of the Closing Date and the Standby Purchaser shall have
performed all covenants and agreements herein required to be performed
on its part at or prior to the Closing Date.
Section 6. Indemnification.
6.1 The Company agrees to indemnify and hold the Standby
Purchaser, its affiliates, and their respective officers, directors, employees,
agents, representatives, and successors (each, a "Standby Purchaser Indemnitee")
harmless from and against any and all losses, claims, damages and liabilities,
joint or several (including any investigation, legal and other expenses
-8-
<PAGE> 9
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted) (collectively, "Losses"),
to which any Standby Purchaser Indemnitee may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such Losses arise out of or
are based upon (i) any inaccuracy in, breach of or failure to comply with, any
representation, warranty, or covenant made by the Company in this Agreement, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Proxy Statement, any preliminary prospectus, the Registration
Statement or the Prospectus (as amended or supplemented, if the Company shall
have filed with the Commission any amendment thereof or supplement thereto), or
any amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as any such untrue
statement or omission or alleged untrue statement or omission was made in such
Proxy Statement, preliminary prospectus, the Registration Statement or the
Prospectus, or such amendment or supplement in reliance upon, and in conformity
with, information furnished to the Company by the Standby Purchaser expressly
for use therein.
6.2 The Standby Purchaser agrees to indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each director of the Company and
each officer of the Company who signs the Registration Statement (each, a
"Company Indemnitee"), from and against any and all Losses to which any Company
Indemnitee may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such Losses are based upon (i) any inaccuracy in, breach of or
failure to comply with, any representation, warranty, or covenant made by the
Standby Purchaser in this Agreement or (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Proxy Statement, any
preliminary prospectus, the Registration Statement or the Prospectus (as amended
or supplemented, if the Company shall have filed with the Commission any
amendment thereof or supplement thereto), or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only insofar as any such untrue statement or omission or alleged
untrue statement or omission was made in such Proxy Statement, preliminary
prospectus, the Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon, and in conformity with, information furnished to
the Company by the Standby Purchaser expressly for use therein; provided,
however, that the obligation of the Standby Purchaser to indemnify the Company
Indemnitees hereunder shall be limited to the total price for the Series A
Preferred Shares purchased by the Standby Purchaser pursuant to this Agreement.
6.3 Any party which proposes to assert the right to be
indemnified under this Section 6 will promptly after receipt of notice of a
claim or of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against any indemnifying party under this
Section 6, notify each such indemnifying party of the nature of the claim or the
commencement of such action, suit or proceeding, enclosing a copy of all
correspondence received and papers served, but the omission so to notify such
indemnifying party of any such claim, action, suit or proceeding shall not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 6. In case any such claim shall be asserted or
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the assertion or
commencement thereof, the indemnifying party shall be entitled to participate
in, and
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<PAGE> 10
to assume the defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its selection so to assume the defense thereof the indemnifying party shall not
be liable to such indemnified party for any subsequent legal or other expenses.
The indemnified party shall have the right to employ its counsel in any such
action where the indemnifying party has assumed the defense as aforesaid, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized by the indemnifying party, (ii) the indemnified party shall
have reasonably concluded that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party shall not in fact have employed counsel satisfactory to
the indemnified party to assume the defense of such action, in any of which
events such fees and expenses shall be borne by the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action or claim
effected without its consent so long as it is performing its obligations under
this Section 6.
Section 7. Termination.
This Agreement may be terminated by Samstock upon written notice to the
Company and thereafter shall be of no further force and effect (without any
liability by the Company to the Standby Purchaser, Lender or any other party)
upon the occurrence of an event of default under the Loan Agreement.
Section 8. Survival.
The indemnification agreement contained in Section 6 hereof and the
representations, warranties, covenants and agreements of the Company and the
Standby Purchaser set forth in this Agreement shall remain operative and in full
force and effect regardless of (a) any termination of this Agreement, (b) any
investigation made on behalf of the Standby Purchaser, or (c) acceptance of
Standby Shares under this Agreement.
Section 9. Miscellaneous
9.1 This Agreement is made solely for the benefit of the
Standby Purchaser and, to the extent provided herein, Lender, and the Company,
and their respective successors, and no other person, partnership, association
or corporation shall acquire or have any right under or by virtue of this
Agreement.
9.2 Neither the Company nor the Standby Purchaser may assign
any of its rights under this Agreement without the prior written consent of the
other party hereto.
9.3 This Agreement, together with the Loan Documents (as
defined in the Loan Agreement), the Second Amended and Restated Investment
Agreement and the Warrant, constitute the entire agreement between the Standby
Purchaser and Lender, on the one hand, and the Company on the other, and
supersedes all prior agreements and understandings relating to the subject
matter hereof. In case any one or more of the provisions contained in this
Agreement, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect under the laws of any
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<PAGE> 11
jurisdiction, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way affected or impaired thereby or under the laws of any other
jurisdiction.
9.4 This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
and all such counterparts together constitute but one and the same instrument.
9.5 This Agreement may not be amended, modified or changed, in
whole or in part, except by an instrument in writing signed by the Company and
the Standby Purchaser.
Section 10. Notices.
Except as otherwise provided in this Agreement, and unless otherwise
notified by the respective addressee, all notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
personally to the recipient, one day after being sent by overnight courier
(charged prepaid), five days after being mailed to the recipient (postage
prepaid) or upon confirmation if transmitted via fax. Notices should be directed
as follows:
If to the Company: Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Fax: (305) 892-3342
With a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Stephen P. Farrell, Esq.
Fax: (212) 309-6273
If to the Standby Purchaser: Samstock, L.L.C.
Two N. Riverside Plaza, Suite 600
Chicago, Illinois 60606
Attention: General Counsel
Fax: (312) 454-0610
Section 11. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of laws rules
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TRANSMEDIA NETWORK INC.
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<PAGE> 12
/s/ Gene Henderson
---------------------------------------------
By: Gene Henderson, President and
Chief Executive Officer
SAMSTOCK, L.L.C.
/s/ Donald J. Liebentritt
---------------------------------------------
By: Donald J. Liebentritt, Vice President
12
<PAGE> 13
EXHIBIT A
[FORM OF WARRANT]
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
DISPOSED OF UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND SUCH LAWS COVERING SUCH SECURITIES OR (II) SUCH SALE, TRANSFER,
ASSIGNMENT, OFFER, PLEDGE OR OTHER DISPOSITION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THE SECURITIES
EVIDENCED BY THIS CERTIFICATE ARE NON-TRANSFERABLE, EXCEPT AS PROVIDED HEREIN.
TRANSMEDIA NETWORK INC.
WARRANT TO PURCHASE 1,000,000 SHARES OF COMMON STOCK
VOID AFTER , 2004
THIS CERTIFIES THAT, for value received, [ , a
limited liability company] (the "HOLDER"), is entitled to subscribe for and
purchase from Transmedia Network Inc., a Delaware corporation (the "COMPANY"),
an aggregate of 1,000,000 shares (as adjusted pursuant to Section 3 hereof) of
fully paid and nonassessable Common Stock (the "SHARES") of the Company, at the
price of $ per share [insert the average of the closing prices of the
Common Stock as reported by the New York Stock Exchange during the 20
consecutive trading days preceding the Closing] (the "EXERCISE PRICE") (as
adjusted pursuant to Section 3 hereof), and subject to the provisions and upon
the terms and conditions hereinafter set forth.
1. Exercise; Payment.
(a) Time of Exercise; Expiration. This Warrant is
immediately exercisable. This Warrant shall expire at, and shall no longer be
exercisable after, 5:00 p.m., Chicago local time, on , 2004.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented
by this Warrant may be exercised by the Holder, at any time, in whole, or from
time to time, in part, by the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit 1 duly executed) at the principal
office of the Company, and by the payment to the Company, by certified,
cashier's or other check
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<PAGE> 14
acceptable to the Company, of an amount equal to the aggregate Exercise Price of
the Shares being purchased.
(ii) Net Issue Exercise. In lieu of exercising
this Warrant, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder a number of shares of the
Company's Common Stock computed using the following formula:
X = Y(A-B)
------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares purchasable under this Warrant.
A = the fair market value of one share of the Company's Common Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(iii) Fair Market Value. For purposes of this
Section 1, the fair market value of the Company's Common Stock shall mean:
A. The average closing price of the Company's
Common Stock on the New York Stock Exchange or in the event
the Company's Common Stock is not then traded on the New York
Stock Exchange the average closing price quoted on any
exchange on which the Common Stock is listed, as published in
the Mid-Western Edition of the Wall Street Journal for the ten
consecutive trading days prior to the date of determination of
fair market value.
B. If the Company's Common Stock is not then
traded on the New York Stock Exchange or on another exchange,
the per share fair market value of the Common Stock shall be
the fair market value price per share as determined in good
faith by the Company's Board of Directors.
(c) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Common Stock
so purchased shall be delivered to the Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant of
identical terms and provisions as those hereof, representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the
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<PAGE> 15
Company shall at all times have authorized and reserved for issuance sufficient
shares of its Common Stock to provide for the exercise of the rights represented
by this Warrant.
3. Adjustment of Exercise Price and Number of Shares. The number and
kind of Shares purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification. In case of any reclassification or change of
outstanding securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), the
Company shall, as condition precedent to such transaction, execute a new Warrant
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share of stock. Such new Warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of this Section 3(a)
shall similarly apply to successive reclassifications or changes.
(b) Subdivision or Combination of Warrant Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its stock, the Exercise Price shall be proportionately decreased in the
case of a subdivision or increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this Warrant
is outstanding and unexpired shall pay a dividend with respect to stock payable
in, or make any other distribution with respect to stock (except any
distribution specifically provided for in the foregoing Section 3(a) and 3(b))
of stock, then the Exercise Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution,
to that price determined by multiplying the Exercise Price in effect immediately
prior to such date of determination by a fraction (i) the numerator of which
shall be the total number of shares of stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which shall be the
total number of shares of stock outstanding immediately after such dividend or
distribution.
(d) Adjustment of Number of Warrant Shares. Upon each adjustment in
the Exercise Price, the number of shares of stock purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the
number of Shares purchasable immediately prior to such adjustment in the
Exercise Price by a fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price immediately thereafter.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice by first class mail to the holder of
this Warrant setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
A-3
<PAGE> 16
5. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of such fractional
shares the Company shall make a cash payment therefor based upon the Exercise
Price then in effect.
6. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants will represent such
portion of such rights as is designated by the Holder at the time of such
surrender. All Warrants representing portions of the rights hereunder are
referred to herein as the "Warrant."
7. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Holder is deemed to be reasonably satisfactory) of
the ownership and the loss, theft, destruction or mutilation of this Warrant,
and in the case of any such loss, theft or destruction, upon the receipt of
indemnity reasonably satisfactory to the Company, or, in the case of any such
mutilation upon surrender of such Warrant, the Company will (at its expense,
except for the cost of any lost security indemnity bond required which shall be
paid for by the Holder) execute and deliver in lieu of such Warrant a new
Warrant of like kind representing the same rights represented by such lost,
stolen, destroyed or mutilated Warrant and dated the date of such lost, stolen,
destroyed or mutilated Warrant.
8. Restrictive Legend. The Shares issuable upon exercise of this
Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or applicable state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise disposed of
unless (i) there is an effective registration statement under such
Act and such laws covering such securities or (ii) such sale,
transfer, assignment, offer, pledge or other disposition is exempt
from the registration and prospectus delivery requirements of such
Act and such laws.
9. Restrictions on Transfer. Neither this Warrant, nor any interest
herein, may be transferred to any party without the Company's prior written
consent; provided, however, that this Warrant may be transferred to any member
of the Zell Group (as defined in that certain Amended and Restated Investment
Agreement, dated as of March 3, 1998, among the Company, Samstock, L.L.C.,
EGI-Transmedia Investors, L.L.C. and Halmostock Limited Partnership) at any
time, in whole, or from time to time, in part, without the Company's consent,
upon delivery to the Company of the Notice of Transfer in the form of Exhibit 2
hereto.
10. Rights of Stockholders. No holder of this Warrant shall be
entitled, as a Warrant holder, to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise hereof for
A-4
<PAGE> 17
any purpose, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
11. Notices, Etc. All notices and other communications between the
Company and the Holder shall be mailed by first class registered or certified
mail, postage prepaid, (i) if to the Company, at the Company's executive
offices, and (ii) if to the Holder, at such address as may have been furnished
to the Company in writing by the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the
State of Delaware and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.
Issued this day of , 1999.
--- -------
A-5
<PAGE> 18
TRANSMEDIA NETWORK INC.
By:
---------------------------
Its:
A-6
<PAGE> 19
EXHIBIT 1
NOTICE OF EXERCISE
TO: TRANSMEDIA NETWORK INC.
11900 Biscayne Boulevard
Miami, Florida 33181
Attention: Chief Executive Officer
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of TRANSMEDIA NETWORK INC. pursuant to the terms of the attached
Warrant.
2. Method of Exercise (Please mark the applicable blank):
The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full
for the purchase price of the shares being purchased.
The undersigned elects to exercise the attached Warrant by
means of the net exercise provisions of Section 1(b)(ii) of
the Warrant.
3. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
Name:
--------------------------
Address:
-----------------------
-----------------------
Signature:
----------------------
Title:
-------------------------
Date:
--------------------------
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<PAGE> 20
EXHIBIT 2
NOTICE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the right represented by the attached
Warrant to purchase * shares of Common Stock of TRANSMEDIA NETWORK INC.,
to which the attached Warrant relates, and appoints
Attorney-in-Fact to transfer such right on the books of TRANSMEDIA NETWORK INC.,
with full power of substitution in the premises.
Dated: By:
------------------------- ----------------------------------
Address:
---------------------------
---------------------------
- -------------------
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
A-8
<PAGE> 21
EXHIBIT B
[FORM OF AMENDMENT TO
CERTIFICATE OF INCORPORATION]
B-1
<PAGE> 22
EXHIBIT C
[FORM OF SECOND AMENDED AND RESTATED
INVESTMENT AGREEMENT]
C-1
<PAGE> 23
EXHIBIT D
[FORM OF OPINION]
D-1
<PAGE> 1
EXHIBIT 8
SECOND AMENDED AND RESTATED INVESTMENT AGREEMENT
Second Amended and Restated Investment Agreement dated as of June 30,
1999, (as amended, supplemented or otherwise modified from time to time, this
"Agreement"), among Transmedia Network Inc., a Delaware corporation (the
"Company"), Samstock, L.L.C., a Delaware limited liability company ("Samstock"),
EGI-Transmedia Investors, L.L.C., a Delaware limited liability company (formerly
known as Transmedia Investors, L.L.C., "TNI") (each of the foregoing parties,
other than the Company, together with Halmostock Limited Partnership, a
Wyoming limited partnership ("Halmostock"), individually an "Investor" and
collectively the "Investors"), and solely with respect to Section 5 of this
Agreement, Robert M. Steiner, as trustee under declaration of trust dated March
9, 1983, as amended, establishing the Robert M. Steiner Revocable Trust
("Steiner Trust").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Stock Purchase and Sale Agreement,
dated as of November 6, 1997, among the Company, Samstock and TNI (the "Purchase
Agreement"), and that certain Assignment Agreement, dated as of March 3, 1998,
among the Company, Samstock, TNI, and Halmostock, on March 3, 1998, the Company
issued and sold to the Investors an aggregate of 2,500,000 newly issued shares
(collectively, the "Shares") of the Company's Common Stock, par value $.02 per
share ("Common Stock"), and warrants (collectively, the "Warrant") to purchase
an additional 1,200,000 shares (collectively, the "Warrant Shares") of Common
Stock;
WHEREAS, in connection with the Purchase Agreement and the transactions
contemplated thereby, the Company, Samstock, TNI and Halmostock entered into
that certain Amended and Restated Investment Agreement, dated as of March 3,
1998 (the "First Amended Investment Agreement");
WHEREAS, as of March 3, 1998, Samstock and Halmostock sold to the
Steiner Trust an aggregate of 47,000 of the Shares and warrants to purchase an
aggregate of 22,560 of the Warrant Shares, and the Steiner Trust executed a
joinder to Section 5 of the First Amended Investment Agreement;
WHEREAS, reference is made to that certain Credit Agreement dated as of
the date hereof, 1999 (the "Loan Agreement"), by and among GAMI Investments,
Inc., a Delaware corporation and an affiliate of Samstock and TNI ("GAMI") as
lender, and each of the Company and its wholly-owned subsidiaries, Transmedia
Restaurant Company, Inc., Transmedia Service Company, Inc., and TMNI
International Incorporated, as borrowers, whereby GAMI loaned to the borrowers
on the date hereof an aggregate principal amount of $10 million (the "Loan");
WHEREAS, in connection with the Loan and as more particularly described
in the Loan Agreement, the Company intends to implement a rights offering (the
"Rights Offering") pursuant to which it is anticipated that the Company will
distribute to all of its stockholders of record as of record date to be
determined, and on terms and conditions acceptable to GAMI, nontransferable
rights to subscribe for and purchase an aggregate of up to $10,000,000 newly
issued Series A senior convertible redeemable preferred stock of the Company,
par value $.10 per share ("Preferred Stock"), to be established by the Company's
Board of Directors in connection with the Rights Offering pursuant to a
Certificate of Designation of Preferred Stock substantially in the form
<PAGE> 2
of Exhibit G to the Loan Agreement;
WHEREAS, the Loan Agreement requires that the Company pay to GAMI 100%
of the gross cash proceeds received by the Company from the Rights Offering to
be applied by GAMI against obligations owed by the borrowers to GAMI under the
Loan Agreement all as more particularly described in the Loan Agreement;
WHEREAS, in order to assure the success of the Rights Offering, and the
receipt by the Company of sufficient gross cash proceeds therefrom to repay all
outstanding amounts under the Loan, Samstock has entered into that certain
Standby Purchase Agreement with the Company, dated as the date hereof (the
"Standby Purchase Agreement"), whereby Samstock has agreed to act as "Standby
Purchaser" for a specified amount of shares of Series A Preferred Stock
available for purchase upon the expiration of unexercised rights, all as more
particularly set forth in the Standby Purchase Agreement;
WHEREAS, in consideration of GAMI's obligations under the Loan
Agreement and Samstock's obligations to act as Standby Purchaser under the
Standby Purchase Agreement, the Loan Agreement and the Standby Purchase
Agreement require the Company to issue to Samstock a warrant (the "Rights
Offering Warrant"), substantially in the form of Exhibit A to the Standby
Purchase Agreement, to purchase an aggregate of 1,000,000 shares (the "Rights
Offering Warrant Shares") of the Company's Common Stock, upon the terms and
subject to the conditions set forth in the Loan Agreement and the Standby
Purchase Agreement;
WHEREAS, the Company, Samstock, TNI, and Melvin Chasen and Iris Chasen,
individuals residing in the State of Florida (together "Chasen"), have entered
into an Amended and Restated Agreement Among Stockholders, dated as of March 3,
1998 (the "Agreement Among Stockholders");
WHEREAS, the Company, Samstock, TNI and Halmostock, have entered into a
Stockholders' Agreement, dated as of March 3, 1998 (the "Stockholders'
Agreement");
WHEREAS, the Company and each of the Investors other than Halmostock are
entering into this Agreement, with the approval of at least a majority of
Disinterested Directors (as defined in the First Amended Investment Agreement),
to establish certain arrangements with respect to the relationships between
them, and intend for this Agreement to amend, restate and supersede the First
Amended Investment Agreement in its entirety, only with respect to the rights
and obligations of each of the parties to the First Amended Investment Agreement
other than Halmostock; it being understood that the First Amended Investment
Agreement will continue in full force and effect with respect to the rights and
obligations of Halmostock thereunder vis a vis each of the other Investors and
the Company, and this Agreement will be read together with the First Amended
Investment Agreement to determine the rights and obligations of all the
Investors including Halmostock and the Company vis a vis all of them in respect
of the subject matter of this Agreement and the First Amended Investment
Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
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<PAGE> 3
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 The terms "beneficial ownership," "person" and "group" shall
have the respective meanings ascribed to such terms pursuant to Regulation 13D-G
adopted by the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof. The term "affiliate" shall have the meaning ascribed to such
term pursuant to Rule 12b-2 under the Exchange Act, as in effect on the date
hereof.
1.2 The "Combined Voting Power" at any measurement date shall mean
the total number of votes which could have been cast in an election of directors
of the Company had a meeting of the stockholders of the Company been duly held
based upon a record date as of the measurement date if all Company Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.3 "Company Voting Securities" shall mean, collectively, Common
Stock, Preferred Stock, any other preferred stock of the Company that is
entitled to vote generally for the election of directors, any other class or
series of Company securities that is entitled to vote generally for the election
of directors and any other securities, warrants, options or rights of any nature
(whether or not issued by the Company) that are convertible into, exchangeable
for, or exercisable for the purchase of, or otherwise give the holder thereof
any rights in respect of, Common Stock, Preferred Stock, any other Company
preferred stock that is entitled to vote generally for the election of
directors, or any other class or series of Company securities that is entitled
to vote generally for the election of directors.
1.4 "Disinterested Director" means Independent Directors who are
"disinterested directors" as that term is used in Section 144 of the Delaware
General Corporate Law.
1.5 "Effective Date" means March 3, 1998.
1.6 "Independent Director" means directors of the Company who
(i) are not current or former employees or officers of the Company, (ii) are not
serving as designees of Samstock pursuant to Article IV hereof, (iii) are not 5%
or greater stockholders of the Company, and (iv) have no financial interest in
and are not otherwise associated with any of the Investors, the Company, any
subsidiary of the Company or any of their respective affiliates, excluding,
however, any equity interest of not more than 2% of any publicly-held entity.
The term "associated" means having a business, financial or familial
relationship that might reasonably be expected to affect the individual's
judgment with respect to matters in which a member of the Zell Group might be
interested.
1.7 The "Maximum Permitted Voting Power" at any measurement date
shall mean the Voting Power as of such measurement date of all Company Voting
Securities, regardless of the holder thereof, (i) represented by the Shares or
the Warrant Shares, (ii) outstanding as of the date hereof and subject to the
Agreement Among Stockholders or the Stockholders' Agreement, (iii) issued by the
Company after the date hereof and subject to the Agreement Among Stockholders or
the Stockholders' Agreement upon issuance, or (iii) represented by the Preferred
Shares, the Rights Offering Warrant Shares or the Preferred Stock Conversion
Shares; provided, however, that, in the event that the Company issues any
Company Voting Securities after the date hereof,
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<PAGE> 4
the Maximum Permitted Voting Power shall be adjusted so that the percentage of
the Combined Voting Power represented by the Maximum Permitted Voting Power
shall not be reduced.
1.8 "Zell Affiliate" means Samstock, TNI and any of their respective
affiliates under control of or common control with Samstock or TNI (exclusive of
Halmostock, Chasen and their respective affiliates).
1.9 "Zell Group" means (i) Samstock, (ii) TNI, (iii) any member of
Samstock or TNI, (iv) any affiliate of any member of Samstock or TNI under
control of, or common control with, such member, (v) Halmostock, (vi) any
partner of Halmostock, (vii) any affiliate of any partner of Halmostock under
control of, or common control with, Halmostock, and (viii) any corporations,
partnerships, limited liability companies or other legal entities that are the
affiliates of any of the foregoing, collectively; provided, however, that
publicly held entities that might fall within this definition (a "Public Zell
Affiliate") shall not be treated as affiliates of any member of the Zell Group
hereunder unless any member of the Zell Group or any of its affiliates took any
action, directly or indirectly, to suggest, encourage or assist such entity in
taking the relevant action to be attributed to the Zell Group hereunder. For
purposes of the preceding sentence and the similar clause appearing in the
second sentence of Section 3.1, the failure of any member of the Zell Group or
any of its affiliates, upon learning of a Public Zell Affiliate's action, to
request that such Public Zell Affiliate refrain from taking such action because
of the provisions of this Agreement will be deemed to constitute "encouraging or
assisting" in such action.
1.10 "Zell Associates" means any member of the Zell Group other than
those persons or entities described in clauses (v) through (vii) of Section 1.9
and clause (viii) of Section 1.9 as it pertains to said clauses (v) through
(vii).
1.11 "Preferred Shares" means the shares of Preferred Stock acquired
by Samstock, TNI or other members of the Zell Group in the Rights Offering,
including without limitation, any shares of Preferred Stock acquired pursuant to
the Standby Purchase Agreement.
1.12 "Preferred Stock Conversion Shares" means shares of Common Stock
issuable upon conversion of Preferred Stock.
1.13 "Standstill Provisions" means collectively Article III hereof in
its entirety and Section 4.5 in its entirety.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Samstock and TNI jointly and severally represent and warrant to
the Company and Chasen as follows:
(a) Each of Samstock and TNI is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware.
Each of Samstock and TNI has the limited liability company power and authority
to enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered
by each of Samstock and TNI and constitutes the legal, valid and binding
agreement of each of Samstock and TNI, enforceable against each of them in
accordance with the terms hereof.
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<PAGE> 5
(c) Neither the execution and delivery of this Agreement nor the
performance by Samstock or TNI of its obligations hereunder will conflict with,
or result in a breach of, or constitute a default under, any law, rule,
regulation, judgment, order or decree of any court, arbitrator or governmental
agency or instrumentality, or any agreement or instrument to which Samstock, TNI
or their respective properties are bound or by which they are affected or any
organizational documents of Samstock or TNI.
(d) As of the Effective Date, no shares of Common Stock (other than
the Shares and the Warrant Shares) were beneficially owned by Samstock or TNI.
2.2 [Intentionally Omitted]
2.3 The Company represents and warrants to Investors as follows:
(a) The Company is a validly existing corporation under the laws of
the jurisdiction of its organization and has the corporate power and authority
to enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of its obligations hereunder will conflict with, or result in a
breach of, or constitute a default under, any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality, or any agreement or instrument to which the Company is bound or
by which it is affected or any charter documents of the Company.
(d) The execution, delivery and performance of this Agreement by the
Company have been duly and validly authorized by the Board of Directors of the
Company (the "Board") and have been approved by a majority of the Disinterested
Directors of the Company (within the meaning of
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<PAGE> 6
Section 3.1 of the First Amended Investment Agreement), and no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement by the Company.
ARTICLE III
STANDSTILL AGREEMENT
3.1 Acquisition of Company Voting Securities. Except as the same may
be approved by a majority of the Disinterested Directors in a specific
resolution to that effect adopted prior to the taking of such action, from and
after the Effective Date and prior to the fifth anniversary of the Effective
Date, no member of the Zell Group shall, directly or indirectly, acquire, offer
to acquire, agree to acquire, become the beneficial owner of or obtain any
rights in respect of any Company Voting Securities, by purchase or otherwise, or
take any action in furtherance thereof, if the effect of such acquisition,
agreement or other action would be (either immediately or upon consummation of
any such acquisition, agreement or other action, or expiration of any period of
time provided in any such acquisition, agreement or other action) to increase
the aggregate beneficial ownership of Company Voting Securities by the Zell
Group to such number of Company Voting Securities that represents or possesses
greater than the Maximum Permitted Voting Power. Notwithstanding the foregoing
maximum limitations, (A) no member of the Zell Group shall be obligated to
dispose of any Company Voting Securities beneficially owned in violation of such
maximum limitations if, and solely to the extent that, its beneficial ownership
is or will be increased solely as a result of (1) a repurchase of any Company
Voting Securities by the Company or any of its subsidiaries if such repurchase
was approved by a majority of the Disinterested Directors or (2) the purchase by
any Public Zell Affiliate not otherwise constituting a part of the Zell Group in
accordance with Section 1.9 hereof unless any member of the Zell Group took any
action, directly or indirectly, to suggest, encourage or assist in such
purchase, and (B) the foregoing shall not prohibit any purchase of Company
Voting Securities directly from the Company pursuant to any rights,
oversubscription rights or standby purchase obligations in connection with
rights offerings by the Company or exercise of any stock options granted by the
Company. For purposes of calculating the maximum limitations, all Company Voting
Securities that are the subject of an agreement, arrangement or understanding
pursuant to which the Zell Group or any member thereof has the right to obtain
beneficial ownership of such securities in the future (including the Warrant
Shares and the Rights Offering Warrant Shares to the extent the Warrant and the
Rights Offering Warrant have not been exercised or has not expired) shall also
be deemed to be outstanding and beneficially owned by the Zell Group or the
applicable member thereof.
3.2 Proxy Solicitations, etc. Prior to the fifth anniversary of the
Effective Date, no member of the Zell Group shall solicit proxies, assist any
other person in any way, directly or indirectly, in the solicitation of proxies,
become a "participant" in a "solicitation" or assist any "participant" in a
"solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Exchange Act) in opposition to the recommendation of a majority of the
Disinterested Directors, submit any proposal for the vote of stockholders of the
Company, in each case (a) without the prior approval of the majority of the
Disinterested Directors or (b) other than with respect to Company Voting
Securities (i) held by any member of the Zell Group or (ii) subject to the
Agreement Among Stockholders or the Stockholders' Agreement.
3.3 No Voting Trusts, Pooling Agreements, or Formation of "Groups".
Except as the same may be approved by a majority of the Disinterested Directors
in a specific resolution to that effect adopted prior to the taking of such
action, prior to the fifth anniversary of the Effective Date, no member of the
Zell Group shall (a) form, join or in any other way participate in a
partnership, pooling agreement, syndicate, voting trust or other "group" with
respect to Company Voting
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<PAGE> 7
Securities other than (i) the Zell Group or (ii) with any Company stockholders
who are parties to the Agreement Among Stockholders or the Stockholders'
Agreement as of the date hereof or hereafter become parties to the Agreement
Among Stockholders or the Stockholders' Agreement in each case in accordance
with the terms thereof as a result of a sale, assignment or other transfer of
Company Voting Securities that are subject to the Agreement Among Stockholders
or the Stockholders' Agreement ("Other Covered Stockholders"); or (b) enter into
any agreement or arrangement or otherwise act in concert with any other person
other than a member of the Zell Group (provided such member of the Zell Group is
itself bound by the terms of this Agreement), or a holder of any interest in any
entity included within the Zell Group, for the purpose of acquiring, holding,
voting or disposing of Company Voting Securities, other than with any Other
Covered Stockholders.
3.4 No Solicitation of Bidders. Prior to the fifth anniversary of the
Effective Date, no member of the Zell Group shall directly or indirectly assist,
encourage or induce any person to bid for or acquire outstanding Company Voting
Securities (other than any Company Voting Securities held by the Zell Group) in
any transaction or series of related transactions, unless the consummation of
such transaction or series of related transactions requires approval of a
majority of the Board of Directors. Prior to disclosing any confidential
non-public information concerning the Company to such person, such person shall
have executed and delivered to the Zell Group a confidentiality and standstill
agreement on substantially the same terms as those set forth in the letter
agreement dated July 16, 1997, entered into between the Company and an affiliate
of Samstock and TNI in connection with the transactions contemplated by the
Purchase Agreement, with such duration as shall be appropriate under the
circumstances in the reasonable judgment of the Zell Group. Promptly upon the
Zell Group entering into any written agreement or arrangement with such person
concerning a transaction covered by this Section 3.4 (including such
aforementioned confidentiality and standstill agreement), the Zell Group shall
notify the Company's Board of Directors and provide the Company's Board of
Directors with copies of the same; provided, however, that the mere sale of
Company Voting Securities by any member of the Zell Group shall not constitute
assisting, encouraging or inducing within the meaning of this Section 3.4.
3.5 Non-Circumvention. Except as the same may be approved by a
majority of the Disinterested Directors in a specific resolution to that effect
adopted prior to the taking of such action, prior to the fifth anniversary of
the Effective Date, no member of the Zell Group shall take any action, alone or
in concert with any other person to circumvent the limitations of the provisions
of Article III of this Agreement. Without limiting the generality of the
foregoing, without such approval no member of the Zell Group shall (i) present
to the Company or to any third party any proposal that can reasonably be
expected to result in any increase beyond the Maximum Permitted Voting Power of
Company Voting Securities beneficially owned in the aggregate by the Zell Group,
(ii) publicly suggest or announce its willingness or desire to engage in a
transaction or group of transactions that would result in any increase beyond
the Maximum Permitted Voting Power of Company Voting Securities beneficially
owned in the aggregate by the Zell Group, or (iii) initiate, request, induce or
attempt to induce or give encouragement to any other person to initiate any
proposal that can reasonably be expected to result in any increase beyond the
Maximum Permitted Voting Power of Company Voting Securities beneficially owned
in the aggregate by the Zell Group.
ARTICLE IV
VOTING OF COMPANY SECURITIES AND RELATED MATTERS
4.1 Each member of the Zell Group that is a holder of record of
Company Voting
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Securities shall be present, and each member of the Zell Group that is a
beneficial owner of Company Voting Securities shall cause the holder of record
to be present, in person or by proxy, at all meetings of stockholders of the
Company so that all Company Voting Securities owned of record or beneficially by
the Zell Group may be counted for the purpose of determining the presence of a
quorum at such meetings.
4.2 So long as Samstock is entitled to designate any directors in
accordance with the provisions of this Article IV, except to the extent
otherwise provided herein, the Company shall take all necessary or appropriate
action to assist in the nomination and election as directors of (i) that number
of individuals specified in this Article IV designated by Samstock to be elected
as directors of the Company (provided, with respect to designees designated
under Sections 4.4 and 4.6 only, such designees are reasonably acceptable to the
Independent Directors at the time of their designation), and (ii) two
Independent Directors. All persons to be so designated as Independent Directors
shall be individuals selected by a majority of the Independent Directors then in
office and shall be mutually acceptable to Samstock on the one hand and a
majority of the Independent Directors on the other hand. The Company hereby
agrees and acknowledges that Sam Zell, F. Philip Handy, Rod Dammeyer and Steven
J. Halmos are reasonably acceptable to the Independent Directors as directors of
the Company. The Company hereby agrees and acknowledges that Lester Wunderman is
reasonably acceptable as an Independent Director. The Company further agrees
that one position on the Board of Directors of the Company is intended to be
filled by the chief executive officer to be selected by the Board of Directors
of the Company, and that in no event shall the chief executive officer of the
Company count as a designee of Samstock. Samstock shall cause its designees on
the Board of Directors of the Company to take all necessary or appropriate
action to assist in the nomination and election as directors of all such
nominees as may be selected to serve as Independent Directors in the manner
described above. Except in furtherance of the exercise of Samstock's rights
pursuant to Section 4.7, the Zell Group and the directors designated by Samstock
shall not vote (as stockholders or directors) in favor of, and shall not take
any other action in furtherance of or seeking to cause, a reduction of the
number of directors of the Company below seven directors or the removal of any
Independent Directors.
4.3 For purposes of this Agreement, directors "designated by
Samstock" shall include directors designated by Samstock as anticipated by this
Article IV, and any other directors of the Company (other than the Company's
chief executive officer) affiliated or associated with any member of the Zell
Group.
4.4 In addition to any other rights to designate directors of the
Company under this Article IV, Samstock shall be entitled to designate the
following number of directors pursuant to Section 4.2 hereof:
(a) so long as the members of the Zell Group that have executed this
Agreement as parties (the "Zell Contracting Parties") beneficially own
collectively at least 15% of the Combined Voting Power of all Company Voting
Securities (including, for these purposes, the Warrant Shares and the Rights
Offering Warrant Shares issuable upon exercise of the Warrant and the Rights
Offering Warrant, respectively, until such time as the Warrant or the Rights
Offering Warrant, as applicable, expires), Samstock shall have the right to
designate two directors of the Company, provided such designees are reasonably
acceptable to the Independent Directors at the time of their designation (it
being hereby acknowledged and agreed by the Company that each of Sam Zell, F.
Philip Handy, Rod Dammeyer and Steven J. Halmos will be acceptable to the
Company at the time of designation); and
(b) so long as the Zell Contracting Parties beneficially own less
than 15%, but at least
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5% of the Combined Voting Power of all Company Voting Securities (as so
calculated), Samstock shall have the right to designate one director of the
Company, provided such designee is reasonably acceptable to the Independent
Directors at the time of his or her designation (it being hereby acknowledged
and agreed by the Company that each of Sam Zell, F. Philip Handy, Rod Dammeyer
and Steven J. Halmos will be acceptable to the Company at the time of
designation);
provided, however, that at any time when the Zell Contracting Parties
shall no longer beneficially own at least 15% of the Combined Voting Power of
all Company Voting Securities (as so calculated), Samstock shall cause one of
its two designees under this Section 4.4 (but not those, if any, designated
under Section 4.7 hereof) to resign forthwith such that only one designee under
this Section 4.4 remains on the Board of Directors of the Company; and provided,
further, that at any time when the Zell Contracting Parties shall no longer
beneficially own at least 5% of the Combined Voting Power of all Company Voting
Securities (as so calculated), Samstock shall not have the right to designate
any directors of the Company under this Section 4.4, Samstock's rights under
this Section 4.4 shall terminate, Samstock shall cause its designees under this
Section 4.4 (but not those, if any, designated under Section 4.7 hereof) to
resign forthwith such that no designee of Samstock under this Section 4.4
remains on the Board of Directors of the Company and all of the covenants under
Article IV of this Agreement pertaining to Samstock's designees under Section
4.4 shall lapse and no longer be of any force or effect. In addition, all of the
covenants under Article III of this Agreement shall lapse and no longer be of
any force or effect if for any reason any of the director designees who are
designated by Samstock pursuant to the rights granted by this Article IV, and,
with respect to any of the director designees who are designated by Samstock
under Sections 4.4 or 4.6 only, are reasonably acceptable to the Independent
Directors at the time of their designation in accordance with Sections 4.2, 4.4
and/or 4.6, shall not be nominated for election as a director of the Company
with the unanimous recommendation of all of the directors of the Company (other
than those directors designated by Samstock pursuant to this Article IV) at the
next election of directors of the Company following Samstock's designation. At
any time when Samstock shall have the right to designate any directors pursuant
to this Article IV, the Company shall not increase the number of directors to
more than seven directors without the prior written consent of Samstock, except
in furtherance of the exercise by Samstock of its rights under Section 4.6 or
Section 4.7.
4.5 Except as expressly set forth above, the Investors shall vote all
Company Voting Securities owned of record by the Investors and shall cause all
Company Voting Securities owned beneficially by the Investors to be voted with
respect to the election or removal of directors of Company, (a) either (i) in
accordance with the recommendations of a majority of the Disinterested
Directors, or (ii) in the same proportions (including abstentions) as the
holders of record of Company Voting Securities other than those beneficially
owned by the Zell Group that are entitled to vote on the election of directors
(or such other matter) vote their Company Voting Securities, provided, however,
that notwithstanding the foregoing subparagraph (a), the Investors may at all
times vote their Company Voting Securities for the election or retention of any
directors designated by Samstock in accordance with this Article IV.
4.6. Notwithstanding anything to the contrary in this Agreement, in
addition to any other rights to designate directors of the Company under this
Article IV, in the event Samstock, pursuant to the Standby Purchase Agreement,
purchases more than 25% of the total number of shares of Preferred Stock issued
by the Company in the Rights Offering (exclusive of those shares of Preferred
Stock purchased by Samstock pursuant to its basic subscription privilege or its
obligation to purchase shares of Preferred Stock not purchased by TNI or TNI's
members pursuant to its or their basic subscription privileges), Samstock shall
have the right to designate one additional director to the Company, which
individual may be designated in Samstock's sole
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discretion without obtaining the acceptance or approval of the Disinterested
Directors or any other person or entity, to serve for a period of three years
or, if earlier, until the time when the Zell Contracting Parties shall no longer
beneficially own at least 15% of the Combined Voting Power of all Company Voting
Securities (including, for these purposes, the Warrant Shares and the Rights
Offering Warrant Shares issuable upon exercise of the Warrant and the Rights
Offering Warrant, respectively, until such time as the Warrant or the Rights
Offering Warrant, as applicable, expires), in which event, Samstock shall cause
its designee under this Section 4.6 (but not those designees, if any, designated
under Section 4.7 hereof) to resign forthwith.
4.7 Notwithstanding anything to the contrary in this Agreement, in
addition to any other rights to designate directors of the Company under this
Article IV, upon the occurrence of any Event of Default (as defined in the Loan
Agreement), and at any time thereafter during the continuance thereof, Samstock
shall have the right to designate such additional number of directors (which
individuals may be designated in Samstock's sole discretion without obtaining
the acceptance or approval of the Disinterested Directors or any other person or
entity), and the Company shall take all necessary or appropriate action to
increase the number of directors constituting the Company's Board of Directors
and/or use its reasonable best efforts to obtain resignations of individuals
then serving as directors (other than directors designated by Samstock), and
assist in the nomination and election as directors such additional designees of
Samstock, such that, after taking such actions into account, the number of
individuals designated by Samstock under this Article IV serving as directors of
the Company shall constitute at least a majority of the total number of
directors, effective as soon as practicable, but in any event no later than two
(2) business days after Samstock notifies the Company in writing of its intent
to exercise the right provided herein and the identity of the individuals
Samstock desires to designate (and, if applicable, the individuals Samstock
desires to resign).
4.8 Notwithstanding anything to the contrary in this Agreement,
automatically upon the occurrence of an Event of Default (as defined in the Loan
Agreement) and the expiration of any and all cure periods, if any, applicable
thereto, without further action or notice by any party, the Standstill
Provisions shall lapse in their entirety and no longer be of any force or effect
with respect to the Zell Associates, and none of the Standstill Provisions shall
be enforceable against any Zell Associate, as if such Standstill Provisions had
never existed; it being understood, that this provision shall not apply to any
members of the Zell Group other than the Zell Associates, and notwithstanding
the foregoing the Standstill Provisions shall continue in full force and effect
with respect to any members of the Zell Group other than the Zell Associates.
ARTICLE V
REGISTRATION RIGHTS
5.1 Definitions. For purposes of this Article V:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act").
(b) The term "Registrable Securities" means shares of Common Stock or
Preferred Stock held, from time to time, by any member of the Zell Group or any
Other Covered Stockholders.
(c) The term "Holder" means any (i) Zell Contracting Party,
(ii) Other Covered Stockholder who is a party hereto or who executes and
delivers to the Company a joinder agreement, agreeing to be legally bound by
this Article V, and (iii) the Steiner Trust, in each case
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who owns of record Registrable Securities.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(e) The term "Shelf Registration Statement" means a registration
statement intended to effect a shelf registration in connection with a Rule 415
Offering.
5.2 Shelf Registrations.
(a) Shares and Warrant Shares. As soon as practicable after the
Effective Date, but in any event no later than ninety (90) days after the
Effective Date, the Company shall prepare and file with the SEC a Shelf
Registration Statement (which shall include pledgees of any selling stockholder
under the caption "plan of distribution" contained in such Shelf Registration
Statement) with respect to all Shares and Warrant Shares and use its reasonable
efforts to cause such Shelf Registration Statement to become effective and keep
such registration statement effective until such time as all Shares and Warrant
Shares have been sold or disposed of thereunder or sold, transferred or
otherwise disposed of (other than pursuant to a pledge of such Registrable
Securities) to a person that is not a Holder or, with respect to any Warrant
Shares for which the Warrant has not been exercised prior to its expiration,
until such time as the Warrant has expired. Notwithstanding the foregoing, if
the Company shall furnish to Samstock a certificate signed by the Chief
Executive, Chief Operating, or Chief Financial Officer of the Company stating
that, in the good faith judgment of a majority of the Disinterested Directors,
it would be materially detrimental to the Company for such registration
statement to be filed, the Company shall have the right to defer such filing for
a period of not more than 120 days after receipt of the Samstock's request;
provided, however, that the Company may not utilize this right more than once in
any 12-month period.
(b) Additional Shares. If the Company shall at any time receive a
written request from Samstock (or its designee) on behalf of any Zell Affiliates
who are the Holders of Registrable Securities that the Company file a Shelf
Registration Statement with respect to any Registrable Securities, then, within
sixty (60) days after the receipt of such request, the Company shall prepare and
file with the SEC a Shelf Registration Statement (which shall include pledgees
of any selling stockholder in the "plan of distribution") with respect to all
Registrable Securities which the Holders request to be registered and use its
reasonable efforts to cause such Shelf Registration Statement to become
effective and keep such Shelf Registration Statement effective until such time
as all Registrable Securities covered thereby have been sold or disposed of
thereunder or sold, transferred or otherwise disposed of (other than pursuant to
a pledge of such Registrable Securities) to a person that is not a Holder. The
rights to cause the Company to file a Shelf Registration Statement under this
Section 5.2(b) shall be in addition to the rights to cause the Company to file a
Shelf Registration Statement under Section 5.2(a). Notwithstanding the
foregoing, if the Company shall furnish to Samstock a certificate signed by the
Chief Executive, Chief Operating, or Chief Financial Officer of the Company
stating that, in the good faith judgment of a majority of the Disinterested
Directors, it would be materially detrimental to the Company for such
registration statement to be filed, the Company shall have the right to defer
such filing for a period of not more than 120 days after receipt of the
Samstock's request; provided, however, that the Company may not utilize this
right more than twice in any 12-month period.
(c) Schedule 13D Statement. Samstock and TNI covenant and agree that
they will, and that they shall cause each Zell Affiliate which shall at any time
hold Shares and/or Warrant Shares subject to Section 5.2(a) hereof, or Preferred
Shares, Preferred Stock Conversion Shares
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and/or Rights Offering Warrant Shares subject to Section 5.2(d) hereof, to
include in any Schedule 13D filed by or on behalf of such Holder a statement to
the effect that such Shelf Registration Statement was put in effect for the sole
purpose of facilitating such Holder's ability to margin its stock and does not
represent any present intention on behalf of the Holder to dispose of any
Shares, Warrant Shares, Preferred Shares, Preferred Stock Conversion Shares or
Rights Offering Warrant Shares covered thereby.
(d) Preferred Shares, Preferred Stock Conversion Shares and Rights
Offering Warrant Shares. As soon as practicable after the closing of the Rights
Offering, but in any event no later than ninety (90) days thereafter, the
Company shall prepare and file with the SEC a Shelf Registration Statement
(which shall include pledgees of any selling stockholder under the caption "plan
of distribution" contained in such Shelf Registration Statement) with respect to
all Preferred Shares, Preferred Stock Conversion Shares and Rights Offering
Warrant Shares and use its reasonable efforts to cause such Shelf Registration
Statement to become effective and keep such registration statement effective
until such time as all Preferred Shares, Preferred Stock Conversion Shares and
Rights Offering Warrant Shares have been sold or disposed of thereunder or sold,
transferred or otherwise disposed of (other than pursuant to a pledge of such
Registrable Securities) to a person that is not a Holder or, with respect to any
Rights Offering Warrant Shares for which the Rights Offering Warrant has not
been exercised prior to its expiration, until such time as the Rights Offering
Warrant has expired. Notwithstanding the foregoing, if the Company shall furnish
to Samstock a certificate signed by the Chief Executive, Chief Operating, or
Chief Financial Officer of the Company stating that, in the good faith judgment
of a majority of the Disinterested Directors, it would be materially detrimental
to the Company for such registration statement to be filed, the Company shall
have the right to defer such filing for a period of not more than 120 days after
receipt of the Samstock's request; provided, however, that the Company may not
utilize this right more than once in any 12-month period.
5.3 Additional Obligations of the Company. Whenever the Company has
filed a Shelf Registration Statement under this Article V, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to
such Shelf Registration Statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered thereby.
(b) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities covered by such Shelf
Registration Statement owned by them.
(c) Use its best efforts to register and qualify the securities
covered by such Shelf Registration Statement under such other securities or Blue
Sky laws of such states or other jurisdictions as shall be reasonably requested
by the Holders, provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions where it is not so subject.
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(d) Notify each Holder of Registrable Securities covered by such
Shelf Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section 5.2, each Holder acknowledges that the Company shall have the right to
suspend the use of the prospectus forming a part of a Shelf Registration
Statement if such offering would interfere with a pending corporate transaction
or for other reasons until such time as an amendment to the Shelf Registration
Statement has been filed by the Company and declared effective by the SEC, or
until such time as the Company has filed an appropriate report with the SEC
pursuant to the Exchange Act. Each Holder hereby covenants that it will (a) keep
any such notice strictly confidential, and (b) not sell any shares of Common
Stock pursuant to such prospectus during the period commencing at the time at
which the Company gives the Holder notice of the suspension of the use of such
prospectus and ending at the time the Company gives the Holder notice that it
may thereafter effect sales pursuant to such prospectus. The Company shall only
be able to suspend the use of such prospectus for periods aggregating no more
than 90 days in respect of any registration.
5.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities and as may be required from time to time to keep such registration
current.
5.5 Expenses of Shelf Registration. All expenses incurred by or on
behalf of the Company in connection with registrations, filings or
qualifications pursuant to Section 5.2 , including, without limitation, all
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for the Company, shall be borne by the
Company. In no event shall the Company be obligated to bear any underwriting
discounts or commissions or brokerage fees or commissions relating to
Registrable Securities or the fees and expenses of counsel to the selling
Holders.
5.6 Indemnification. In the event any Registrable Securities are
included in a Shelf Registration Statement under this Article V:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder and the affiliates of such Holder, and their
respective directors, officers, general and limited partners, agents and
representatives (and the directors, officers, affiliates and controlling persons
thereof), and each other person, if any, who controls such Holder within the
meaning of the Act, against any losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus (but only if such statement is not corrected in the final prospectus)
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to
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make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, affiliate or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 5.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person. Each indemnified party shall furnish such
information regarding itself or the claim in question as an indemnifying party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.6(b) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section 5.6(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of such
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this Section 5.6(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
5.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 5.6 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 5.6.
The indemnified party shall have the right, but not the obligation, to
participate in the defense of any action referred to above through counsel of
its own choosing and shall have the right, but not the obligation, to assert any
and all separate defenses, cross claims or counterclaims which it may have, and
the
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fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of such counsel has been specifically authorized
in advance by the indemnifying party, (ii) there is a conflict of interest that
prevents counsel for the indemnifying party from adequately representing the
interests of the indemnified party or there are defenses available to the
indemnified party that are different from, or additional to, the defenses that
are available to the indemnifying party, (iii) the indemnifying party does not
employ counsel that is reasonably satisfactory to the indemnified party within a
reasonable period of time, or (iv) the indemnifying party fails to assume the
defense or does not reasonably contest such action in good faith, in which case,
if the indemnified party notifies the indemnifying party that it elects to
employ separate counsel, the indemnifying party shall not have the right to
assume the defense of such action on behalf of the indemnified party and the
reasonable fees and expenses of such separate counsel shall be borne by the
indemnifying party; provided, however, that, the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to one firm acting as local counsel) for all
indemnified parties.
(d) The obligations of the Company and the holders under this Section
5.6 shall survive the completion of any offering of Registrable Securities in a
Shelf Registration Statement under this Article V.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
5.7 Reports Under the Exchange Act. With a view to making available
to the holders the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required under the Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144, or as to whether it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information (and the Company shall take such
action) as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
5.8 No Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Article V may only
be assigned by a Holder to a transferee or assignee of any Registrable
Securities if (i) such transferee or assignee is a Zell Contracting Party and
(ii) immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
5.9 Waiver Procedures. The observance by the Company of any provision
of this
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Article V may be waived (either generally or in a particular instance and either
retroactively or prospectively) with the written consent of the Holders of a
majority of the Registrable Securities, and any waiver effected in accordance
with this paragraph shall be binding upon each Holder of Registrable Securities.
5.10 "Market Stand-off" Agreement. Any Holder of Registrable
Securities, if requested by an underwriter of any registered public offering of
Company securities being sold in a firm commitment underwriting, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other Company
Voting Securities) held by such Holder other than shares of Registrable
Securities included in the registration during the seven days prior to, and
during a period of up to 180 days following, the effective date of the
registration statement. Such agreement shall be in writing in a form reasonably
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of the required stand-off period.
5.11 Listing of Shares. The Company shall use its commercially
reasonable efforts to cause (i) the Shares, (ii) upon exercise of the Warrant,
the Warrant Shares, (iii) the Preferred Shares, (iv) upon conversion of the
Preferred Shares, the Preferred Stock Conversion Shares, and (v) upon exercise
of the Rights Offering Warrant, the Rights Offering Warrant Shares, to be listed
on the New York Stock Exchange as soon as practicable.
ARTICLE VI
CONFIDENTIALITY
6.1 Confidential Material.
(a) Definitions. For purposes of this Section 6.1:
(i) The term "Confidential Material" means all information,
whether oral, written or otherwise (including any information furnished prior to
the execution of this Agreement), furnished by the Company to any member of the
Zell Group or any of the Representatives (as defined below), and all notes,
reports, analyses, compilations, studies and other materials prepared by the
Zell Group or any of the Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing or based upon, in whole
or in part, any such information, and the fact that such information has been
delivered to the Zell Group or any of its Representatives. The term
"Confidential Material" does not include information which is or becomes
generally available to the public other than as a result of a disclosure by any
member of the Zell Group or any of the Representatives or becomes available to
any member of the Zell Group or any of the Representatives on a non-confidential
basis from any source that is not known by such member of the Zell Group or such
Representative to be bound by an obligation of confidentiality to the Company.
(ii) The term "Representatives" shall mean any and all
employees, agents, financial advisors, partners, affiliates or other
representatives of any member of the Zell Group.
(b) Each member of the Zell Group and each of the Representatives
will preserve the confidentiality of the Confidential Material and will not
disclose any of the Confidential Material in any manner whatsoever; provided,
however, that (i) the Zell Group may make any disclosure of such information to
which the Company gives its prior consent, (ii) any of such information may be
disclosed to the Representatives who need to know such information, and who are
informed of the confidential nature of the Confidential Material and of the
terms of this Section 6.1 and who agree
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to keep such information confidential, (iii) any member of the Zell Group may
make any disclosure of such information in connection with any activity which
such member of the Zell Group reasonably believes to be in the best interests of
the Company and not prohibited by this Agreement, provided the recipient of such
information is informed of the confidential nature of the Confidential Material
and of the terms of this Section 6.1 and agrees to keep such information
confidential and (iv) any member of the Zell Group may make any disclosure of
such information to any other member of the Zell Group. In any event, the Zell
Group will be responsible for any actions by the Representatives which are not
in accordance with the provisions hereof.
(c) If any member of the Zell Group or any of the Representatives are
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any informal or
formal investigation by any government or governmental agency or authority or
otherwise) to disclose any Confidential Material or such person's opinion,
judgment, view or recommendation concerning the Company as developed from the
Confidential Material, the Zell Group agrees (i) to promptly notify the Company
of the existence, terms and circumstances surrounding such a request, (ii) to
the extent possible, to consult with the Company on the advisability of taking
legally available steps to resist or narrow such request and (iii) if disclosure
of such information is required, to furnish only that portion of the
Confidential Material which, in the opinion of counsel to the relevant member of
the Zell Group, the Zell Group is legally compelled to disclose, and to
cooperate with any action by the Company to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Material.
(d) Each Investor hereby acknowledges that the United States
securities laws prohibit, in certain circumstances, any person who has received
from an issuer material, non-public information, including certain information
that may be part of the Confidential Material, while such information is
non-public, from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
(e) This Section 6.1 shall survive until the earlier of the fifth
anniversary of this Agreement or two years following the date of termination of
this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1. [Intentionally deleted]
7.2. Term of Agreement; Certain Provisions Regarding Termination.
Unless this Agreement specifically provides for earlier or later termination
with respect to any particular right or obligation, this Agreement shall
terminate if the Zell Group shall, at any time, sell or otherwise dispose of or
otherwise cease to own Company Voting Securities such that the Zell Group
beneficially owns in the aggregate Company Voting Securities representing less
than 5% of the Combined Voting Power of all Company Voting Securities
(calculated in accordance with Section 3.1 and including the Shares and, to the
extent the Warrant has not been exercised or has not expired, the Warrant
Shares).
7.3 Legend and Stop Transfer Order. To assist in effectuating the
provisions of this Agreement, each of the Investors hereby consents to the
placement, in connection with the transactions contemplated by the Purchase
Agreement and the Standby Purchase Agreement or otherwise within 10 business
days after any Company Voting Securities become subject to the
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provisions of this Agreement, of the applicable legend specified below on all
certificates representing ownership of Company Voting Securities owned of record
or beneficially by any member of the Zell Group, until such shares are sold,
transferred or disposed in a manner permitted hereby to a person who is not then
a member of the Zell Group. The Company agrees to remove promptly all legends
and stop transfer orders with respect to the transfer of Company Voting
Securities being made to a person who is not then a member of the Zell Group in
compliance with the provisions of this Agreement.
Certificates representing any Shares or Warrant Shares held by Samstock
or TNI shall contain a legend, in substantially the following form:
The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise disposed of unless (i) there is
an effective registration statement under such Act and such laws
covering such securities or (ii) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery requirements of such Act and such laws. The
securities evidenced by this certificate are subject to the
restrictions on transfer contained in the Second Amended and Restated
Investment Agreement dated as of June 30, 1999, the Amended and
Restated Agreement Among Stockholders dated as of March 3, 1998, and
the Stockholder's Agreement dated as of March 3, 1998, in each case, to
which the Company is a party, as amended, supplemented or otherwise
modified from time to time, and may not be transferred except in
compliance therewith."
Certificates representing any Preferred Shares, the Rights Offering
Warrant Shares or the Preferred Stock Conversion Shares held by Samstock or TNI
shall contain a legend, in substantially the following form:
The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise disposed of unless (i) there is
an effective registration statement under such Act and such laws
covering such securities or (ii) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery requirements of such Act and such laws. The
securities evidenced by this certificate are subject to the
restrictions on transfer contained in the Second Amended and Restated
Investment Agreement dated as of June 30, 1999, to which the Company is
a party, as amended, supplemented or otherwise modified from time to
time, and may not be transferred except in compliance therewith."
Certificates representing any Shares or Warrant Shares held by
Halmostock shall contain a legend, in substantially the following form:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise disposed of unless (i) there is
an effective registration statement under such Act and such laws
covering such securities or (ii) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery
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requirements of such Act and such laws. The securities evidenced by
this certificate are subject to the restrictions on transfer contained
in the Second Amended and Restated Investment Agreement dated as of
June 30, 1999, and the Stockholders' Agreement dated as of March 3,
1998, in each case, to which the Company is a party, as amended,
supplemented or otherwise modified from time to time, and may not be
transferred except in compliance therewith."
7.4 Remedies.
(a) Each of the Investors and the Company acknowledge and agree
that (i) the provisions of this Agreement are reasonable and necessary to
protect the proper and legitimate interests of the parties hereto, and (ii) the
parties would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by the other party (or its affiliates) without the
necessity of proving actual damages or of posting any bond, and to enforce
specifically the terms and provisions hereof and thereof in any court of the
United States or any state thereof having jurisdiction, which rights shall be
cumulative and in addition to any other remedy to which the parties may be
entitled hereunder or at law or equity.
(b) In addition to any other remedy the Company may have under
this Agreement or in law or equity, if any member of the Zell Group shall
acquire or transfer any Company Voting Securities in violation of this
Agreement, such Company Voting Securities which are in excess of the number
permitted to be owned or controlled by the Zell Group or which have been
transferred by a member of the Zell Group in violation of the provisions of this
Agreement may not be voted by the owner thereof or any proxy therefor.
7.5 Additional Zell Group Parties; Several Obligations. All of the
liabilities and obligations under this Agreement: (a) of members of the Zell
Group who are Zell Affiliates shall be joint and several; (b) as between members
of the Zell Group who are Zell Affiliates, on the one hand, and any other
persons or groups who are not Zell Affiliates, on the other hand, shall be
several and not joint. Notwithstanding anything to the contrary in this
Agreement, in no event shall any member of the Zell Group who is a Zell
Affiliate be responsible in any manner for any liability or obligation of any
person or group who is not a Zell Affiliate. Notwithstanding anything to the
contrary in this Agreement, in no event shall any member of the Zell Group who
is not a Zell Affiliate be responsible in any manner for any liability or
obligation of any person or group who is a Zell Affiliate. Notwithstanding
anything to the contrary in this Agreement, no natural person or entity that is
not a signatory party to this Agreement shall have any liability or obligation
under this Agreement, except as otherwise provided in Section 7.12 of this
Agreement. Each member of the Zell Group that shall become or have the right to
become the beneficial owner, within the meaning and scope of Section 3.1 hereof,
of Company Voting Securities shall, promptly upon becoming such owner or holder,
execute and deliver to the Company a joinder agreement, agreeing to be legally
bound by this Agreement to the same extent as if it had signed this Agreement as
an original signatory as a member of the Zell Group (each such member of the
Zell Group, a "Zell Contracting Party"); provided that failure to execute such
an agreement shall not excuse such member's non-compliance with any provision of
this Agreement. No member of the Zell Group shall transfer securities to another
member of the Zell Group unless the transferee shall agree to be bound by this
Agreement in the manner specified above in this Section 7.5.
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7.6 Notices. All notices, and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
facsimile, to the appropriate address or facsimile number set forth below (or at
such other address or facsimile number for a party as shall be specified by like
notice):
if to Samstock or TNI:
Samstock, L.L.C.
Two N. Riverside Plaza - Suite 600
Chicago, IL 60606
Attention: General Counsel
Fax: (312) 454-0335
if to Halmostock:
Halmostock Limited Partnership
21 W. Las Olas Boulevard
Ft. Lauderdale, FL 33301
Attention: Steven J. Halmos
Fax: (954) 760-4983
with an additional copy to:
Kenny Nachwalter Seymour
Arnold Critchlow & Spector, P.A.
1100 Miami Center
201 South Biscayne Boulevard
Miami, Florida 33131-4327
Attention: Thomas H. Seymour, Esq.
Fax: (305) 372-1861
if to the Company:
Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Attention: Chief Executive Officer
Fax: (305) 892-3342
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Stephen P. Farrell, Esq.
Fax: (212) 309-6273
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If to the Steiner Trust:
Robert M. Steiner, as trustee
64 East Elm Street
Chicago, Illinois 60611
Fax: (312) 983-8985
7.7 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The parties hereto agree that they will use
their best efforts at all times to support and defend this Agreement.
7.8 Amendments. This Agreement may be amended only by an agreement
in writing signed by each of the parties hereto; provided, however, that any
amendment executed by the Company must prior thereto be approved by a majority
of the Disinterested Directors then in office.
7.9 Governing Law. This Agreement shall be governed and controlled
as to validity, enforcement, interpretation, construction, effect and in all
other respects by the internal laws of the State of Delaware applicable to
contracts made in that State.
7.10 Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
7.11 Counterparts; Facsimile Signatures. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, bears the signatures of each of the parties hereto. This Agreement may
be executed in any number of counterparts, each of which shall be an original as
against the party whose signature appears thereon, or on whose behalf such
counterpart is executed, but all of which taken together shall be one and the
same agreement. A facsimile copy of a signature of a party to this Agreement or
any such counterpart shall be fully effective as if an original signature.
7.12 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto.
7.13 Assignments. This Agreement may not be assigned without the
prior written consent of each party hereto, and any attempt to effect an
assignment hereof without such consent shall be void.
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IN WITNESS WHEREOF, each of the Investors and the Company have executed
this Second Amended and Restated Investment Agreement as of the date first above
written.
INVESTORS:
EGI-TRANSMEDIA INVESTORS, L.L.C.
/s/ Donald J. Liebentritt
--------------------------------------
By: Donald J. Liebentritt
Vice President
SAMSTOCK, L.L.C.
/s/ Donald J. Liebentritt
--------------------------------------
By: Donald J. Liebentritt
Vice President
SOLELY FOR PURPOSES OF SECTION 5 HEREOF:
STEINER TRUST:
/s/ Robert M. Steiner, Trustee
--------------------------------------
Robert M. Steiner, as trustee under
declaration of trust dated March 9, 1983,
as amended, establishing the Robert M.
Steiner Revocable Trust
COMPANY:
TRANSMEDIA NETWORK INC.
/s/ Gene Henderson
--------------------------------------
By: Gene Henderson, President and
Chief Executive Officer
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EXHIBIT 9
POWER OF ATTORNEY
STATE OF FLORIDA )
COUNTY OF DADE )
KNOW ALL MEN BY THESE PRESENTS that Halmos-Investments-Western, Inc.,
as the general partner of Halmostock Limited Partnership, having an address at
21 W. Las Olas Boulevard, Ft. Lauderdale, Florida 33301, has made, constituted
and appointed and BY THESE PRESENTS, does make, constitute and appoint either of
SHELI Z. ROSENBERG or DONALD J. LIEBENTRITT, each having an address at Two North
Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-In-Fact
for it and in its name, place and stead to sign and execute all documents
concerning a Schedule 13D with respect to the common stock of Transmedia Network
Inc. and concerning any amendments thereto, giving and granting unto either of
Sheli Z. Rosenberg or Donald J. Liebentritt, said Attorneys-In-Fact, full power
and authority to do and perform all and everything whatsoever, requisite and
necessary to be done with respect to the above referenced matter, as fully, to
all intents and purposes as it might or could do if personally present to the
doing thereof, with full power of substitution and revocation, hereby ratifying
and confirming all that said Attorney-In-Fact or her or his substitutes shall
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Halmos-Investments-Western, Inc. has hereunto set
its hand and seal this 26th day of February, 1998.
/S/ Steven J. Halmos
----------------------------
By: Steven J. Halmos
Its: President
I, Marieta Oria, A Notary Public in and for said County in the State
aforesaid, do hereby certify that Steven J. Halmos, personally known to me to be
the same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free and voluntary act for the uses and purposes therein
set forth.
Given under my hand and notarial seal this 26 day of February, 1998.
/S/ Marieta Oria
----------------------------
My Commission Expires:
Marieta Oria
My Commission # CC443715
Expires: May 7, 1999
Bonded Thru Notary Public Underwriters
