<PAGE>
As filed with the Securities and Exchange Commission on October 5, 1999
Registration Statement No. 333-84531
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
TRANSMEDIA NETWORK INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 84-6028875
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
11900 Biscayne Boulevard
Miami, Florida 33181
(305) 892-3300
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
----------------
Gene M. Henderson
Chief Executive Officer
11900 Biscayne Boulevard
Miami, Florida 33181
(305) 892-3300
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
----------------
Copy to:
Stephen P. Farrell, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
(212) 309-6000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the Registration Statement becomes effective.
----------------
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. / /
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this form, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /__________________________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /__________________________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /__________________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /__________________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per share aggregate offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rights to Purchase Series A
Preferred Stock (1)............. 4,152,000 $ 0 $ 0 $ 0
Series A Preferred Stock ....... 4,152,000 $2.41 $10,006,320 (2)
Common Stock (3)................ 4,152,000 (4) (4) (4)
==============================================================================================================================
</TABLE>
<PAGE>
(1) Pursuant to Rule 457(g), no separate registration fee is required for the
rights since they are being registered in the same registration statement
as the Series A Preferred Stock underlying the rights.
(2) $2,780 of the required $2,782 registration fee was previously paid.
(3) Such indeterminate number of shares of Common Stock shall be issuable
pursuant to the terms of the Series A Preferred Stock being registered
hereunder under their terms, including, without limitation, the
antidilution provisions thereof.
(4) No separate consideration will be received by Transmedia upon conversion of
the Series A Preferred Stock and, accordingly, no additional registration
fee is payable pursuant to Rule 457(i).
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to such Section 8(a), may determine.
================================================================================
<PAGE>
Prospectus
October 7, 1999
TRANSMEDIA NETWORK INC.
4,152,000 Subscription Rights
4,152,000 Shares of Series A Preferred Stock
4,152,000 Shares of Common Stock
- --------------------------------------------------------------------------------
We are distributing non-transferable rights to purchase Series A senior
convertible redeemable preferred shares to persons who owned shares of our
common stock as of the close of business on the record date, October 6, 1999.
We will issue up to 4,152,000 Series A preferred shares in this offering. You
will have the right to subscribe for one Series A preferred share, at a
subscription price of $2.41, for each 3.218 shares of common stock you owned on
October 6, 1999. You will not receive any fractional rights. If you exercise
all of your rights, you may also have the opportunity to purchase additional
Series A preferred shares at the same purchase price.
Our Series A preferred shares will be convertible into our common stock.
You will be able to exercise your rights to purchase the Series A preferred
shares only during a limited period. If you do not exercise your rights before
5:00 p.m., Eastern Standard Time, on October 22, 1999, the rights will expire.
We may decide to extend the rights offering, in our discretion, for up to 10
days.
Our common stock is listed on the New York Stock Exchange under the symbol
"TMN." On September 24, 1999, the closing price of the common stock as reported
by the NYSE was $3.4375.
This investment involves risk. See "Risk Factors" beginning on Page 6.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
- --------------------------------------------------------------------------------
The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and special reports, proxy statements, and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any materials that we file with the SEC at its Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet web site (http://www.sec.gov) that
contains all reports, proxy and information statements, and other information
filed by us and other electronic filers. You may also inspect the reports, proxy
and information statements, and other information filed by us at the offices of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005.
This prospectus constitutes a part of a registration statement on Form
S-2 filed by us with the SEC under the Securities Act, with respect to the
securities offered in this prospectus. This prospectus does not contain all the
information set forth in the registration statement. Certain parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. We refer to the registration statement and to the exhibits to such
registration statement for further information with respect to us and the
securities offered in this prospectus. Copies of the registration statement and
the exhibits to such registration statement are on file at the offices of the
SEC and may be obtained upon payment of the prescribed fee or may be examined
without charge at the public reference facilities of the SEC described above.
Statements contained in this prospectus concerning the provisions of documents
are necessarily summaries of such documents, and each statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information about us by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. We incorporate by reference the following
documents, filed with the SEC under the Exchange Act of 1934: (1) Annual Report
on Form 10-K for the fiscal year ended September 30, 1998; (2) Quarterly Reports
on Form 10-Q for the quarters ended December 31, 1998, March 31, 1999 and June
30, 1999; (3) Current Report on Form 8-K, filed on April 1, 1999; and (4)
Current Report on Form 8-K, filed on July 14, 1999, as amended by Current Report
on Form 8-K/A filed on September 14, 1999 and by Current Report on Form 8-K/A
filed on October 5, 1999.
A copy of the Form 10-K, the Form 10-Q for the quarter ended June 30,
1999 and the Form 8-K/A filed on September 14, 1999 referenced above are
included with this prospectus. If you need another copy of the Form 10-K or any
Form 10-Q, you may request one at no cost, by writing or telephoning us at the
following address:
Chief Financial Officer
11900 Biscayne Boulevard
Miami, Florida 33181
(305) 892-3300
You may rely on the information incorporated by reference or provided in this
prospectus or any prospectus supplement. We have not authorized anyone else to
provide you with different or additional information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are
not making an offer of these securities in any jurisdiction where the offer or
sale is not permitted.
You should assume that the information appearing in this prospectus is accurate
as of the date on the front cover of this prospectus only. Our business,
financial condition, results of operations and prospects may have changed since
that date.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page Page
---- ----
<S> <C>
Where You Can Find More Information............. i Capitalization................................... 15
Incorporation of Certain Documents by Selected Consolidated Financial Data............. 16
Reference..................................... i Recent Developments.............................. 17
Summary......................................... 1 The Rights Offering.............................. 19
Risk Factors.................................... 5 Related Party Transactions....................... 25
Legal Proceedings............................... 12 Description of Capital Stock..................... 27
A Warning About Forward-Looking Plan of Distribution............................. 32
Statements.................................... 12 Certain United States Federal Income Tax
Use of Proceeds................................. 12 Considerations................................. 32
Price Range of Common Stock..................... 13 Experts.......................................... 35
Determination of Subscription Price............. 13 Legal Matters.................................... 35
Dilution........................................ 13
</TABLE>
ii
<PAGE>
SUMMARY
In order to conduct this offering we must increase our authorized share capital.
We are calling a special meeting of our stockholders to approve the increase and
certain other matters described in the proxy statement being distributed to our
stockholders. Unless our stockholders improve the increase and the other matters
proposed to them, we will not pursue the offering contemplated by this
prospectus. We cannot assure you that this condition will be satisfied.
This prospectus assumes that 4,149,378 Series A preferred shares will be issued
in this offering; the exact number of shares issued may vary based on the
rounding of fractional shares.
The following summary highlights the material items relating to this offering.
It does not contain all of the information that you should consider before
deciding to exercise your rights and invest in the Series A preferred shares. To
understand this offering fully, you should read the entire prospectus carefully,
including the risk factors, and our financial statements and the notes to those
statements incorporated by reference in this prospectus. You are urged to read
this prospectus and the accompanying documents in their entirety.
Transmedia Network Inc.
Transmedia
We own and market the Transmedia Card, which offers savings to our card members
on dining as well as lodging, travel, retail and catalogue merchandise and long
distance telephone calls. We purchase rights-to-receive in the form of food and
beverage credits from restaurants and other establishments which we then make
available at a discount to their full retail value to holders of the Transmedia
Card. In June 1999, we completed the acquisition of a similar membership program
operated under the Dining A La Card trade name and service mark. As a result of
this acquisition, we estimate that our member base and network of participating
restaurants has grown to approximately 2,100,000 and 9,500, respectively, from
its previous base of 1,100,000 members and 5,600 restaurant merchants. We also
have a relationship with the Signature Group, the former owner of Dining A La
Card, to gain access to sponsor relationships it has with the world's leading
airlines.
We operate in central and south Florida, the New York, Chicago and Los Angeles
metropolitan areas, Boston and surrounding New England, Philadelphia, San
Francisco, Detroit, Indianapolis, Milwaukee, Denver, Phoenix, North and South
Carolina, Georgia, parts of Tennessee, and Texas. As a result of our acquisition
of Dining A La Card, our operations have expanded to Kansas City, St. Louis,
Minneapolis-St. Paul, Las Vegas, Seattle, San Diego, Portland, Oregon, Cleveland
and Hawaii.
The Rights Offering
Rights
Distribution of rights.................. You will receive one subscription
right for each 3.218 shares of
common stock you hold as of the
record date. If you have fewer than
3.218 shares of common stock you
will receive no rights. We will not
issue fractional rights; the number
of rights we offer to each
stockholder will be rounded up or
down to the nearest whole number.
Each right includes a basic
subscription privilege and an
oversubscription privilege. The
distribution of the rights and the
issuance of Series A preferred
shares upon the exercise of the
rights under the basic subscription
privilege or under the
oversubscription privilege are
referred to as the "rights
offering." See "The Rights
Offering--The Rights," "--Basic
Subscription Privilege" and
"--Oversubscription Privilege."
Securities outstanding after
Rights Offering......................... Following the sale of all of the
Series A preferred shares issued in
the rights offering, and assuming
that they were all converted into
shares of common stock, there would
then be approximately 17,500,000
shares of common stock outstanding.
This compares to 13,352,709 shares
of common stock outstanding before
the rights offering.
1
<PAGE>
Record date............................. October 6, 1999
Expiration time......................... October 22, 1999, 5:00 p.m., Eastern
Standard Time, unless we extend the
expiration time, but not beyond
November 1, 1999, 5:00 p.m., Eastern
Standard Time. No one may exercise
rights after the expiration time.
Nontransferability of rights............ The rights are not saleable or
transferable.
Listing................................. We have applied to the New York
Stock Exchange to list the Series A
preferred shares under the symbol
"TMNPrA."
Basic subscription privilege............ The basic subscription privilege
entitles you to purchase one Series
A preferred share for every 3.218
shares of common stock you hold.
Oversubscription privilege.............. If you elect to fully exercise the
basic subscription privilege you may
also subscribe for any Series A
preferred shares not purchased by
other stockholders. Series A
preferred shares available for
purchase pursuant to the
oversubscription privilege will be
subject to proration if the
oversubscribed shares exceed the
number of Series A preferred shares
available. Proration will be in
proportion to the number of Series A
preferred shares a holder has
subscribed for pursuant to the basic
subscription privilege.
Subscription price...................... $2.41 per Series A preferred share.
See "The Rights Offering--
Determination of Subscription
Price."
Standby agreement....................... Samstock, L.L.C., an affiliate of
Equity Group Investments, LLC and
our largest stockholder
("Samstock"), has agreed to act as a
standby purchaser to ensure the
sale, at the subscription price, of
all of the Series A preferred shares
we are offering. See "Related Party
Transactions--Standby Purchase
Agreement." As compensation for its
standby commitment and for the
$10,000,000 loan one of its
affiliates made to us at the time of
our purchase of Dining A La Card, we
are issuing to Samstock a five-year
warrant to purchase 1,000,000 shares
of our common stock. Samstock
currently has the right to nominate
two directors for election to our
board. If it is required to purchase
under the standby purchase agreement
25% of the total number of Series A
preferred shares offered to our
other stockholders in this rights
offering (other than pursuant to its
basic subscription privilege and its
obligation to purchase shares not
subscribed for by EGI- Transmedia
Investors, L.L.C. or its members
pursuant to its or their basic
subscription privileges), then the
number of directors constituting our
board will be increased by one, and
Samstock will have the right to
nominate an additional director to
fill that newly-created
directorship. See "Related Party
Transactions--GAMI Loan."
Procedure for exercising rights......... To exercise your rights, you should
complete the subscription
certificate and forward it, along
with payment of the subscription
price for the number of Series A
preferred shares you wish to
purchase, to the subscription agent
for receipt on or prior to the
expiration time. If you plan to mail
the subscription certificate, we
recommend that you use insured,
registered mail. See "The Rights
Offering--Exercise of Rights."
No revocation........................... You may not revoke your subscription
after the subscription agent
receives your subscription
certificate. See "The Rights
Offering--No Revocation."
Our withdrawal right.................... We reserve the right to withdraw the
offering at any time prior to
delivery of the Series A preferred
shares. Unless all of the Series A
preferred shares are sold in this
offering and the condition to this
offering is satisfied at or prior to
the expiration time, the offering
will be withdrawn. We will have no
obligation to you in the event of
such withdrawal other than to return
to subscribers any payment received
in respect of the subscription
price, without interest. See "The
Rights Offering--Withdrawal Right."
2
<PAGE>
Persons holding shares, or
wishing to exercise rights
through others.......................... If you hold shares of common stock
through a broker, dealer, commercial
bank, trust company or other nominee
and would prefer to have that
institution act on your behalf with
respect to the rights, you should
contact the institution and inform
them of your wishes. See "The Rights
Offering--Exercise of Rights."
Subscription agent...................... American Stock Transfer & Trust
Company. See "The Rights
Offering--Subscription Agent."
Terms of the Series A Preferred Stock
Conversion by holder.................... Each whole Series A preferred share
may be converted into common stock
at the option of the holder at any
time. The rate of conversion is
determined by dividing the sum of
$2.41, plus accrued but unpaid
current dividends, additional
dividends and deferred dividends by
the Series A conversion price. See
"--Dividends" below. The Series A
conversion price shall initially be
fixed at $2.41, but is subject to
adjustment in the event of a merger,
share split or combination,
restructuring, recapitalizations or
similar events or an issuance of
common stock below the conversion
price then in effect.
Holders of a majority of the
outstanding Series A preferred
shares will have the right to
require Transmedia to convert all
outstanding Series A preferred
shares at any time following the
closing of this offering. Samstock
may have the ability to require such
conversion if it is required to make
substantial purchases of Series A
preferred shares pursuant to its
standby obligations.
Conversion by Transmedia................ If at any time beginning three years
following the closing of this
offering the closing price of the
common stock exceeds $4.82, plus
accrued but unpaid current
dividends, additional dividends and
deferred dividends thereon, for
thirty consecutive days, then we
will have the right, for a period of
90 days thereafter, to require the
conversion of all outstanding Series
A preferred shares at the conversion
price. We will also have the right
to require conversion if we complete
an underwritten public offering of
our equity securities which results
in gross proceeds to Transmedia or
selling stockholders of $20,000,000
and either the price to public of
the securities sold or the average
of the high and low sales prices of
our common stock on the date of the
closing of that public offering is
not less than the Series A
conversion price then in effect.
Dividends............................... As a holder of the Series A
preferred shares you will be
entitled to receive dividends at the
rate of $0.29 per share per annum at
least $0.145 of which is payable in
quarterly installments in arrears on
the first business day of January,
April, July and October ("current
dividends"). Annual dividends in the
amount of $0.145 per share will not
be payable currently but shall be
deferred, accrue and be payable upon
a conversion or redemption of the
Series A preferred shares or
liquidation, dissolution or winding
up of Transmedia ("deferred
dividends"). We, however, may choose
to pay any or all deferred dividends
currently. Dividends will accrue
from and including the issue date to
and including the date on which the
preferred shares are redeemed or
converted or on which the
liquidation preference is paid
thereon. To the extent not paid,
current dividends and deferred
dividends will be cumulative. The
Series A preferred shares will be
entitled to receive cash dividends
on an as-converted basis equal to
the common stock, if dividends are
paid on common stock.
If we default in our obligation to
pay any portion of current dividends
when due (such portion, a "past due
current dividend"), holders of the
Series A preferred shares will be
entitled to receive an additional
dividend per share ("additional
dividends") at an annual rate equal
to the per share amount of the past
due current dividend, multiplied by
the prime rate of interest (as
announced by the Chase Manhattan
Bank) plus 6% for the first
3
<PAGE>
90 days of the default, increasing
by an additional 1/2% at the
beginning of each subsequent 90 day
period up to a maximum rate equal to
the prime rate plus 7-1/2% per
annum. All additional dividends will
be cumulative from the dividend
payment date on which the default
giving rise to a past due current
dividend had occurred.
Subordination........................... If Transmedia is actually liquidated
or dissolved, or if Transmedia sells
substantially all of its assets or
merges or experiences a change of
control (a "deemed liquidation"),
holders of the Series A preferred
shares would be entitled to receive,
in cash, a sum per share equal to
$2.41 plus all accrued but unpaid
current dividends, additional
dividends and all deferred dividends
thereon.
Upon an actual liquidation (but not
upon a deemed liquidation), after
payment of the amount described
above, any additional amounts
available for distribution will be
distributed among the holders of the
Series A preferred shares and the
common stock pro rata on an
as-converted basis.
Voting.................................. Holders of the Series A preferred
shares will vote together with the
holders of the common stock on all
matters which are submitted to a
vote of the stockholders on the
basis of one vote for each Series A
preferred share held of record by
such holders. In addition, if and
whenever current dividends payable
on Series A preferred shares are in
arrears and unpaid in an aggregate
amount equal to or exceeding the
amount of current dividends due and
payable thereon for six (6)
quarterly dividend periods
(consecutive or otherwise), then the
number of directors constituting the
board of directors will be increased
by two, and the Series A preferred
shares, voting as a class, will have
the right to elect two directors to
fill such newly-created
directorships.
Redemption by Transmedia................ Beginning on the fifth anniversary
of the closing of this rights
offering, we may elect to redeem all
of the outstanding Series A
preferred shares at a redemption
price per share equal to $2.41 plus
all accrued but unpaid current
dividends, additional dividends and
deferred dividends thereon or, if we
choose, redeem the shares ratably
in one-third increments during the
fifth, sixth and seventh years
following the closing of this
offering, subject to each holder's
prior right of conversion.
Other Matters
Use of proceeds......................... If all Series A preferred shares are
sold in the rights offering, the
gross proceeds will be $10,000,000.
We are required to use all of the
gross proceeds to repay outstanding
amounts under a loan from one of
Samstock's affiliates which we used
to finance the purchase of Dining A
La Card. For more information see
"Related Party Transactions" and
"Use of Proceeds."
Risk factors............................ For a discussion of the risks
involved in exercising your rights
and investing in the Series A
preferred shares, see "Risk
Factors."
Transmedia commenced operations in 1984 and was reincorporated as a Delaware
corporation in 1987. Our corporate offices are located at 11900 Biscayne
Boulevard, Miami Florida 33181; telephone (305) 892-3300.
4
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and other information
in this document before deciding to exercise your rights.
Operating Risks
We have had losses from operations for the last two fiscal years and in every
quarter of the current fiscal year. The operations of Dining A La Card, which we
recently acquired, have sustained operating losses since inception. We expect
that we may continue to incur operating losses until we fully integrate the
operations of Dining A La Card.
We have incurred net losses of $400,000 and $7,800,000 during fiscal
1997 and 1998, respectively, and have incurred a net loss of $5,300,000 in the
nine months ended June 30, 1999. The principal causes of our losses were (1)
decreases in rights-to-receive revenue, due primarily to lower sales volume in
the New York, Boston and Philadelphia markets, our largest markets, (2)
increases in selling, general and administrative expenses (due, in part, to
one-time payments in termination of employment and consulting agreements to the
previous Chairman and Chief Executive Officer during fiscal 1998 and, in other
periods to increases in information technology expenses principally associated
with year 2000 remediation and legal reserves) and (3) decreases in the number
of new enrollments and lower and often less frequent spending by new members.
In addition, Dining A La Card has incurred losses of $15,200,000 and
$41,800,000 during the years ended December 31, 1997 and 1998, respectively. On
a pro forma basis, after giving effect to our acquisition of Dining A La Card as
of the beginning of the period, our net losses for our fiscal year ended
September 30, 1998 were $28,500,000. See "Unaudited Pro Forma Financial
Information." We anticipate that we may continue to incur operating losses until
we integrate the operations of Dining A La Card, eliminate duplicative operating
costs and rationalize the combined overhead structure.
We may have difficulty meeting our future cash needs.
During the nine months ended June 30, 1999, we experienced a decrease
in cash and cash equivalents of $1,400,000. Although we obtained in June 1999 a
$35,000,000 senior secured revolving loan from The Chase Manhattan Bank and a
$10,000,000 term loan from GAMI Investments, Inc., an affiliate of our largest
stockholder, these facilities come due no later than December 30, 1999 and were
largely used to fund our acquisition of Dining A La Card. Although we intend to
replace the Chase loan with a securitization facility in respect of the Dining A
La Card rights-to-receive we recently purchased, we cannot assure you that we
will be able to obtain this facility on terms acceptable to us, if at all. If we
are unable to obtain new financing by the beginning of calendar year 2000, we
will likely not have sufficient cash to fund our operations. In addition, in
June 1999 we were required to obtain a waiver through December 31, 1999 of a
default relating to our failure as of April 30, 1999 to meet the $24,000,000
minimum stockholder equity requirements that are in our existing securitization
facility. This waiver may be terminated at any time if the indebtedness due to
Chase or to GAMI comes due prior to their scheduled maturity dates or if our net
worth is not at least $24,000,000. The waiver may also be terminated on or after
October 31, 1999 if the credit rating of the notes under the facility has been
withdrawn or reduced and either our net worth is not at least $20,000,000 at
October 31, 1999 or this rights offering has not been commenced by that date. We
will also have to begin an early paydown of that facility if we fail to meet the
$24,000,000 minimum stockholder equity requirement as of December 31, 1999, or
if the waiver is terminated prior to that date for any reason. If an early
payment of the securitization facility is required, the Chase and GAMI loans
would also be in default and our financial condition and results of operations
would be materially adversely affected. We are depending on this rights offering
to provide us with the additional equity needed to bring us into compliance with
the $24,000,000 minimum stockholder equity requirement.
5
<PAGE>
We depend on our ability to attract and retain desirable merchants.
The majority of our revenue is derived from our right to receive cash
in exchange for food and beverage credits. Our business depends on our ability
to attract a large variety of desirable merchants in each geographic market that
we serve in order to generate both rights-to-receive and cardmember interest.
Failure to procure contracts with a large number of merchants in a timely manner
or any significant reduction in business from such merchants in any market would
reduce rights-to-receive revenue and adversely affect our business. In addition,
a failure to attract desirable merchants could cause members to stop using their
Transmedia Card or to cancel their memberships, and would harm our ability to
attract new members and participating merchants. Any decline in cardmember usage
or membership enrollments would slow rights-to-receive turnover, causing a
further decline in rights-to-receive revenue, and would reduce our fee income.
Our success depends on our ability to attract and retain active members.
Our future success depends in large part on continued demand for our
programs by consumers. Any number of factors could affect the frequency with
which consumers participate in our programs or whether they enroll in a
Transmedia program at all. Among these factors include (1) consumer tastes and
dining preferences, (2) the frequency with which consumers dine out, (3) general
economic conditions, (4) weather conditions and (5) the availability of
alternative discount programs in the local region in which consumers live and
work. Any significant decline in card usage or increase in card cancellations,
without a corresponding increase in new member enrollments, would have a
material adverse effect on our business.
We depend on increasing our marketing force and forming new marketing
relationships to grow our business.
We must aggressively hire marketing personnel and enter into new
marketing relationships to help gain access to large groups of potential
customers. We have relationships with various organizations for the marketing,
support and endorsement of our services and products. For example, we rely on
our agreements with banks across the country to market our services to their
existing and future customer base. However, we need to expand these
relationships and enter into new relationships. In connection with our
acquisition of Dining A La Card, we entered into a services collaboration
agreement with SignatureCard, under which SignatureCard will generate members by
relying on its long-standing marketing partner arrangements with the world's
leading airlines, certain banks and others for the mutual benefit of
SignatureCard and Transmedia. We cannot assure you that this relationship will
be successful. If it is unsuccessful, we would be required to develop marketing
relationships on our own. The development of these partnerships can be a long
and difficult process and requires experienced sales and marketing personnel.
Competition for such personnel is intense, and we may not be able to retain
existing personnel or attract additional personnel in the future necessary to be
successful in our efforts.
Our future success depends on programs we market through credit card issuers,
banks, airlines and other marketing partners. A downturn in those industries
would adversely affect us.
Our future success depends on demand for our dining programs from
businesses and industries we serve or seek to serve. A significant downturn in
an industry or trend within an industry to reduce or eliminate its use of
membership programs would have a material adverse effect on our business,
financial condition and results of operations. Specifically, Transmedia
currently uses various marketing methods to solicit new members. Under one of
the methods, we use our relationships with banks and other credit card issuers
to issue to prospective members our private label charge card, the Transmedia
Card, pre-linked to that member's credit card, which may be activated by making
a telephone call. Recently adopted consumer credit regulations will prohibit
these "call to activate" programs. We intend to phase out this solicitation
method, solely as it relates to the private label card, and we will need to
either utilize our other forms of direct marketing solicitation or develop new
marketing strategies. We cannot assure you that we will be able to develop new
strategies or that the alternative methods will be utilized successfully.
6
<PAGE>
We are susceptible to merchant credit risk.
We strive to obtain restaurants and other merchants which are
financially sound and offer a variety of quality food and services. To the
extent that participating merchants fail, we could be adversely affected.
Because we generally make cash advances to restaurants and other participating
merchants in exchange for rights, we may not be able, upon the failure of a
business, to collect the full amount, or any, of the funds advanced. Although
our practice generally is to protect our right to recover advanced monies by
taking a security interest in a merchant's collateral or other guarantees, we
cannot assure you that these measures would be adequate to enable us to recover
losses. In addition, because the Dining A La Card business had not engaged in
this practice until recently, the majority of the rights-to- receive we
purchased in the acquisition are unsecured. If these merchants were to fail
before we establish a security interest in accordance with our policy, we might
not be able to recover amounts they owe in respect of the rights-to- receive
that we purchased.
Economic slowdowns could hurt our business.
The success of our business depends on our members' use of the
Transmedia Card. Our future success will also depend on our members' use at
participating merchants of other credit cards registered with our Dining A La
Card program. If the national or local economy slows in the regions in which we
do business, our members may perceive that they have less disposable income to
permit them to dine out. As a consequence, they may dine out less frequently,
and use their Transmedia Card or other registered cards less often, if at all.
Any decline in card usage would hurt our business. In addition, a decline in the
national economy or in the regions in which we operate typically has an initial
positive impact because restaurants can more readily absorb the incremental
business. However, a sustained economic downturn could cause merchants who
participate in our programs to go out of business. Although our practice
generally is to protect our right to recover monies we advance to merchants by
taking a security interest in a merchant's assets, we cannot assure you that
such measures would be adequate. It is likely that, should the number of
merchants entering bankruptcy rise, the number of uncollectible accounts would
also rise. This would have an adverse effect on our business.
An inability to maintain an appropriate balance between the number of members
and the number of merchants in each market may adversely affect our operations.
The success of our business depends on our ability to maintain an
appropriate ratio of members to merchants within each geographic market we
serve. If we have too many members and not enough restaurants, our member base
may become dissatisfied and participating restaurants may experience a higher
volume of discount business than anticipated. This could result in low card
holder usage, high membership cancellations and attrition in the restaurant
base. Alternatively, if too many restaurants participate in our programs with
too few members, rights-to-receive turnover volume will be reduced resulting in
reduced revenue. Managing this ratio requires an ability, among other things, to
anticipate trends within a market and the desires of our customers and
participating restaurant partners. We cannot assure you that we will be able to
manage this balance effectively in each of our markets. An inability to do so,
however, could harm our business.
We depend on members of our senior management.
In October 1998, our board of directors appointed a new President and
Chief Executive Officer, Gene M. Henderson. Our success will depend, in part, on
the skills, experience, efforts and policies of Mr. Henderson and certain other
key employees, including our Executive Vice President and Chief Financial
Officer, the President of Transmedia Restaurant Company Inc. and the President
of Transmedia Service Company, Inc., our two principal operating subsidiaries.
If one or more of these senior executives or key personnel were not to remain
active with Transmedia, our results of operations could be affected.
7
<PAGE>
Recent adoption of new business strategies may not be successful.
Transmedia recently implemented two new business strategies. First, we
terminated promotions of no-fee memberships while principally marketing
fee-based memberships to new customers and existing customers, upon termination
of their existing contract year. This new strategy is premised upon the
assumption that fee-paying members are better members that both spend more and
use the card more frequently. This assumption, however, has not been proven
absolutely and the strategy may prove not to be successful. Spending patterns of
fee-based members acquired through these marketing campaigns, historically
greater than those of no-fee members, may end up being substantially similar to
those of their non-fee paying counterparts. In addition, Transmedia could lose a
substantial number of members who elect not to pay an annual fee in order to
renew their memberships. Any such eventuality could have an adverse effect on
our business and operating results.
Second, we have adopted a strategy of beginning to shift our business
to a registered card platform and away from private label. We have adopted this
strategy principally for three reasons. First, we believe consumers prefer the
discretion of a registered card (in which dining guests are unaware that the
cardholder is receiving a discount) as opposed to the private label (which is
commonly associated with discount dining). Second, our recent acquisition of
Dining A La Card has provided us with a strong registered card infrastructure
upon which we can build. Finally, because the changing regulatory landscape has
impacted our most successful solicitation method for the private label card, a
registered card program can provide us with alternative marketing solutions.
Nevertheless, implementation of this strategy may be difficult and time
consuming. Merchants may resist the change and various back office mechanics
must be put in place. We cannot assure you that this strategy will be
implemented successfully or in a timely manner. Any failure in its
implementation, however, could have an adverse effect on our business and
operating results.
Initial and renewal fee memberships contribute to our profitability;
cancellations could impact our profitability.
Fee income from new members may not be sufficient to cover the cost of
solicitation in the initial year of an individual membership program, as
compared to renewal years, due primarily to high marketing costs associated with
initial member procurement. In addition, we experience a higher percentage of
cancellations during the initial membership period as compared to renewal
periods. During an initial annual membership term or a renewal term, members may
cancel their memberships in the program, generally for a pro rata refund of the
membership fees for that period. Accordingly, profitability of our programs
depends, in part, on recurring and sustained fee membership renewals.
We depend on our agreements with transaction processors, presenters and
aggregators.
Because credit card processing is an integral part of our business, our
relationship with the processors, presenters and aggregators are very important.
Should these relationships terminate and we are unable to find suitable
replacements, our ability to receive, process and present transactions could be
impaired, which would materially and adversely impact our operations.
We may need additional capital even after the rights offering.
If we are unable to consummate a new securitization facility as
currently contemplated to replace the interim bank financing used to finance our
acquisition of Dining A La Card, we will need to raise additional funds. If we
raise additional funds through the sale of equity or convertible debt
securities, your percentage ownership will be reduced. In addition, these
transactions may dilute the value of the stock outstanding. We may have to issue
securities that have rights, preferences and privileges senior to our common
stock or, with the consent of the holders of the Series A preferred shares, the
Series A preferred stock. Alternatively, we may have to borrow funds at rates
significantly higher than we anticipate will apply to the securitization. We
cannot assure you that we will be able to raise additional funds on terms
favorable to us or at all. If future financing is not available or is not
available on acceptable terms, we will likely not be able to fund our future
needs. This would have a material adverse effect on our business, operations and
financial condition.
8
<PAGE>
Potential Year 2000 problems may have an adverse effect on our operations and
ability to offer services without interruption.
The risks posed by Year 2000 issues could adversely affect our business
in a number of significant ways. Although we believe that our internally
developed systems and technology are Year 2000 compliant as a result of the
substantial completion in July 1999 of the implementation and testing phases of
our Year 2000 remediation plan, our information technology systems nevertheless
could be substantially impaired or cease to operate due to Year 2000 problems.
Additionally, we rely on information technology supplied by third parties,
including suppliers and customers, whose systems interface with ours. We have
contacted our critical suppliers and customers and have received varying
information from them regarding their state of compliance or expected
compliance. Year 2000 problems experienced by us or any of these third parties
could result in an interruption in, or a failure of, certain normal business
activities which could materially and adversely affect our operations, liquidity
and financial condition. Despite contingency plans that we have in place, we
cannot assure you that disruptions will not occur.
Offering Risks
Your exercise of rights may not be revoked; the rights offering may be canceled.
Once you have exercised your rights, your exercise may not be revoked.
If the condition to this rights offering is not satisfied or if we elect to
withdraw the rights offering for any other reason, the rights offering will be
canceled. In the event of cancellation, neither Transmedia nor the subscription
agent will have any obligation to you with respect to the rights except to
return, without interest, any payment of the subscription price received by the
subscription agent. See "The Rights Offering."
There will be no public market for rights; there may be a limited market for the
Series A preferred shares.
There will be no public market for the rights. Transmedia has applied
to the New York Stock Exchange to list the Series A preferred shares; we cannot
assure you, however, that our application will be approved. We have been
informed by the NYSE that approval will be subject to the condition, among
others, that the Series A preferred shares be held by at least 100 holders of
round lots. If the Series A preferred shares are purchased by fewer than 100
stockholders, we will seek to list the securities on the over-the-counter
market. In either case, we cannot assure you that an active market in the Series
A preferred shares will develop. Liquidity in respect of the Series A preferred
shares may be further reduced if Samstock purchases a substantial amount of the
Series A preferred shares, either under its subscription privileges or its
standby commitment. The market price for the Series A preferred shares may be
subject to significant fluctuations, and may not be equal to the subscription
price you paid for the shares upon exercise of your rights.
The listing of our common stock on the New York Stock Exchange is subject to
compliance with our business plan and monitoring by the Exchange over the next
year and a half.
On August 5, 1999, the New York Stock Exchange notified us of the
pending adoption of amendments to its continued listing criteria and of
Transmedia's noncompliance with the new standards. In accordance with the
requirements of the notification, Transmedia submitted to the NYSE its plan to
come into compliance with the new criteria. The rights offering contemplated by
this prospectus is intended, in part, to position Transmedia to come into
compliance with these standards. On September 16, 1999, we were advised by the
NYSE that our plan has been accepted and that we will continue to be a listed
company on the NYSE. Transmedia's performance relative to the plan of compliance
is subject to monitoring by the NYSE over the next six fiscal quarters. We
cannot assure you that we will comply with this plan or that our securities will
remain listed on the NYSE.
9
<PAGE>
If you do not exercise all of your rights, your ownership interest in Transmedia
will be diluted.
The Series A preferred shares will entitle the holders to acquire
approximately 4,149,378 shares of common stock, representing approximately 23.7%
of the total outstanding shares of common stock of Transmedia after giving
effect to the conversion of the Series A preferred shares. One consequence of
the offering is that holders of common stock that elect not to exercise their
rights could experience dilution with respect to their ownership interest and
voting rights in Transmedia. In addition, because the subscription price
represents a discount from the prevailing market price of our common stock,
stockholders that elect not to exercise their rights could experience dilution
with respect to their economic interest in Transmedia. See "Dilution."
Samstock and its affiliates may increase their ownership in Transmedia as a
result of this offering.
Samstock and its affiliates, as of September 10, 1999, beneficially
owned in aggregate 4,697,449 shares of our common stock, representing
approximately 32.3% of our outstanding common stock. Of this amount, 2,241,695
shares were owned by Samstock and its affiliate, EGI-Transmedia Investors,
L.L.C. ("EGI-TNI"), 1,011,213 shares were issuable upon the exercise of warrants
held by Samstock and EGI-TNI, 1,278,314 shares were held by others but were
subject to voting and disposition restrictions in favor of Samstock and 166,227
shares were issuable upon exercise of warrants held by others but would be, if
exercised, the subject of voting and disposition restrictions in favor of
Samstock. If Samstock exercises its basic subscription privilege and also
purchases the number of shares for which EGI-TNI or its members are permitted
but fail to subscribe, and Samstock is not required to purchase any additional
Series A preferred shares, it and its affiliates would beneficially own
6,157,191 shares of common stock, or 31.3% of the total common stock
outstanding, after giving effect to (1) the immediate conversion of the Series A
preferred shares into common stock, and (2) the issuance to Samstock of a
warrant to purchase 1,000,000 shares of our common stock in consideration of its
entering into the standby purchase agreement and of the provision by GAMI of the
loan. If no other stockholders validly subscribe for and purchase Series A
preferred shares pursuant to this rights offering, however, Samstock would be
required to purchase all of the shares offered. In that event, Samstock and its
affiliates would beneficially own 9,846,827 shares of common stock, or 50.0% of
the total common stock outstanding, after giving effect to (1) the immediate
conversion of the Series A preferred shares into common stock, and (2) the
issuance to Samstock of the warrants.
The holders of a majority of the outstanding Series A preferred shares
offered pursuant to the rights offering will have the right to require us to
convert all outstanding Series A preferred shares at any time following the
closing of the offering. If Samstock, either pursuant to the exercise of its
subscription privileges or pursuant to its standby commitment acquires a
majority of the Series A preferred shares, it would be able to require
conversion of the entire Series in its discretion.
In addition, Samstock and its affiliates have various rights to
designate members to our board of directors. If Samstock were required to
purchase more than 25% of the number of Series A preferred shares issued upon
exercise of rights (other than pursuant to its basic subscription privilege and
its obligation to purchase shares not subscribed for by EGI-TNI or its members
pursuant to its or their basic subscription privileges), it will be entitled to
designate an additional member to Transmedia's board of directors, and thereby
increase the size of the board. In addition, upon an event of default under the
GAMI loan agreement, various standstill covenants binding Samstock and its
affiliates (which currently prohibit Samstock and its affiliates, subject to
certain limitations, from acquiring additional securities of Transmedia (other
than in connection with this rights offering), soliciting proxies in opposition
to the recommendation of a majority of our disinterested directors, forming
"groups" for the purpose of acquiring, voting or disposing of our voting
securities, or soliciting bidders for Transmedia, among other things, until
March 2003) would automatically terminate, and Samstock would have the right to
designate additional directors to our board of directors so that the total
number of Samstock designees on our board would constitute a majority.
Furthermore, upon certain defaults in the payment of dividends, our board of
directors will be increased by two members and the Series A preferred stock, as
a class, will have the right to elect two directors to fill the newly-created
directorships.
10
<PAGE>
Standby commitment is conditional.
To guarantee that Transmedia will receive gross proceeds of
approximately $10,000,000 from the rights offering, Samstock has agreed to act
as a standby purchaser and purchase up to all of the shares of the Series A
preferred shares offered hereby, less amounts subscribed for by other holders of
rights. However, this commitment is subject to certain conditions to closing,
including the approval by stockholders of the increase in our authorized share
capital and certain other matters and the termination or expiration of any
waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, among other things. We cannot assure you that all
conditions will be satisfied so that Samstock will complete the agreed-upon
purchases. To the extent that these conditions are not satisfied or Samstock
fails to perform its obligations, we may not receive sufficient proceeds from
the rights offering to repay the GAMI loan upon maturity or fund our capital
needs. A default under the GAMI loan would also trigger a default under the
Chase bridge loan and a termination of the bondholder's waiver under our
existing securitization facility. See "We may have difficulty meeting our future
cash needs." Any of these defaults or terminations could, unless waived, result
in the immediate acceleration of all amounts due under these instruments, which
would significantly and negatively impact our financial condition and operating
results.
Our board of directors may issue additional shares of preferred stock without
stockholder approval.
Our certificate of incorporation will, if the proxy proposals being
presented to our stockholders are approved, authorize the issuance of up to
10,000,000 shares of preferred stock with rights and preferences that may be
determined from time to time by the board of directors. If all of the rights
offered hereunder are exercised, an aggregate of 4,149,378 shares of preferred
stock will be issued in this rights offering. Accordingly, the board of
directors may, without stockholder approval, issue one or more new series of
preferred stock with rights which could adversely affect the voting power or
other rights of the holders of outstanding shares of preferred stock or common
stock. In addition, the issuance of additional shares of preferred stock may
have the effect of rendering more difficult, or discouraging, an acquisition or
change in control of Transmedia. Although we do not have any current plans to
issue any additional series or shares of preferred stock, except for the
preferred stock to be issued in this rights offering, we may do so in the
future.
The existence of shares available for sale in the future may have an adverse
effect on our stock price.
Sales of a substantial amount of common stock in the public market, or
the perception that these sales may occur, could adversely affect the market
price of our common stock prevailing from time to time. This could also impair
our ability to raise additional capital through the sale of equity securities.
Following this rights offering, assuming that all of the rights offered hereby
are fully exercised and that all Series A preferred shares are immediately
converted, we will have 4,149,378 of common stock outstanding. Of these shares,
approximately 6,157,191 shares will be held by our affiliate, Samstock (and
associated entities or persons). We have registered for resale 3,117,908 shares
of common stock (including shares of common stock underlying warrants, as
described below) purchased by Samstock and its affiliates in March 1998 and an
additional 1,802,601 shares of common stock held by others. We have also agreed
to register for resale (1) any Series A preferred shares purchased by Samstock
pursuant to this offering or the standby purchase commitment, and (2) any shares
of common stock into which the Series A preferred shares purchased by Samstock
pursuant to this offering or the standby commitment are exercisable.
As part of a transaction concluded in March 1998, we issued warrants to
purchase an aggregate of 1,200,000 shares of common stock through March 2003,
one-third of which are exercisable at $6.00 per share, one-third of which are
exercisable at $7.00 per share and the last third of which are exercisable at
$8.00 per share. In connection with the acquisition of Dining A La Card, we
issued an option to purchase 400,000 shares of common stock through June 2002,
at an exercise price of $4.00 per share. Subject to receipt of stockholder
approval of the proxy proposals, we are obligated to issue warrants to purchase
an aggregate of 1,000,000 shares of our common stock to Samstock in
consideration of its obligations under the standby purchase agreement and the
provision by GAMI of the $10,000,000 term loan. We have registered, or have
agreed to register, for resale all of these shares if they are issued. The sale
of a substantial number of these shares at any time or over time could adversely
affect the market price of the common stock. We cannot predict the effect that
the availability and future sales of common stock could have on the market
price.
11
<PAGE>
LEGAL PROCEEDINGS
In December 1996, Transmedia terminated its license agreement with
Sports & Leisure Inc. In February 1997, Sports & Leisure brought an action
against us in the 11th Judicial Circuit, Dade County, Florida, alleging that we
improperly terminated the license and seeking significant money damages.
Transmedia has counterclaimed for breach of the agreement. This litigation has
been scheduled for trial in November 1999. We are not able to predict what its
ultimate outcome may be. An unfavorable, significant verdict could have a
material adverse effect on Transmedia and its financial position and results of
operations.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements." Any statement in
this prospectus, other than a statement of historical fact, is a forward-looking
statement. You can generally identify forward-looking statements by looking for
words such as "may," "will," "expect," "intend," "estimate," "anticipate,"
"believe" or "continue." Variations on those or similar words, or the negatives
of such words, also may indicate forward-looking statements.
Although Transmedia believes that the expectations reflected in this
prospectus are reasonable, we cannot assure you that our expectations will be
correct. We have included a discussion entitled "Risk Factors" in this
prospectus, disclosing important factors that could cause our actual results to
differ materially from our expectations. If in the future you hear or read any
forward-looking statements concerning Transmedia, you should refer back to these
Risk Factors.
The forward-looking statements in this prospectus are accurate only as
of its date. If Transmedia's expectations change, or if new events, conditions
or circumstances arise, we are not required to, and may not, update or revise
any forward-looking statement in this prospectus.
USE OF PROCEEDS
If all of the rights offered by this prospectus are exercised, we will
receive $10,000,000 in gross proceeds ($9,666,418 after deducting estimated
offering expenses). We are required to use all of the gross proceeds to repay
the GAMI loan. As of September 30, 1999, $10,000,000 in principal amount was
outstanding under this loan. The borrowings accrue interest at the prime rate
(as announced from time to time by The Chase Manhattan Bank in New York, New
York) plus 4% and mature on the earlier of the closing of this rights offering
and December 30, 1999. For a more detailed description of the GAMI loan, see
"Recent Developments" and "Related Party Transactions" in this prospectus.
12
<PAGE>
PRICE RANGE OF COMMON STOCK
The common stock is traded on the New York Stock Exchange under the
trading symbol TMN.
The following table sets forth, for the fiscal quarters indicated, the
high and low sales prices per share for the common stock, as reported by the
NYSE and the distributions declared. Our fiscal year ends on September 30.
<TABLE>
<CAPTION>
High Low Distribution
---- --- ------------
<S> <C> <C> <C>
Fiscal Year 1998
First Quarter........................................ $6.313 $3.813 $.02
Second Quarter....................................... 6.686 5.000 -
Third Quarter........................................ 8.313 5.438 -
Fourth Quarter....................................... 6.188 3.188 -
Fiscal Year 1999
First Quarter........................................ $4.625 $2.000 -
Second Quarter....................................... 4.625 2.375 -
Third Quarter........................................ 4.188 3.063 -
Fourth Quarter ...................................... 4.438 2.625 -
</TABLE>
Our credit agreements with Chase and GAMI prohibit us from paying any
cash dividends. In addition, we are required under our existing securitization
facility to maintain a minimum stockholder equity of $24,000,000. This
requirement may also inhibit our ability to pay dividends in the future. Any
future payment of dividends will depend upon our earnings and financial
requirements as well as general business conditions, among other things.
The closing price of the common stock on the NYSE on September 24, 1999
was $3.4375 per share. On September 24, 1999, Transmedia had approximately
13,352,709 shares of common stock outstanding, owned by approximately 410
holders of record.
DETERMINATION OF SUBSCRIPTION PRICE
The subscription price of the rights was determined by our board of
directors, and is not necessarily related to the assets, book value or net worth
of Transmedia or any other established criteria of value, and may not be
indicative of the fair value of the securities offered. In determining the
subscription price, the board of directors considered, among other things, the
historic and current market price of the common stock on the New York Stock
Exchange (approximately $3.44 per share at September 24, 1999), the book value
of the common stock (approximately $1.82 per share at June 30, 1999) as compared
to its market price over the past several months, Transmedia's earnings and
prospects, as well as Transmedia's need for capital.
DILUTION
Our net tangible book value on June 30, 1999 was $20,819,000 or $1.56
per share of common stock based on 13,352,709 shares of common stock
outstanding. Net tangible book value per share is equal to our total assets,
less intangible assets and total liabilities, divided by the number of shares of
common stock outstanding as of June 30, 1999.
After giving effect to the receipt of net proceeds from the sale of the
securities offered hereby (assuming (1) a public offering price of $2.41 per
Series A preferred share (representing 70% of the closing price of the common
stock on September 24, 1999), (2) full subscription of the rights, and (3) the
immediate conversion of the foregoing Series A preferred shares into common
shares), our pro forma net tangible book value at June 30, 1999 would have been
approximately $1.76 per share. Therefore, you will incur an immediate increase
in net tangible book value of
13
<PAGE>
approximately $0.20 per share of common stock. Dilution refers to the difference
between the offering price of a common share underlying the Series A preferred
shares offered hereby and the net tangible book value of a common share, after
giving effect to this rights offering, but giving no effect to the exercise of
warrants issuable upon the closing of this rights offering to Samstock. See
"Related Party Transactions".
The following table, which incorporates the foregoing assumptions,
illustrates this dilution. Unless all of the Series A preferred shares offered
are sold either in this offering or pursuant to the standby purchase agreement,
the offering will be withdrawn.
<TABLE>
<CAPTION>
Full Subscription
------------------------------
<S> <C>
Public offering price per common share underlying the Series A preferred shares
offered hereby at September 30, 1999(1)............................................... 2.41
Net tangible book value per common share at June 30, 1999............................. 1.56
Increase in net tangible book value per common share attributable to sale of
Series A preferred shares offered hereby.............................................. 0.20
Pro forma net tangible book value per common share after offering..................... 1.76
Dilution per common share to investor(2)(3)........................................... 0.65
</TABLE>
- -----------------
(1) Public offering price per common share is calculated as though the Series A
preferred shares are immediately converted into common stock.
(2) At June 30, 1999, 1,641,093 shares of common stock are issuable pursuant to
the Company's 1996 Long-Term Incentive Plan (the "Plan").
(3) The dilution amounts set forth above under "Full Subscription" assume
subscription to all shares of Series A preferred stock offered hereby.
The following table sets forth, as of the date of this Prospectus, the
number of shares of common stock purchased, the percentage of common stock
purchased, the total consideration paid (before expenses of this offering), the
percentage of total consideration paid and the average price per share paid, by
(1) our existing stockholders and (2) investors in this offering, in each case
assuming the maximum proceeds to Transmedia from the rights offering (i.e., full
subscription).
<TABLE>
<CAPTION>
Shares Purchased Average
----------------------------- Price per
Number Percentage Amount Percentage Share
------------ ------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C>
Existing Stockholders................. 410 100% 13,352,709 76% $1.84
Rights Offering Investors............. -- -- 4,149,378 24% $2.41
-------- --------- ------------ --------- --------
Total(1)..................... 410 100.0% 17,502,087 100.0% $1.98(2)
======== ========= ============ ========= ========
</TABLE>
(1) Excludes any conversion of Series A preferred shares into common stock.
(2) Assuming full subscription of the rights offering and immediate conversion
of the Series A preferred shares into common stock, the average price per
share paid by all stockholders would increase from $1.84 to $1.98 per
share.
14
<PAGE>
CAPITALIZATION
The following table sets forth our short-term debt and capitalization
as of June 30, 1999 (1) on an actual basis, and (2) on a pro forma basis to
reflect our receipt of the estimated proceeds from this rights offering and the
application of the proceeds of this rights offering as set forth above in Use of
Proceeds.
You should read the table below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
all financial statements and notes thereto included in our Annual Report on Form
10-K/A for the year ended September 30, 1998 incorporated by reference into this
prospectus.
<TABLE>
<CAPTION>
As of June 30, 1999
--------------------------------------
Actual As Adjusted
-------------- ------------------
(in thousands)
Short term debt:
<S> <C> <C>
Chase senior secured revolving loan........................... $29,000 $29,000
GAMI term loan................................................ 10,000 --
Current portion of long-term debt............................. -- --
----------- ------------
$39,000 $29,000
=========== ============
Long term debt:
Secured non-recourse notes payable............................ $33,000 $33,000
Other long-term liabilities................................... 2,041 2,041
Stockholders' equity:
Common stock, $0.02 par value; 20,000,000 shares
authorized; 70,000,000 shares authorized (pro forma);
13,352,709 shares issued and outstanding (actual and pro
forma as adjusted)1/.......................................... 268 268
------------ ------------
Preferred stock, $0.10 par value; 1,000,000 shares
authorized; 10,000,000 shares authorized (pro forma as
adjusted); no shares issued and outstanding (actual);
4,149,378 shares issued and outstanding (pro forma as
adjusted)..................................................... -- 10,000
Additional paid-in capital.................................... 23,521 23,521
Accumulated other comprehensive income........................ 382 382
Retained earnings............................................. 78 78
------------- ------------
Total stockholders' equity.................... 24,249 34,249
------------- ------------
Total capitalization............... $59,290 $69,290
============= ============
</TABLE>
- ---------------------
1/ Excludes an aggregate of 1,641,093 shares issuable upon exercise of
outstanding stock options and 2,200,000 shares issuable upon exercise of
outstanding warrants.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below are (1) selected consolidated financial data of
Transmedia as of the dates and for the periods indicated, (2) unaudited interim
consolidated financial data of Transmedia as of the date and for the period
indicated, (3) selected pro forma consolidated financial data of Transmedia as
of the dates and for the periods indicated, which give effect to the closing of
the acquisition of Dining A La Card and the receipt of financing in the
aggregate principal amount of $39,000,000 and the completion of this rights
offering as though such events had occurred at the beginning of such period, and
(4) selected pro forma balance sheet information as of September 30, 1998 and
June 30, 1999, which gives effect to the completion of this rights offering. The
financial information of Transmedia as of September 30, 1994, 1995, 1996, 1997
and 1998 and for each of the five years in the period ended September 30, 1998
has been derived from, and should be read in conjunction with, the audited
financial statements and accompanying notes included in Transmedia's Annual
Reports on Form 10-K for the years ended September 30, 1994, 1995 and 1998, and
Form 10K/A for the years ended September 30, 1996 and 1997. The financial
information derived from Transmedia's unaudited consolidated financial
statements for the nine months ended June 30, 1999 includes all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
financial position and results of operations as of the date and for the period
indicated. This data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and our financial
statements and notes thereto contained in the Annual Reports.
<TABLE>
<CAPTION>
Pro Forma
Nine Six
Pro Forma Months Months
Year Ended September 30, Year Ended Ended Ended
----------------------------------------------- September June 30, June 30,
1994 1995 1996 1997 1998 30, 1998 1999 1999
------- ------- ------- ------- ------ -------- ------- --------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Gross dining sales $62,012 $78,632 $90,076 $101,301 $95,549 $216,061 $70,854 $109,482
Operating revenues:
Net revenues from rights-to-receive...... 11,899 15,769 19,504 21,232 19,659 24,945 14,303 18,892
Membership and renewal fee income........ 2,685 4,081 6,646 7,251 7,321 10,823 5,905 5,600
Franchise fee income..................... 1,061 1,881 1,839 1,438 1,249 1,249 797 538
Other income............................. 281 423 497 1,023 1,912 1,929 1,199 783
------- ------- ------- -------- ------- -------- ------- --------
Total operating revenues................... 15,926 22,154 28,486 30,944 30,141 38,946 22,204 25,813
------- ------- ------- -------- ------- -------- ------- --------
Total operating expenses................... 10,709 15,809 23,729 30,246 37,606 60,872 26,700 28,766
------- ------- ------- -------- ------- -------- ------- --------
Operating income (loss).................... 5,217 6,345 4,757 698 (7,465) (21,926) (4,496) (2,954)
Income (loss) before taxes................. 6,974 6,879 4,107 (684) (10,436) (28,514) (5,289) (6,061)
Net income (loss).......................... $4,176 $4,196 $2,546 $(424) $(7,836) $(28,514) $(5,289) $(6,061)
Basic and diluted operating income (loss)
per share................................ $ 0.53 $ 0.64 0.46 0.07 (0.63) $ (1.80) $ (0.35) $ (0.23)
Basic and diluted net income (loss) per
share.................................... $ 0.42 $ 0.42 $ 0.25 $ (0.04) $ (0.67) $ (2.33) $ (0.41) $ (0.47)
<CAPTION>
Pro Forma Pro Forma
As of September 30, as of As of as of
----------------------------------------------- September June 30, June 30,
1994 1995 1996 1997 1998 30, 1998 1999 1999
------- ------- ------- ------ ------- -------- ------- --------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets............................... $28,477 $38,383 $54,514 $72,685 $74,425 $117,985 114,094 114,094
Long-term debt:
Recourse.......................... -- 2,000 15,000 -- -- 2,758 2,041 2,041
Non-recourse...................... -- -- -- 33,000 33,000 33,000 33,000 33,000
Stockholders' equity....................... 18,925 24,191 25,753 25,304 27,734 39,463 24,249 34,249
Cash dividends per common share............ $ 0.04 $ 0.04 $ 0.04 $ 0.02 $ 0.02 $ 0.02 -- --
Debt to total assets....................... 0% 5% 28% 45% 44% 30% 48% 31%
</TABLE>
16
<PAGE>
RECENT DEVELOPMENTS
Acquisition of Dining A La Card Program
On June 30, 1999, we concluded the acquisition from SignatureCard, a
subsidiary of Montgomery Ward & Co., Incorporated, of assets related to a
membership discount dining program SignatureCard operated under the Dining A La
Card trade name and service mark. While Transmedia cardmembers receive
distinctive Transmedia cards which they present to participating merchants,
members of the Dining A La Card program register one of their nationally known
credit cards with the program and use this registered credit card at restaurants
participating in the Dining A La Card program. The assets acquired included
various intellectual property rights and computer software, membership and
merchant data, rights-to-receive at various restaurants and the registered card
program. As consideration for the assets, we paid SignatureCard $35,000,000 in
cash at closing (representing the estimated amount of the cash funded by
SignatureCard for certain "qualified" rights-to-receive at merchants
participating in the Dining A La Card program), issued to SignatureCard 400,000
shares of our common stock and issued to SignatureCard a three-year option to
purchase an additional 400,000 shares of our common stock at a price of $4.00
per share. In addition, during the two-year period following the closing, we
have agreed to share with SignatureCard certain amounts received in excess of
the amount funded at closing in respect of "non-qualified" rights-to receive.
SignatureCard may, at any time between January 1, 2000 and June 30, 2002,
require us to repurchase all or some of the 400,000 shares of common stock we
issued at the closing at a price of $8.00 per share.
In connection with the acquisition of Dining A La Card, we entered into
a services collaboration agreement with SignatureCard. Under this agreement,
SignatureCard will continue to provide dining members from its airline frequent
flyer partner programs and other marketing programs. It will also share, for
12.5 years, certain profits we derive from SignatureCard-generated members as
well as a portion of the membership fee revenues generated from fee paying
members acquired in this transaction or subsequently through SignatureCard's
efforts.
To finance the acquisition, we obtained a $35,000,000 senior secured
revolving bridge loan facility from Chase (from which $29,000,000 was drawn down
at the closing of the Dining A La Card acquisition) and a $10,000,000 term loan
from GAMI.
The Chase Facility
The Chase facility permits us to borrow up to an aggregate principal
amount equal to the lesser of $35,000,000 and the amount available under a
borrowing base formula based on the amount of Dining A La Card receivables which
meet certain eligibility criteria (which was $35,000,000 at closing). The
facility is secured by liens on substantially all of our assets (including those
purchased in the acquisition), other than those subject to an existing
securitization facility, as well as by pledges of the stock of our three
principal subsidiaries: Transmedia Restaurant Company Inc., Transmedia Service
Company Inc., and TMNI International Incorporated. It is our intention to use
the remaining proceeds of the facility in connection with the ongoing Dining A
La Card business.
Amounts drawn down under the facility bear interest, at our election,
at either (i) 0.25% plus the greater of the Chase prime rate and 1.5% plus the
federal funds effective rate, or (ii) 1.25% plus one month LIBOR. The facility
expires on December 30, 1999 and we must repay all outstanding amounts by that
time. Interest is payable monthly in arrears. Any amounts overdue under the
facility bear interest at the applicable rate plus 2%. The agreement contains
customary events of default, as well as a cross default if we default on our
existing securitization facility or the GAMI loan or any other material
indebtedness. We intend to repay this bridge loan with the proceeds from a
securitized financing of the Dining A La Card rights-to-receive arranged through
Chase.
In connection with the Chase facility, we paid a $500,000 fee to Chase
upon the closing and are required to pay a monthly fee equal to 0.375% of the
average amount of undrawn funds under the facility.
17
<PAGE>
The GAMI Loan
The GAMI term loan in the amount of $10,000,000 is unsecured and
subordinated to the Chase facility. It obligates us as well as our three
principal subsidiaries as borrowers. Interest accrues on the principal amount
outstanding at the prime rate (as announced from time to time by Chase) plus 4%,
and is payable monthly in arrears. Overdue amounts bear interest at the prime
rate plus 8%.
The terms of this agreement require us to conduct this rights offering
and to use the gross proceeds to repay all outstanding amounts under this loan.
It matures on the closing of this rights offering or December 30, 1999, if
earlier. The failure of our stockholders to approve the proxy proposals and the
occurrence of an event of default under various agreements relating to the
rights offering (see "Related Party Transactions") or under the Chase facility
constitute defaults under this loan, among other customary default events. Upon
an event of default, various standstill covenants binding Samstock and its
affiliates would automatically terminate. In addition, Samstock would have the
right to designate additional directors to our board so that the total number of
Samstock designees on our board would constitute a majority, among other
remedies.
The terms of this agreement required us to pay to GAMI at the closing
of the loan a cash fee of $500,000, which is reimbursable to us upon (i) the
closing of this rights offering, (ii) the issuance to Samstock of warrants to
purchase 1,000,000 shares of our common stock and (iii) the repayment of the
GAMI loan. If the rights offering is not consummated and the warrants are not
issued, we are required to pay GAMI an additional $500,000 fee in cash.
Existing Securitization Facility Waiver
As of April 30, 1999, Transmedia's stockholder equity was less than the
$24,000,000 minimum required under its existing securitization facility. This
default has been waived through December 31, 1999. The waiver may terminate,
however, (1) after October 31, 1999, if this rights offering has not yet been
commenced or if we continue to fail to comply with the stockholder equity
requirements and, in each case, the rating of the notes under the securitization
facility is withdrawn or reduced, and (2) at any time, if the indebtedness under
the Chase or GAMI loans is accelerated or if we fail to maintain stockholder
equity of at least $20,000,000. We are depending on this rights offering to
provide us with the additional equity needed to bring us into compliance with
the terms of this facility. If we are unable to satisfy this requirement by
December 31, 1999, or if the waiver is terminated, an early amortization event
under the facility could be declared, and our financial condition and results of
operations would be materially negatively impacted. See "Risk Factors -- We may
have difficulty meeting our future cash needs."
18
<PAGE>
THE RIGHTS OFFERING
The Rights
We are distributing to the holders of our common stock, at no cost to
the holders, non-transferable rights to purchase our Series A preferred shares.
For a description of the Series A preferred shares, see "Description of Capital
Stock--Preferred Stock." If you owned shares of our common stock as of the close
of business on October 6, 1999, the record date, we will give you the right to
subscribe for one Series A preferred share, at a subscription price of $2.41 per
share (the "Subscription Price"), for each 3.218 whole shares of common stock
you owned. You will not receive any fractional rights or cash in lieu of
fractional rights during the rights offering, but instead we will round your
number of rights up or down to the nearest whole number. No public market for
the rights will exist and the rights may not be sold, assigned or otherwise
transferred. See "--Nontransferability of Rights."
If you wish to exercise your rights, you must do so before 5:00 p.m.,
Eastern Standard Time, on October 22, 1999. After that time, the rights will
expire and will no longer be exercisable. See "--Expiration Time."
Basic Subscription Privilege
Each right will entitle you to receive, upon payment of $2.41 to
Transmedia, one Series A preferred share. Transmedia will send you certificates
representing the shares that you purchase pursuant to your basic subscription
privilege as soon as practicable after October 22, 1999, whether you exercise
your rights immediately prior to that date or earlier. If you hold your common
stock through Depository Trust Company, or arrange for delivery and payment
through DTC, the appropriate account will be credited.
Oversubscription Privilege
Each right also gives you an "oversubscription privilege" to purchase
additional Series A preferred shares that are not purchased by other
stockholders. You are entitled to exercise your oversubscription privilege only
if you exercise your basic subscription privilege in full.
If you wish to exercise your oversubscription privilege, you should
indicate the number of additional shares that you would like to purchase in the
space provided on your subscription certificate. When you send in your
subscription certificate, you must also send the full purchase price for the
number of additional shares that you have requested to purchase (in addition to
the payment due for shares purchased through your basic subscription privilege).
If the number of shares remaining after the exercise of all basic
subscription privileges is not sufficient to satisfy all oversubscription
privileges, you will be allocated shares pro rata (subject to elimination of
fractional shares), in proportion to the number of shares you purchased through
your basic subscription privilege.
As soon as practicable after October 22, 1999, the subscription agent
will determine the number of Series A preferred shares that you may purchase
pursuant to the oversubscription privilege. We will send you certificates
representing these shares as soon as practicable after October 22, 1999. If you
request and pay for more shares than are allocated to you, we will refund that
overpayment, without interest.
In connection with the exercise of the oversubscription privilege, banks,
brokers and other nominee holders of rights who act on behalf of beneficial
owners will be required to certify to the subscription agent and Transmedia as
to the aggregate number of rights that have been exercised and the number of
Series A preferred shares that are being requested through the oversubscription
privilege, by each beneficial owner on whose behalf such nominee holder is
acting.
Standby Commitment
Pursuant to a standby purchase agreement, approved by a majority of the
disinterested directors of our board of directors, Samstock, a principal
stockholder, has agreed to act as a standby purchaser to ensure the sale, at the
subscription price, of all of the Series A preferred shares we are offering
hereby, the gross proceeds of which would be sufficient to repay the principal
outstanding amount under the GAMI loan. See "Recent Developments." If Samstock
19
<PAGE>
purchases under its standby commitment more than 25% of the total number of
Series A preferred shares offered to our other stockholders in this rights
offering (other than pursuant to its basic subscription privilege and its
obligation to purchase shares not subscribed for by EGI-Transmedia Investors,
L.L.C. or its members pursuant to its or their basic subscription privileges),
it will have the right to designate an additional director to our board and thus
increase the size of our board. As a compensation for Samstock's standby
purchase commitment and for the $10,000,000 loan from GAMI, Transmedia will
issue to Samstock warrants to purchase 1,000,000 shares of common stock,
exercisable over a five-year period at an exercise price equal to the average of
the closing price of the common stock during the 20 consecutive trading days
preceding the closing of this rights offering. See "Related Party Transactions."
Subscription Price
The subscription price for one Series A preferred share, which may be
purchased upon exercise of one right, is $2.41. Series A preferred shares
purchased through the oversubscription privilege or though the standby
commitment will have the same subscription price as shares purchased under the
basic subscription privilege.
Expiration Time
The rights will expire at 5:00 p.m., Eastern Standard Time, on October
22, 1999, unless Transmedia, in its discretion, extends the rights offering for
up to 10 days. If you do not exercise your basic subscription privilege and
oversubscription privilege prior to that time, the rights will be null and void.
Transmedia will not be required to issue Series A preferred shares to you if the
subscription agent receives your subscription certificate or your payment after
that time, regardless of when you sent the subscription certificate and payment,
unless you send the documents in compliance with the guaranteed delivery
procedures described below.
Our Withdrawal Right
We reserve the right to withdraw the rights offering at any time before
or at the time it is due to expire and for any reason (including, without
limitation, the failure by stockholders to approve the increase in our
authorized share capital or certain other matters, or a change in the market
price of the common stock). We cannot assure you that the condition to this
offering will be satisfied or that we will not withdraw this offering for other
reasons. If we withdraw the offering, the GAMI loan agreement and the Chase
bridge facility would be in default and, if either those defaults results in an
acceleration of the indebtedness due under the GAMI or Chase loan, the waiver
under our existing securitization would terminate. If Transmedia withdraws the
offering, all funds received from holders will be refunded promptly without
interest or penalty.
Nontransferability of Rights
The rights may not be transferred, except by operation of law in the
event of death or dissolution of their holder.
Determination of Subscription Price
The subscription price of the rights was determined by our board of
directors, and is not necessarily related to the assets, book value or net worth
of Transmedia or any other established criteria of value, and may not be
indicative of the fair value of the securities offered. In determining the
subscription price, the board of directors considered, among other things, the
historic and current market price of the common stock on the New York Stock
Exchange (approximately $3.44 per share at September 24, 1999), the book value
of the common stock (approximately $1.82 per share at June 30, 1999) as compared
to its market price over the past several months, Transmedia's earnings and
prospects, as well as Transmedia's need for capital.
20
<PAGE>
Exercise of Rights
Method of Exercise
You may exercise your rights by delivering to the subscription agent,
American Stock Transfer & Trust Company on or prior to October 22, 1999:
(1) the properly completed and signed subscription certificate
accompanying this prospectus;
(2) any required signature guarantees; and
(3) payment in full of the subscription price for each Series A
preferred share to be purchased through the basic subscription
privilege and the oversubscription privilege.
You should deliver your subscription certificate and payment to the
address set forth below under "--Subscription Agent."
Method of Payment
Payment for the shares must be made (1) by check or bank draft (cashier's
check) drawn upon a United States bank or a postal, telegraphic or express money
order payable to "American Stock Transfer & Trust Company", as subscription
agent or (2) by wire transfer of funds to an account maintained by the
subscription agent for the purpose of accepting subscriptions at the Chase
Manhattan Bank, Account No. 323-062547 (Transmedia Network Inc.); ABA No.
021000021. The subscription price will be considered to have been received by
the subscription agent only upon:
(1) clearance of any uncertified check;
(2) receipt by the rights agent of any certified check or bank
draft upon a United States bank or of any postal, telegraphic
or express money order; or
(3) receipt of collected funds in the subscription agent's account
designated above.
Note that funds paid by uncertified personal check may take at least five
business days to clear. Accordingly, if you wish to pay by means of an
uncertified personal check, Transmedia urges you to make payment sufficiently in
advance of October 22, 1999 to ensure that the payment is received and clears
before that date. Transmedia also urges you to consider payment by means of
certified or cashier's check or money order.
Guaranteed Delivery Procedures
If you want to exercise your rights, but time will not permit your
subscription certificate to reach the subscription agent on or prior to 5:00
p.m., on October 22, 1999, you may exercise your rights if you satisfy the
following Guaranteed Delivery Procedures:
(1) You send, and the subscription agent receives, payment in full
for each Series A preferred share being purchased through the
basic subscription right and the oversubscription privilege,
on or prior to October 22, 1999;
(2) You send, and the subscription agent receives, or prior to
October 22, a Notice of Guaranteed Delivery, substantially in
the form provided with the attached instructions, from a
member firm of a registered national securities exchange or a
member of the National Association of Securities Dealers,
inc., or a commercial bank or trust company having an office
or correspondent in the United States. The Notice of
Guaranteed Delivery must state your name, the number of rights
that you hold, the number of Series A preferred shares that
you wish to purchase pursuant to the basic subscription right
and the number of shares, if any, you wish to purchase
pursuant to the oversubscription privilege. The Notice of
Guaranteed Delivery must guarantee the delivery of your
subscription
21
<PAGE>
certificate to the subscription agent within three New York
Stock Exchange trading days following the date of the Notice
of Guaranteed Delivery; and
(3) You send, and the subscription agent receives, your properly
completed and duly executed subscription certificate,
including any required signature guarantees, within three NYSE
trading days following the date of your Notice of Guaranteed
Delivery. The Notice of Guaranteed Delivery may be delivered
to the subscription agent in the same manner as your
subscription certificate at the addresses set forth below, or
may be transmitted to the subscription agent by facsimile
transmission, to facsimile number (718) 234-5001. You can
obtain additional copies of the form of Notice of Guaranteed
Delivery by requesting it from the subscription agent at the
address set forth below under "--Subscription Agent."
Signature Guarantee
Signatures on the subscription certificate must be guaranteed by an
Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the Exchange Act,
subject to the standards and procedures adopted by the subscription agent.
Eligible Guarantor Institutions include banks, brokers, dealers, credit unions,
national securities exchanges and savings associations.
Signatures on the subscription certificate do not need to be guaranteed
if:
(1) the subscription certificate provides that the Series A
preferred shares to be purchased are to be delivered directly
to the record owner of such rights; or
(2) the subscription certificate is submitted for the account of a
member firm of a registered national securities exchange or a
member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
Shares Held for Others
If you hold shares of common stock for the account of others, such as a
broker, a trustee or a depository for securities, you should notify the
respective beneficial owners of such shares as soon as possible to obtain
instructions with respect to the rights beneficially owned by them.
If you are a beneficial owner of common stock held by a holder of record,
such as a broker, trustee or a depository for securities, you should contact the
holder and ask him to effect transactions in accordance with your instructions.
Ambiguities in Exercise of the Rights
If you do not specify the number of rights being exercised on your
subscription certificate, or if your payment is not sufficient to pay the total
purchase price for all of the shares that you indicated you wished to purchase,
you will be deemed to have exercised the maximum number of rights that could be
exercised for the amount of the payment that the subscription agent receives
from you.
If your payment exceeds the total purchase price for all of the rights
shown on your subscription certificate, your payment will be applied until
depleted, to subscribe for Series A preferred shares in the following order:
(1) to subscribe for the number of Series A preferred shares, if
any, that you indicated on the subscription certificate(s)
that you wished to purchase through your basic subscription
privilege;
(2) to subscribe for Series A preferred shares until your basic
subscription privilege has been fully exercised;
(3) to subscribe for additional Series A preferred shares pursuant
to the oversubscription privilege (subject to any applicable
proration).
22
<PAGE>
Any excess payment remaining after the foregoing allocation will be
returned to you as soon as practicable by mail, without interest or deductions.
Important
Please carefully read the instructions accompanying the subscription
certificate and follow those instructions in detail. Do not send subscription
certificates to Transmedia.
You are responsible for choosing the payment and delivery method for
your subscription certificate, and you bear the risks associated with such
delivery. If you choose to deliver your subscription certificate and payment by
mail, Transmedia recommends that you use registered mail, properly insured, with
return receipt requested. Transmedia also recommends that you allow a sufficient
number of days to ensure delivery to the subscription agent and clearance of
payment prior to October 22, 1999. Because uncertified personal checks may take
at least five business days to clear, the company strongly urges you to pay, or
arrange for payment, by means of certified or cashier's check or money order.
Validity of Subscriptions
All questions concerning the timeliness, validity, form and eligibility
of any exercise of rights will be determined by Transmedia, which determination
will be final and binding. Transmedia, in its sole discretion, may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
right by reason of any defect or irregularity in such exercise. Subscriptions
will not be deemed to have been received or accepted until all irregularities
have been waived or cured within such time as Transmedia determines in its sole
discretion. Neither Transmedia nor the subscription agent will be under any duty
to give notification of any defect or irregularity in connection with the
submission or subscription certificates or incur any liability for failure to
give such notification.
No Revocation
After you have exercised your basic subscription privilege or
oversubscription privilege, you may not revoke that exercise. You should not
exercise your rights unless you are certain that you wish to purchase Series A
preferred shares.
Listing
We have applied to list the Series A preferred shares offered hereby on
the NYSE under the symbol "TMNPrA." If our application is not approved, we
intend to make arrangements to have the Series A preferred shares traded in the
over-the-counter market. The rights are non-transferable and will not be listed
on any national securities exchange or quotation system.
Fees and Expenses
Transmedia will pay all fees charged by the subscription agent. You are
responsible for paying any other commissions, fees, taxes or other expenses
incurred in connection with the exercise of the rights. Neither Transmedia nor
the subscription agent will pay such expenses.
Rights of Subscribers
You will have no rights as a stockholder of Transmedia with respect to
the Series A Preferred shares you subscribe for or the shares of common stock
into which those shares are convertible until certificates for those shares are
issued to you. You will have no right to revoke your subscription after you
deliver to the subscription agent a completed subscription certificate and
payment.
23
<PAGE>
Subscription Agent
Transmedia has appointed American Stock Transfer & Trust Company as
subscription agent for the rights offering. The subscription agent's address for
packages sent by mail or overnight delivery is: American Stock Transfer & Trust
Company, 40 Wall Street, New York, NY 10005, Attn: Reorganization Department.
The Subscription Agent's telephone number is (800) 937-5449, and its
facsimile number is (718) 234-5001. The Subscription Agent's telephone number to
confirm receipt of facsimile transmissions is (718) 921-8200.
You should deliver your subscription certificate, payment of the
subscription price and Notice of Guaranteed Delivery (if any) to the
subscription agent.
Transmedia will pay the fees and expenses of the subscription agent,
which we estimate will total $15,000. We have also agreed to indemnify the
subscription agent from any liability which it may incur in connection with the
rights offering.
No Board Recommendation
Your decision whether to exercise your rights and invest in the Series A
preferred shares must be made by you, based upon your own evaluation of your
best interests. Accordingly, the board of directors does not make any
recommendation to any rights holder regarding the exercise of his, her or its
rights.
24
<PAGE>
RELATED PARTY TRANSACTIONS
The GAMI Loan
On June 30, 1999, we, together with our three principal subsidiaries as
borrowers, entered into a term loan with GAMI, an affiliate of Samstock, our
largest stockholder, providing us with interim debt financing in a total
aggregate amount of $10,000,000. The term loan is unsecured and is subordinated
to the Chase revolving credit facility. See "Recent Developments." To finance
our acquisition of Dining A La Card, we borrowed the entire principal amount
available under this loan on June 30, 1999, the net proceeds of which, after
payment of the fees discussed below and a transaction advisory fee to EGI, were
approximately $9,100,000. Repayments of this loan are not subject to
reborrowing. The loan bears interest at the prime rate (as announced from time
to time by The Chase Manhattan Bank) plus 4% and is payable monthly in arrears.
The loan matures on December 30, 1999 or the earlier closing of this rights
offering.
The terms of the GAMI loan require us to conduct this rights offering
(and to use the gross proceeds to repay the loan) and to enter into the standby
purchase agreement and a second amended and restated investment agreement with
Samstock and certain other persons. Any default under these agreements, the
Chase facility or the waiver letter issued under our securitization facility,
and any failure by stockholders to approve the proxy proposals being presented
to them would each trigger a default under the GAMI loan, among other customary
default events. Upon a default event, in addition to the remedies available
under the loan agreement, the various standstill covenants binding Samstock and
its affiliates under the investment agreement (which currently prohibit Samstock
and its affiliates, subject to certain limitations, from acquiring additional
securities of Transmedia, soliciting proxies in opposition to the recommendation
of a majority of our disinterested directors, forming "groups" for the purpose
of acquiring, voting or disposing of our voting securities, or soliciting
bidders for Transmedia, among other things, until March 2003) would
automatically terminate, and Samstock would have the right to designate
additional directors to our board so that the total number of Samstock designees
on our board would constitute a majority.
As consideration for GAMI providing the loan and Samstock acting as a
standby purchaser under the standby purchase agreement, we paid GAMI a
reimbursable fee of $500,000. Upon receipt of stockholder approval of the proxy
proposals and the closing of this rights offering, (1) Transmedia will issue to
Samstock warrants to purchase 1,000,000 shares of our common stock, and (2) GAMI
will reimburse to us the $500,000 payment we previously paid to GAMI (less
outstanding principal and interest amounts under the loan). The warrants are
exercisable at any time, from time to time, in whole or in part for five years
from the closing of this rights offering at a price per share equal to the
average of the closing prices of our common stock on the New York Stock Exchange
during the 20 trading days preceding such closing. If the proxy proposals are
not approved by our stockholders, or this rights offering is withdrawn or
canceled for any other reason, we will not be reimbursed and, in addition, will
be required to pay GAMI an additional $500,000 in fees under the loan agreement
with GAMI.
We are required to register for resale all shares of common stock
issuable to Samstock upon exercise of the warrants in accordance with the terms
of the second amended and restated investment agreement. See "Description of
Capital Stock--Warrants."
The Standby Purchase Agreement
Samstock has entered into a standby purchase agreement with us, pursuant
to which it has agreed to act as a standby purchaser of the Series A preferred
shares to ensure that $10,000,000 in gross proceeds are raised. We are required
to use all the proceeds of this offering to repay the loan described above. See
"Use of Proceeds." Under the agreement, Samstock is obligated to purchase all
Series A preferred shares not subscribed for by other stockholders in this
rights offering (including pursuant to any oversubscription privilege).
The obligation of Samstock to effect these purchases is subject to
various conditions, including (1) the receipt of stockholder approval of the
increase in our authorized share capital and certain other matters being
presented to them, and (2) the expiration or termination of any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
among others. We cannot assure you that all of the conditions will be satisfied
or waived.
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The purchase price of Series A preferred shares to be paid by Samstock
pursuant to the standby purchase agreement will be the subscription price
offered to you. As of the date of this prospectus, we cannot determine the exact
number of Series A preferred shares, if any, that will be required to be
purchased under the standby commitment.
If Samstock purchases more than 25% of the total number of Series A
preferred shares offered to our other stockholders in this rights offering
(other than pursuant to its basic subscription privilege or its obligation to
purchase shares not subscribed for by EGI-Transmedia Investors, L.L.C. or its
members pursuant to its or their basic subscription privileges), it will have
the right to designate an additional director to our board and the size of our
board would be increased by one. Seven directors currently comprise our board of
directors, two of whom have been designated by Samstock.
As compensation for Samstock's commitment under the standby purchase
agreement and for GAMI's commitment under the loan described above we have
agreed to issue to Samstock warrants to purchase a total of 1,000,000 shares of
common stock. See "--GAMI Loan."
Samstock has advised us that it will be acquiring the Series A Preferred
shares pursuant to the stand by purchase agreement for investment purposes and
not with a view to their sale or distribution. We have granted to Samstock
certain rights to require us to register the Series A preferred shares (and the
shares of common stock into which they are convertible) purchased by it in this
offering or under the standby purchase agreement. See "Description of Capital
Stock--Registration Rights." Transmedia and Samstock have agreed to indemnify
one another for certain liabilities under the securities laws.
Advisory Services
In connection with our acquisition of Dining A La Card, we paid a fee for
transaction advisory services to EGI of $386,000.
Approval by Disinterested Directors
The disinterested directors of our board have approved each of the
transactions described above, subject, in the case of the warrant issuance, to
receipt of stockholder approval of the same, by a vote of three to one.
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DESCRIPTION OF CAPITAL STOCK
Immediately following the completion of this rights offering, assuming
that the conditions to this offering are satisfied (including the approval by
stockholders of the proxy proposals) and upon filing of our certificate of
amendment to our certificate of incorporation, the authorized capital stock of
Transmedia will consist of 70,000,000 shares of common stock, par value $.02 per
share, and 10,000,000 shares of preferred stock, par value $.10 per share.
As of September 24, 1999, we had 13,352,709 shares of common stock
outstanding held by approximately 410 stockholders of record. Upon completion of
this offering, assuming the maximum number of rights are exercised, there will
be outstanding (1) 13,352,709 shares of our common stock (17,502,087 shares if
the Series A preferred shares are fully converted into common stock), (2)
4,149,378 Series A preferred shares (or no Series A preferred shares, if they
are all immediately converted into common stock), (3) options to purchase
1,641,093 shares of common stock, and (4) warrants to purchase 2,200,000 shares
of common stock.
Common Stock
Holders of our common stock are entitled to one vote per share held of
record on matters to be voted upon by the stockholders. Holders of common stock
are entitled to receive dividends out of funds legally available for
distribution when and if declared by our board of directors and to share ratably
in the assets of Transmedia legally available for distribution to stockholders
in the event of liquidation, dissolution or winding-up of Transmedia, subject to
any preferences that may be applicable to any shares of our preferred stock, par
value $.10 per share, then outstanding. Holders of common stock have no
subscription, redemption or conversion rights and, under Delaware law, no
preemptive rights to acquire unissued shares, treasury shares or securities
convertible into such shares. All outstanding shares of common stock are, and
all shares of common stock to be issued in the future (assuming the issuance of
such shares will have been duly authorized by Transmedia and issued against
receipt of the consideration approved by Transmedia, which will be no less than
the par value thereof) will be, duly authorized, validly issued, fully paid and
non-assessable.
Preferred Stock
The board of directors has the authority, within the limitations and
restrictions stated in the certificate of incorporation, to provide by
resolution for the issuance of shares of preferred stock, in one or more classes
or series, and to fix the rights, preferences, privileges and restrictions
thereof, including the powers, designations, preferences and relative,
participating, optional or other special rights, qualifications, limitations or
restrictions thereof. The number of authorized shares of preferred stock may be
increased or decreased by the affirmative vote of the holders of a majority of
the outstanding common stock, without a vote of the holders of the preferred
stock, or any series thereof, unless a vote of such holders is required pursuant
to the resolutions establishing the series of preferred stock. The issuance of
preferred stock could have the effect of decreasing the market price of the
common stock and could adversely affect the voting and other rights of the
holders of common stock. See "Risk Factors--If you do not exercise all of your
rights, your ownership interest in Transmedia will be diluted" and
"--Transmedia's board of directors may issue additional shares of preferred
stock without stockholder approval."
Series A Preferred Shares
The shares designated as Series A preferred shares will be senior
convertible redeemable preferred stock.
Conversion. Each whole share of Series A preferred stock is convertible
into common stock at any time at the option of the holder and, at any time after
the third anniversary of the closing of this offering (upon satisfaction of
certain conditions), at our option, at a conversion price of $2.41 subject to
adjustment on customary terms to avoid dilution in the event of a merger, stock
split, recapitalization or other similar events or an issuance of common stock
below the conversion price then in effect. We will have the right to effect a
conversion if the closing price of the common stock at any time after such third
anniversary exceeds $4.82, plus accrued and unpaid current dividends, additional
dividends and deferred dividends, for thirty consecutive days, provided that we
effect such conversion within 90 days thereafter. We will also have the right to
require conversion if we complete an underwritten offering of our equity
securities which results in gross proceeds to Transmedia or selling stockholders
of $20,000,000 and either the price to public of the securities sold or the
average of the high and low sales price of our common stock on the date of the
closing of the public offering is not less than the Series A conversion price
then in effect. Holders of a majority of the outstanding Series A
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preferred shares also will have the right to require us to convert all
outstanding Series A preferred shares at any time following the closing of this
offering. The number of shares of common stock issuable upon any conversion will
be determined by dividing the sum of $2.41, plus accrued but unpaid current
dividends, additional dividends and deferred dividends by the Series A
conversion price then in effect.
Dividends. As a holder of the Series A preferred shares you will be
entitled to receive, when, as and if declared by the board of directors and to
the extent of funds legally available for the payment of dividends, dividends at
the rate of $0.29 per share per annum, at least $0.145 of which is payable in
quarterly installments in arrears on the first business day of January, April,
July and October ("current dividends"). Annual dividends in the amount of $0.145
per share shall not be payable currently but shall be deferred, accrue and be
payable upon a conversion or redemption of the Series A preferred shares or
liquidation, dissolution or winding up of Transmedia ("deferred dividends"). See
"--Subordination" below. We may choose to pay any or all deferred dividends
currently. Dividends will accrue from and including the issue date to and
including the date on which the preferred stock is redeemed or converted or on
which the liquidation preference is paid thereon. To the extent not paid,
dividends will be cumulative. The Series A preferred shares also will be
entitled to receive cash dividends on an as-converted basis equal to the common
stock, if dividends are paid on common stock.
If we default in our obligation to pay any portion of current dividends
when due (such portion, a "past due current dividend"), the holders will be
entitled to receive, when, as and if declared by the board of directors and to
the extent of funds legally available for the payment of dividends, an
additional dividend per share ("additional dividends") at an annual rate equal
to the per share amount of the past due current dividend, multiplied by the
prime rate of interest (as announced by The Chase Manhattan Bank) plus 6% for
the first 90 days of such default, increasing by an additional 1/2% at the
beginning of each subsequent 90 day period up to a maximum rate equal to the
prime rate plus 7-1/2%. All additional dividends will be cumulative from the
dividend payment date on which the default giving rise to a past due current
dividend had occurred.
Voting. Holders of the Series A preferred shares will vote together with
the holders of the common stock on all matters which are submitted to a vote of
the stockholders on the basis of one vote for each share of Series A preferred
stock held of record by such holders. In addition, if and whenever current
dividends payable on shares of Series A preferred stock are in arrears and
unpaid in an aggregate amount equal to or exceeding the amount of current
dividends due and payable thereon for six (6) quarterly dividend periods
(consecutive or otherwise), then the number of directors constituting the board
of directors will be increased by two, and the Series A preferred shares, voting
as a class, will have the right to elect two directors to fill the newly-created
directorships. The right to elect directors will remain in effect until all
cumulative current dividends (and any additional dividends with respect to those
current dividends) have been paid in full.
Subordination. Upon a liquidation, dissolution or winding up of
Transmedia, the holders of the Series A preferred shares would be entitled to
receive, in cash, a sum per share equal to $2.41 plus all accrued but unpaid
current dividends, additional dividends and deferred dividends thereon, before
any amounts are paid to holders of common stock. If amounts available for
distribution to stockholders are insufficient to permit payment to all holders
of Series A preferred shares of this preferential amount, then our entire funds
available to holders of Series A preferred shares will be distributed ratably
among the holders in proportion to the number of shares owned. Upon liquidation
(other than a "deemed liquidation event" described below), after payment of the
amount described above, any additional amounts available for distribution will
be distributed among the holders of the Series A preferred shares and common
stock pro rata on an as-converted basis.
If we consolidate with or merge into another entity, if we sell or
transfer all or substantially all of our assets, or if a majority of our
outstanding stock is sold, resulting in stockholders immediately prior to the
sale owning less than 50% of our voting securities, we will treat such event as
a liquidation, dissolution or winding up (a "deemed liquidation event"), unless
the transaction is approved by the holders of majority of the then outstanding
Series A preferred shares. From and after the date of a deemed liquidation, all
rights of the holders of Series A preferred shares, as such, will cease and
terminate, and each Series A preferred share shall automatically be canceled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange for the share other than the right to receive payment of
the preferential amount described above.
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Redemption. At any time after the fifth anniversary of the closing of
this rights offering, Transmedia may elect to redeem all of the Series A
preferred shares then outstanding at a redemption price per share equal to $2.41
plus all accrued but unpaid current dividends, additional dividends and deferred
dividends thereon (the "redemption price"). Transmedia, however, may choose to
effect the redemption in not less than one-third increments ratably during the
fifth, sixth and seventh years following the closing of this rights offering. In
the event that we do not have sufficient funds legally available to redeem the
total number of shares to be redeemed, we will use those funds which are legally
available to redeem the maximum number of shares, selected by lot or by another
method approved by the Board of Directors.
Options
As of September 24, 1999 (1) options to purchase a total of 1,641,093
shares of common stock were outstanding, and (2) up to 63,716 additional shares
of common stock may be subject to options granted in the future under
Transmedia's 1996 Long-Term Incentive Plan.
Warrants
As of September 24, 1999, we had outstanding warrants for the purchase of
an aggregate of 1,200,000 shares of common stock, exercisable at any time until
March 23, 2003. One-third of the warrants are exercisable at $6.00 per share,
one-third of the warrants are exercisable at $7.00 per share, and one-third of
the warrants are exercisable at $8.00 per share. Of this number, warrants to
purchase 905,049 shares of common stock are held by affiliates of Samstock.
Subject to receipt of stockholder approval, Transmedia is obligated to issue to
Samstock, upon completion of this offering, warrants to purchase 1,000,000
shares of common stock in consideration of a $10,000,000 loan to us by an
affiliate and its standby commitment. All of the aforementioned warrants contain
or will contain restrictions on transfer and customary anti-dilution provisions
for stock splits or other recapitalization.
Registration Rights
Upon the completion of this rights offering, and the issuance to
Samstock of warrants to purchase an aggregate of 1,000,000 shares of common
stock, the holders of an aggregate of at least 6,327,191 shares of common stock
or securities exercisable for common stock (up to a maximum of 10,016,827 shares
of common stock or securities exercisable for common stock) will be entitled to
certain registration rights. These rights are provided under the terms of a
second amended and restated investment agreement among Transmedia, Samstock and
EGI-Transmedia Investors, L.L.C. The agreement provides for rights to require
Transmedia to file a shelf registration statement with respect to all
registrable securities and to keep such registration statement effective until
all registrable securities are sold or disposed of under the registration
statement or to unaffiliated third parties. In April 1998, Transmedia filed a
shelf registration statement covering 4,920,509 of these shares. Transmedia is
obligated to file another shelf registration statement covering the Series A
preferred shares purchased by Samstock pursuant to the standby purchase
agreement and an indeterminate number of shares of common stock into which the
preferred shares may be exercisable from time to time as well as 1,000,000
shares of common stock underlying the warrant in accordance with the second
amended investment agreement within 90 days following the completion of this
rights offering. Registration of shares of common stock pursuant to the rights
granted in these agreements will result in such shares becoming freely tradeable
without restriction under the Securities Act of 1933. All registration expenses
incurred in connection with the above registrations will be borne by Transmedia.
Delaware Anti-takeover Law and Certain Charter Provisions
Transmedia is subject to Section 203 of the Delaware General Corporation
Law. In general, Section 203 prevents certain "business combinations" between a
Delaware corporation, whose stock generally is publicly traded or held of record
by more than 2,000 stockholders, and an "interested stockholder" (defined
generally as a person owning 15% or more of a corporation's outstanding voting
stock) for three years following the date such person became an interested
stockholder unless:
o the corporation has elected in its certificate of
incorporation or bylaws not to be governed by the Delaware
anti-takeover law (we have not made such an election);
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o the business combination was approved by the board of the
corporation before the other party to the business combination
became an interested stockholder;
o upon consummation of the transaction that made it an
interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding
at the commencement of the transaction (excluding voting stock
owned by directors who are also officers or held in certain
employee stock ownership plans); or
o following the transaction that made it an interested
stockholder, the business combination is approved by the board
of the corporation and ratified at a meeting of stockholders
by at least two-thirds of the voting stock which the
interested stockholder did not own.
The three-year prohibition does not apply to certain business
combinations proposed by an interested stockholder following the announcement or
notification of certain extraordinary transactions involving the corporation and
a person who had not been an interested stockholder during the previous three
years or who became an interested stockholder with the approval of a majority of
the corporation's directors. The term "business combination" is defined
generally to include mergers or consolidations between a Delaware corporation
and an interested stockholder, transactions with an interested stockholder
involving the assets or stock of the corporation or its majority-owned
subsidiaries and transactions which increase an interested stockholder's
percentage ownership of stock. Section 203 could have the effect of delaying,
deferring or preventing a change in control of Transmedia.
Additionally, provisions of our certificate of incorporation may have an
anti-takeover effect. They may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by you, our stockholders. The following summarizes these
provisions
Supermajority Voting Provisions. Our certificate of incorporation
requires the affirmative vote of at least 80% of the voting power of the
corporation entitled to vote generally in the election of directors to approve
certain business combinations with a holder of 10% or greater of the voting
power of Transmedia or certain affiliates of any such holder, unless the
transaction is approved by a majority of disinterested directors and certain
price and procedural requirements are met.
Authorized But Unissued Shares. The authorized but unissued shares of our
common stock and preferred stock are available for future issuance without
stockholder approval. We may use these shares for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. This could make it more
difficult or discourage an attempt to obtain control of us by means of a proxy
contest, tender offer, merger or otherwise.
Limitation of Liability and Indemnification
The certificate of incorporation provides that Transmedia's directors
shall not be personally liable to Transmedia or its stockholders for monetary
damages for any breach of fiduciary duty as directors of Transmedia, except to
the extent prohibited by the Delaware General Corporation Law (the "DGCL").
Section 145 of the DGCL enables a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising our of
their status as directors and officers. This provision, however, does not
eliminate or limit the liability of a director:
o for any breach of the director's duty of loyalty to the
corporation or its stockholders;
o for any acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;
o for payments of dividends or approval of stock repurchases or
redemptions that are prohibited by the DGCL; or
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o for any transaction from which the director derived an
improper personal benefit.
Transmedia's certificate of incorporation provides that it may fully
indemnify any person who was or is a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director or officer of Transmedia or was serving at the request of
Transmedia as a director or officer of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan, whether the basis of such proceeding is alleged action in
an official capacity as a director or officer or in any other capacity while
serving as a director or officer against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by that person
in connection therewith.
Transfer Agent
American Stock Transfer & Trust Company, New York, New York is the
transfer agent and registrar for our common stock, and will also serve as
subscription agent in connection with the rights offering.
Listing
The common stock is listed on the NYSE under the symbol "TMN." We have
applied to list the Series A preferred shares on the NYSE under the symbol
"TMNPrA." The rights are non-transferable and will not be listed on any national
securities exchange or quotation system.
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PLAN OF DISTRIBUTION
The Series A preferred shares offered in this rights offering are being
offered by Transmedia directly to holders of its common stock.
Transmedia will pay the fees and expenses of American Stock Transfer &
Trust Company, as subscription agent, and also has agreed to indemnify the
subscription agent from any liability which it may incur in connection with the
rights offering, including liabilities under the Securities Act.
On or about October 7, 1999, we will distribute the rights and copies of
this prospectus to individuals who owned shares of common stock on October 6,
1999. If you wish to exercise your rights and purchase Series A preferred
shares, you should complete, date and sign the subscription certificate and
return it, together with payment for the shares, prior to the expiration time to
the subscription agent at the address on page 24. See "The Rights
Offering--Exercise of Rights." Your subscription rights are nontransferable. See
"The Rights Offering--Nontransferability of Rights." If you have any questions
concerning the procedure for exercising your rights and subscribing for Series A
preferred shares, you should contact the subscription agent.
To guarantee to Transmedia gross proceeds of $10,000,000 from this rights
offering, Samstock has entered into a standby purchase agreement. Under that
agreement, Samstock is obligated to purchase from the Company all Series A
preferred shares offered by this prospectus not subscribed for by other
stockholders in this rights offering, including pursuant to any oversubscription
privilege, to ensure that all Series A preferred shares offered hereby are sold.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the material United States federal
income tax considerations of the rights offering to holders of common stock.
This summary is not a complete discussion of all federal income tax consequences
of the rights offering and addresses only the income tax consequences applicable
to you if you are one of the following:
o an individual citizen or resident of the United States;
o a corporation created or organized in or under the laws of the
United States or any of its political subdivisions; or
o an estate or trust the income of which is subject to United
States federal income taxation regardless of its source.
In particular, this summary may not address the federal income tax consequences
applicable to you if you are a person subject to special treatment under United
States federal income tax law, such as a dealer or trader in securities or
currencies, a financial institution or other stockholder that treats income in
respect of our common stock as financial services income, a life insurance
company, a tax-exempt entity, a stockholder that holds our common stock as a
part of a straddle or conversion transaction or other arrangement involving more
than one position or that hedges against currency risks in respect of our common
stock, a stockholder that has a principal place of business or "tax home"
outside the United States, or a stockholder whose "functional currency" is not
the United States dollar.
The discussion below is based upon the provisions of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings
and judicial decisions as of the date of this prospectus; any authority may be
repealed, revoked or modified, perhaps with retroactive effect, so as to result
in federal income tax consequences different from those discussed below. In
addition, this summary does not address the tax consequences of the rights
offering under applicable state, local or foreign tax laws. This discussion
assumes that your shares of common stock and the rights and Series A preferred
shares issued to you as part of the rights offering constitute capital assets.
This discussion is included for your general information only. You should
consult your tax advisor to determine the tax consequences to you of the rights
offering in light of your particular circumstances, including any state, local
and foreign tax consequences.
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The Rights
Receipt of the Rights
You will not recognize any gain or other income upon the receipt of the
rights. Your tax basis in each right will depend on whether you exercise the
right or allow the right to expire. If you exercise a right, your tax basis in
the right will be determined by allocating the tax basis of your common stock on
which the right is distributed between the common stock and the right, in
proportion to their relative fair market values on the date of distribution of
the right. However, if the fair market value of your rights is less than 15
percent of the fair market value of your existing shares of common stock, then
the tax basis of each right will be deemed to be zero and the tax basis of the
common stock will be unchanged, unless you elect to allocate tax basis to your
rights by attaching an election statement to your federal income tax return for
the tax year in which the rights are issued. If you allow a right to expire, it
will be treated as having no tax basis.
Expiration or Exercise of the Rights
You will not recognize any loss upon the expiration of a right because no
basis is allocated to a right if it is allowed to expire. You generally will not
recognize a gain or loss on the exercise of a right. The tax basis of a Series A
preferred share that you acquire through the exercise of a right will equal the
sum of your tax basis, if any, in the right exercised and the amount paid for
the share. The holding period of a share of Series A preferred stock acquired
through the rights offering will begin on the date that you exercise your right.
Series A Preferred Shares
Distributions
You will recognize ordinary dividend income upon the receipt of a
distribution on your Series A preferred shares to the extent of Transmedia's
current and accumulated earnings and profits. A distribution in excess of
Transmedia's current and accumulated earnings and profits will constitute a
nontaxable return of capital to the extent of the tax basis in your Series A
preferred shares and thereafter will constitute capital gain. You will not be
treated as having received a distribution with respect to any accrued dividends
until the accrued dividends are actually paid, in which case they would then be
taxable in the same manner described in this paragraph.
Dividends to Corporate Stockholders
The discussion under this sub-heading applies to you only if you
are a corporation holding our common stock.
If you are a corporation, then dividends that we pay to you, to the
extent of Transmedia's current and accumulated earnings and profits generally
will be eligible for the dividends received deduction in Section 243 of the
Code, subject to the exceptions and restrictions contained in Sections 246(c),
246A and 1059 of the Code. Section 246(c) of the Code will disallow the
dividends received deduction in its entirety if (i) you do not hold the Series A
preferred shares for a period of more than 45 days (90 days in the case of
dividends that are attributable to a period or periods aggregating more than 366
days) immediately before or immediately after you become entitled to receive
each dividend on the Series A preferred shares or (ii) you are under an
obligation to make related payments with respect to positions in substantially
similar or related property. Section 246(c)(4) of the Code provides that you may
not count toward this minimum holding period any period in which you have
diminished your risk of loss with respect to the Series A preferred shares
through certain options, contracts to sell, short sales or other similar
transactions. Section 246A of the Code contains the 'debt-financed portfolio
stock' rules, under which the dividends received deduction could be reduced to
the extent that you incur indebtedness directly attributable to your investment
in the Series A preferred shares.
Under Section 1059 of the Code, you will be required to reduce (but not
below zero) your tax basis in the Series A preferred shares by the "nontaxed
portion" of any "extraordinary dividend," if you have not held the Series A
preferred shares for more than two years before the earliest of the dates on
which we have declared, announced, or agreed to, the amount or payment of the
dividend. You will be treated as recognizing gain from the sale of stock to the
extent, if any, that the nontaxed portion of an extraordinary dividend exceeds
your tax basis in the Series A preferred shares. Generally,
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the "nontaxed portion" of an extraordinary dividend is the amount excluded from
income by operation of the dividends received deduction. In the case of the
Series A preferred shares, an "extraordinary dividend" generally will be any
dividend that (i) equals or exceeds five percent of your tax basis in the Series
A preferred shares, treating all dividends having ex-dividend dates within an
85-day period as one dividend, or (ii) exceeds 20 percent of your tax basis in
the Series A preferred shares, treating all dividends having ex-dividend dates
within a 365-day period as one dividend. In determining whether a dividend paid
on the Series A preferred shares is an extraordinary dividend, you may elect to
substitute the fair market value of the stock as of the day before the
ex-dividend date for your tax basis, provided that the fair market value is
established to the satisfaction of the Internal Revenue Service. Quite apart
from the foregoing rules, an extraordinary dividend also will include any amount
treated as a dividend in the case of a redemption of Series A preferred shares
that either is not pro rata as to all Transmedia stockholders or is in partial
liquidation of Transmedia, regardless of the stockholder's holding period and
regardless of the size of the dividend.
Special rules exist under Section 1059 for "qualified preferred
dividends." A qualified preferred dividend is any fixed dividend payable with
respect to any share of stock that (i) provides for fixed preferred dividends
payable not less frequently than annually and (ii) is not in arrears as to
dividends at the time that the holder acquires the stock. With respect to your
Series A preferred shares, the portion of a preferred dividend that is actually
paid may meet the definition of a qualified preferred dividend, but the portion
of the preferred dividend that is unpaid and accrued, or a dividend that is paid
as a result of a distribution on the common stock, would not meet the definition
of a qualified preferred dividend. A qualified preferred dividend does not
include any dividend payable with respect to any share of stock if the actual
rate of return on such stock exceeds 15 percent. Section 1059 does not apply to
qualified preferred dividends if a corporate stockholder holds the underlying
stock for more than five years. If the stockholder disposes of the underlying
stock before that stock has been held for more than five years, then, in
general, the amount subject to extraordinary dividend treatment will be limited
to the excess, if any, of the qualified preferred dividends actually paid on the
stock over the qualified preferred dividends that would have been paid on the
basis of the stated rate of return. Actual or stated rates of return are the
actual or stated dividends expressed as a percentage of the lesser of (i) the
stockholder's tax basis in the stock or (ii) the liquidation preference of the
stock.
Conversion of Series A preferred shares
You generally will not recognize gain or loss on the conversion of Series
A preferred shares for shares of common stock, except that (i) you will be
treated as having received a constructive distribution in an amount equal to the
fair market value of any shares of common stock attributable to dividend
arrearages, which will be taxed according to discussion above under
"--Distributions," and, (ii) with respect to any cash received in lieu of
fractional shares of common stock, you will be treated as if we had redeemed the
fractional shares according to the discussion below under "--Redemption." Shares
of common stock that you receive through a conversion in which you do not
recognize gain or loss will have a tax basis equal to the tax basis in the
Series A preferred shares converted therefor and the holding period of the
common stock will include the holding period of the Series A preferred shares
converted therefor. Shares of common stock that are treated as constructive
distributions will have a tax basis equal to their fair market value on the date
of their conversion and their holding period will commence on the date following
the conversion date.
Redemption
If we redeem your Series A preferred shares for cash or other property,
this redemption will be treated under Section 302 of the Code as a sale or other
disposition of Series A preferred shares if it (i) results in a "complete
termination" of your interest in Transmedia, (ii) is "substantially
disproportionate" with respect to you or (iii) is "not essentially equivalent to
a dividend" with respect to you. For the purposes of these tests, the
constructive ownership rules of Section 318 of the Code generally apply, which,
among other things, treat holders of Series A preferred shares as owning the
underlying common stock. A distribution to you will be "not essentially
equivalent to a dividend" if it results in a "meaningful reduction" in your
proportionate stock interest in Transmedia. The Internal Revenue Service has
issued a published ruling indicating that a redemption that reduces the
proportionate interest of a stockholder whose relative stock interest is minimal
and who exercises no control over the corporation's affairs should be treated as
"not essentially equivalent to a dividend."
34
<PAGE>
If none of the three tests of Section 302(b) of the Code is met, then
the sum of the amount of cash and the fair market value of any property that you
receive will be treated as a distribution according to the discussion above in
"--Distributions." Any tax basis in the Series A preferred shares redeemed would
be transferred to your remaining stock-holdings in Transmedia.
Sale or Other Disposition
You generally will recognize gain or loss upon a sale or other taxable
disposition of Series A preferred shares (other than upon a redemption treated
as a distribution) in an amount equal to the difference between (i) the sum of
the amount of cash and the fair market value of any property received upon the
sale or other disposition, except to the extent the cash and property are
attributable to declared but unpaid dividends, and (ii) your tax basis in the
Series A preferred shares. Any gain or loss recognized will be capital gain or
loss and will be long-term capital gain or loss if you have held our stock for
more than one year.
Adjustments to the Conversion Price
We believe that the Series A preferred shares will be deemed
"participating" preferred stock for the purposes of Section 305 of the Code.
Consequently, you will not be required under Section 305(b)(4) of the Code to
include in your income any adjustments that are made to the conversion price of
your Series A preferred shares to account for accrued dividends.
Backup Withholding Tax
You may be subject to backup withholding tax at a rate of 31% of the
dividends and other "reportable payments" (including, under certain
circumstances, sales proceeds) paid with respect to the Series A preferred
shares if, in general, you fail to comply with certain certification procedures
and are not an exempt recipient under applicable provisions of the Code.
EXPERTS
The consolidated financial statements of Transmedia as of September 30,
1998 and 1997, and for each of the years in the three-year period ended
September 30, 1998, have been incorporated herein by reference to the Annual
Report on Form 10-K/A for the year ended September 30, 1998 in reliance on the
report of KPMG LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
The financial statements of Dining A La Card as of December 31, 1998 and
for each of the three years in the period then ended have been incorporated
herein by reference to the Current Report on Form 8-K/A, filed on September 14,
1999, in reliance on the report of Arthur Andersen LLP, independent public
accountants, upon the authority of said firm as experts in giving said reports.
LEGAL MATTERS
The validity of the securities we are offering hereby will be passed
upon for us by Potter Anderson & Corroon LLP, Wilmington, Delaware.
35
<PAGE>
================================================================================
October 7, 1999
Transmedia Network Inc.
4,152,000 Subscription Rights
4,152,000 Shares of Series A Preferred Stock
-------------------
P R O S P E C T U S
-------------------
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission fee................. $ 2,782
New York Stock Exchange listing fee.................... 47,800
Printing and engraving fees............................ 20,000
Accountant's fees and expenses......................... 12,000
Legal fees and expenses................................ 250,000
Miscellaneous.......................................... 1,000
-----------------
Total.................................................. 333,582
=================
Item 15. Indemnification of Officers and Directors.
Subsection (a) of Section 145 of the General Corporation Law of
Delaware (the "DGCL") empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
complete action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amount paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification may be made
in respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
Section 145 of the DGCL further provides that to the extent a director,
officer, employee or agent of a corporation has been successful in the defense
of any action, suit or proceeding referred to in subsections (a) and (b) or in
the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification or advancement of expenses
provided for by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such whether or not
the corporation would have the power to indemnify him against such liabilities
under Section 145.
Article Eight of the Transmedia's Certificate of Incorporation, as
amended, which is an exhibit to this prospectus and incorporated herein by
reference, provides in effect for the indemnification by Transmedia of each
director and officer of Transmedia to the fullest extent permitted by the DGCL.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
1.1 Form of Standby Purchase Agreement between Transmedia Network Inc. and
Samstock, L.L.C.
3.1 Certificate of Incorporation of Transmedia Network Inc., as amended. (b)
3.2 Certificate of Amendment to the Certificate of Incorporation of Transmedia
Network Inc. (e)
3.3 Certificate of Amendment to the Certificate of Incorporation of Transmedia
Network Inc., as filed with the Delaware Secretary of State on March 22,
1994. (a)
3.4 Form of Amendment to the Certificate of Incorporation of Transmedia
Network Inc. (k)
3.5 Form of Certificate of Designations, Preferences and Rights of Series A
Senior Convertible Redeemable Preferred Stock.
3.6 By-Laws of Transmedia Network Inc. (c)
4.1 Form of Series A Preferred Stock certificate.
4.2 Form of Subscription Agreement Rights between Transmedia Network Inc. and
American Stock Transfer & Trust Company, as subscription agent.
4.3 Second Amended and Restated Investment Agreement dated as of June 30,
1999 among Transmedia Network Inc., Samstock, L.L.C.,
EGI-Transmedia Investors, L.L.C., and, with respect to Section
5 of the Agreement only, Robert M. Steiner, as trustee under
declaration of trust dated March 9, 1983, as amended,
establishing the Robert M. Steiner Revocable Trust.
5.1 Opinion of Potter Anderson & Corroon LLP.
10.1 Asset Purchase Agreement, dated as of March 17, 1999, between Transmedia (j)
Network Inc. and SignatureCard, Inc., as amended by Amendment No. 1 thereto
dated as of April 15, 1999 and Amendment No. 2 thereto dated as of May 31,
1999.
10.2 Option Agreement, dated as of June 30, 1999, between Transmedia Network (j)
Inc. and SignatureCard, Inc.
10.3 Services Collaboration Agreement, dated as of June 30, 1999, between (j)
Transmedia Network Inc. and SignatureCard, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
10.4 Credit Agreement, dated as of June 30, 1999, between Transmedia Network Inc. (j)
and The Chase Manhattan Bank.
10.5 Security Agreement, dated as of June 30, 1999, between Transmedia Network (j)
Inc. and The Chase Manhattan Bank.
10.6 Pledge Agreement, dated as of June 30, 1999, between Transmedia Network (j)
Inc. and The Chase Manhattan Bank.
10.7 Credit Agreement, dated as of June 30, 1999, between GAMI Investments, Inc., (j)
Transmedia Network Inc., Transmedia Restaurant Company Inc., Transmedia
Service Company Inc. and TMNI International Incorporated.
10.8 1987 Stock Option and Rights Plan, as amended. (a)
10.9 Form of Stock Option Agreement (as modified) between Transmedia
Network Inc. and certain Directors. (g)
10.10 Amended and Restated Employment Agreement dated as of November 15,
1996 between Transmedia Network Inc. and Melvin Chasen. (f)
10.11 Amended and Restated Consulting Agreement dated as of November 15,
1996 between Transmedia Network Inc. and Melvin Chasen. (f)
10.12 Second Restated and Amended Employment Agreement dated as of October
1, 1998 between Transmedia Network Inc. and James Callaghan. (k)
10.13 Master License Agreement dated December 14, 1992 between Transmedia
Network Inc. and Conestoga Partners, Inc. (d)
10.14 First Amendment to Master License Agreement dated April 12, 1993,
between Transmedia Network Inc. and Conestoga Partners, Inc. (e)
10.15 Second Amendment to Master License Agreement -- Assignment and
Assumption Agreement dated August 11, 1993 among Transmedia Network
Inc., TMNI International Incorporated and Transmedia Europe, Inc. (e)
10.16 Master License Agreement Amendment No. 3 dated November 22, 1993
between TMNI International Incorporated and Transmedia Europe, Inc. (e)
10.17 Master License Agreement dated March 21, 1994 between TMNI
International Incorporated and Conestoga Partners II, Inc. licensing rights in
the Asia Pacific region. (a)
10.18 Agreement, dated as of December 6, 1996, among Transmedia Network Inc.,
TMNI International Incorporated, Transmedia Europe Inc. and Transmedia
Asia Pacific Inc. (f)
10.19 Stock Purchase and Sale Agreement, dated as of November 6, 1997, among
Transmedia Network Inc., Samstock, L.L.C., and Transmedia Investors,
L.L.C. (h)
10.20 Form of Warrant to purchase Common Stock. (i)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
10.21 Amended and Restated Agreement Among Stockholders Agreement, dated as
of March 3, 1998, among Transmedia Network Inc., Samstock, L.L.C., EGI-
Transmedia Investors, L.L.C., Melvin Chasen, Iris Chasen and Halmstock
Limited Partnership. (i)
10.22 Stockholders Agreement, dated as of March 3, 1998, among Transmedia
Network Inc., EGI-Transmedia Investors, L.L.C., Samstock, L.L.C. and
Melvin Chasen and Halmstock Limited Partnership. (i)
10.23 Security Agreement dated as of December 1, 1996 among TNI Funding
Company I, L.L.C. as Issuer, The Chase Manhattan Bank as Trustee and as
Collateral Agent, TNI Funding I, Inc., as Seller and Transmedia Network
Inc., as Servicer. (g)
10.24 Purchase Agreement dated as of December 1, 1996 among Transmedia
Network Inc., Transmedia Restaurant Company Inc., Transmedia Service
Company Inc. and TNI Funding I, Inc., as Purchaser. (g)
10.25 Purchase and Servicing Agreement dated as of December 1, 1996 among
TNI Funding Company I, L.L.C., as Issuer, TNI Funding I, Inc. as Seller,
Transmedia Network Inc., as Servicer, Frank Felix Associates, Ltd., as Back-
up Servicer and The Chase Manhattan Bank, as Trustee. (g)
10.26 Indenture dated as of December 1, 1996 between TNI Funding Company I,
L.L.C., as Issuer and The Chase Manhattan Bank, as Trustee. (g)
10.27 Letter of Agreement dated January 29, 1997 between Transmedia Network
Inc. and Stephen E. Lerch. (g)
10.28 Transmedia Network Inc. 1996 Long-Term Incentive Plan (including
Amendments through August 5, 1998). (b)
10.29 Employment Agreement dated as of January 5, 1999 between Transmedia
Network Inc. and Christine Donohoo.
10.30 Employment Agreement dated as of October 14, 1998 between Transmedia
Network Inc. and Gene M. Henderson.
21.1 Subsidiaries of Transmedia Network Inc. (a)
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5).
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included in the signature page hereto).
99.1 Form of subscription certificate.
99.2 Form of Instructions to Stockholders as to use of subscription certificates.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
99.3 Form of Notice of Guaranteed Delivery for subscription certificates.
99.4 Form of letter to Securities Dealers, Commercial Banks, Brokers, Trust
Companies, and Other Nominees.
99.5 Form of Broker client letter.
99.6 Form of Special Notice to holders of Common Stock of Transmedia Network
Inc. whose addresses are outside the United States.
99.7 Form of Nominee Holder Certification Form
<CAPTION>
REFERENCES -- DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
<S> <C>
(a) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994 and incorporated
by reference.
(b) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998, and incorporated
by reference thereto.
(c) Filed as an exhibit to the Post Effective Amendment to the
Registration Statement on Form S-1 (Registration No. 33-5036),
and incorporated by reference thereto.
(d) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1992, and incorporated
by reference thereto.
(e) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993, and incorporated
by reference thereto.
(f) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1996, and incorporated
by reference thereto.
(g) Filed as an exhibit to Transmedia's Annual Report on Form
10-K/A for the fiscal year ended September 30, 1997, and
incorporated by reference thereto.
(h) Filed as an exhibit to Transmedia's Current Report on Form 8-K
dated as of November 6, 1997, and incorporated by reference
thereto.
(i) Filed as an exhibit to Transmedia's Current Report on Form 8-K
filed on March 3, 1998.
(j) Filed as an exhibit to Transmedia's Current Report on Form 8-K
filed on July 14, 1999, and incorporated by reference thereto.
(k) Previously filed.
</TABLE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes
A. (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
II-5
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
C. (1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted form the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Miami,
state of Florida on this 4th day of October, 1999.
TRANSMEDIA NETWORK INC.
By: /s/ Stephen E. Lerch
-------------------------------------
Stephen E. Lerch
Executive Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons on
behalf of Transmedia Network Inc. in the capacities and on the dates indicated.
Each person, in so signing, also makes, constitutes and appoints Gene
M. Henderson and Stephen E. Lerch, and each such person acting singly, with full
power of substitution, his true and lawful attorney-in-fact, in his name, place
and stead to sign for him, and in his name in the capacity indicated below, and
any and all amendments and post-effective amendments to this Registration
Statement, and any other Registration Statement filed by Transmedia Network Inc.
pursuant to Rule 462(b) that registers additional amounts of shares of common
stock for the offering contemplated by this Registration Statement and any
amendment thereto, hereby ratifying and confirming our signatures as they may be
signed by our attorneys.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
President and Chief Executive
/s/ Gene M. Henderson* Officer (Principal Executive
- ------------------------------------ Officer), Director October 4, 1999
Gene M. Henderson
Executive Vice President and Chief
/s/ Stephen E. Lerch Financial Officer (Principal
- ------------------------------------ Financial and Accounting Officer) October 4, 1999
Stephen E. Lerch
/s/ F. Philip Handy*
- ------------------------------------ Chairman of the Board October 4, 1999
F. Philip Handy
/s/ Jack Africk*
- ------------------------------------ Director October 4, 1999
Jack Africk
/s/ Rod F. Dammeyer*
- ------------------------------------ Director October 4, 1999
Rod F. Dammeyer
/s/ Herbert M. Gardner*
- ------------------------------------ Director October 4, 1999
Herbert M. Gardner
<PAGE>
</TABLE>
<TABLE>
<S> <C> <C>
/s/ George S. Wiedemann*
- ------------------------------------ Director October 4, 1999
George S. Wiedemann
/s/ Lester Wunderman*
- ------------------------------------ Director October 4, 1999
Lester Wunderman
</TABLE>
* By Stephen E. Lerch, attorney-in-fact.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
1.1 Form of Standby Purchase Agreement between Transmedia Network Inc. and
Samstock, L.L.C.
3.1 Certificate of Incorporation of Transmedia Network Inc., as amended. (b)
3.2 Certificate of Amendment to the Certificate of Incorporation of Transmedia
Network Inc. (e)
3.3 Certificate of Amendment to the Certificate of Incorporation of Transmedia
Network Inc., as filed with the Delaware Secretary of State on March 22,
1994. (a)
3.4 Form of Amendment to the Certificate of Incorporation of Transmedia (k)
Network Inc.
3.5 Form of Certificate of Designations, Preferences and Rights of Series A
Senior Convertible Redeemable Preferred Stock.
3.6 By-Laws of Transmedia Network Inc. (c)
4.1 Form of Series A Preferred Stock certificate
4.2 Form of Rights Agreement between Transmedia Network Inc. and American
Stock Transfer & Trust Company, as subscription agent.
4.3 Second Amended and Restated Investment Agreement dated as of June 30,
1999 among Transmedia Network Inc., Samstock, L.L.C.,
EGI-Transmedia Investors, L.L.C., and, with respect to Section
5 of the Agreement only, Robert M. Steiner, as trustee under
declaration of trust dated March 9, 1983, as amended,
establishing the Robert M. Steiner Revocable Trust.
5.1 Opinion of Potter Anderson & Corroon LLP.
10.1 Asset Purchase Agreement, dated as of March 17, 1999, between Transmedia (j)
Network Inc. and SignatureCard, Inc., as amended by Amendment No. 1 thereto
dated as of April 15, 1999 and Amendment No. 2 thereto dated as of May 31,
1999.
10.2 Option Agreement, dated as of June 30, 1999, between Transmedia Network (j)
Inc. and SignatureCard, Inc.
10.3 Services Collaboration Agreement, dated as of June 30, 1999, between (j)
Transmedia Network Inc. and SignatureCard, Inc.
10.4 Credit Agreement, dated as of June 30, 1999, between Transmedia Network Inc. (j)
and The Chase Manhattan Bank.
10.5 Security Agreement, dated as of June 30, 1999, between Transmedia Network (j)
Inc. and The Chase Manhattan Bank.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
10.6 Pledge Agreement, dated as of June 30, 1999, between Transmedia Network (j)
Inc. and The Chase Manhattan Bank.
10.7 Credit Agreement, dated as of June 30, 1999, between GAMI Investments, Inc., (j)
Transmedia Network Inc., Transmedia Restaurant Company Inc., Transmedia
Service Company Inc. and TMNI International Incorporated.
10.8 1987 Stock Option and Rights Plan, as amended. (a)
10.9 Form of Stock Option Agreement (as modified) between Transmedia
Network Inc. and certain Directors. (g)
10.10 Amended and Restated Employment Agreement dated as of November 15,
1996 between Transmedia Network Inc. and Melvin Chasen. (f)
10.11 Amended and Restated Consulting Agreement dated as of November 15,
1996 between Transmedia Network Inc. and Melvin Chasen. (f)
10.12 Second Restated and Amended Employment Agreement dated as of October
1, 1998 between Transmedia Network Inc. and James Callaghan. (k)
10.13 Master License Agreement dated December 14, 1992 between Transmedia
Network Inc. and Conestoga Partners, Inc. (d)
10.14 First Amendment to Master License Agreement dated April 12, 1993,
between Transmedia Network Inc. and Conestoga Partners, Inc. (e)
10.15 Second Amendment to Master License Agreement -- Assignment and
Assumption Agreement dated August 11, 1993 among Transmedia Network
Inc., TMNI International Incorporated and Transmedia Europe, Inc. (e)
10.16 Master License Agreement Amendment No. 3 dated November 22, 1993
between TMNI International Incorporated and Transmedia Europe, Inc. (e)
10.17 Master License Agreement dated March 21, 1994 between TMNI
International Incorporated and Conestoga Partners II, Inc. licensing rights in
the Asia Pacific region. (a)
10.18 Agreement, dated as of December 6, 1996, among Transmedia Network Inc.,
TMNI International Incorporated, Transmedia Europe Inc. and Transmedia
Asia Pacific Inc. (f)
10.19 Stock Purchase and Sale Agreement, dated as of November 6, 1997, among
Transmedia Network Inc., Samstock, L.L.C., and Transmedia Investors,
L.L.C. (h)
10.20 Form of Warrant to purchase Common Stock. (i)
10.21 Amended and Restated Agreement Among Stockholders Agreement, dated as
of March 3, 1998, among Transmedia Network Inc., Samstock, L.L.C., EGI-
Transmedia Investors, L.L.C., Melvin Chasen, Iris Chasen and Halmstock
Limited Partnership. (i)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
10.22 Stockholders Agreement, dated as of March 3, 1998, among Transmedia
Network Inc., EGI-Transmedia Investors, L.L.C., Samstock, L.L.C. and
Melvin Chasen and Halmstock Limited Partnership. (i)
10.23 Security Agreement dated as of December 1, 1996 among TNI Funding
Company I, L.L.C. as Issuer, The Chase Manhattan Bank as Trustee and as
Collateral Agent, TNI Funding I, Inc., as Seller and Transmedia Network
Inc., as Servicer. (g)
10.24 Purchase Agreement dated as of December 1, 1996 among Transmedia
Network Inc., Transmedia Restaurant Company Inc., Transmedia Service
Company Inc. and TNI Funding I, Inc., as Purchaser. (g)
10.25 Purchase and Servicing Agreement dated as of December 1, 1996 among
TNI Funding Company I, L.L.C., as Issuer, TNI Funding I, Inc. as Seller,
Transmedia Network Inc., as Servicer, Frank Felix Associates, Ltd., as Back-
up Servicer and The Chase Manhattan Bank, as Trustee. (g)
10.26 Indenture dated as of December 1, 1996 between TNI Funding Company I,
L.L.C., as Issuer and The Chase Manhattan Bank, as Trustee. (g)
10.27 Letter of Agreement dated January 29, 1997 between Transmedia Network
Inc. and Stephen E. Lerch. (g)
10.28 Transmedia Network Inc. 1996 Long-Term Incentive Plan (including
Amendments through August 5, 1998). (b)
10.29 Employment Agreement dated as of January 5, 1999 between Transmedia
Network Inc. and Christine Donohoo.
10.30 Employment Agreement dated as of October 14, 1998 between Transmedia
Network Inc. and Gene M. Henderson.
21.1 Subsidiaries of Transmedia Network Inc. (a)
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5).
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included in the signature page hereto).
99.1 Form of subscription certificate.
99.2 Form of Instructions to Stockholders as to use of subscription certificates.
99.3 Form of Notice of Guaranteed Delivery for subscription certificates.
99.4 Form of letter to Securities Dealers, Commercial Banks, Brokers, Trust
Companies, and Other Nominees.
99.5 Form of Broker client letter.
99.6 Form of Special Notice to holders of Common Stock of Transmedia Network
Inc. whose addresses are outside the United States.
99.7 Form of Nominee Holder Certification Form
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page/Reference
- ----------- ---------------------- --------------
<S> <C> <C>
REFERENCES -- DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(a) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994 and incorporated
by reference.
(b) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998, and incorporated
by reference thereto.
(c) Filed as an exhibit to the Post Effective Amendment to the
Registration Statement on Form S-1 (Registration No. 33-5036),
and incorporated by reference thereto.
(d) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1992, and incorporated
by reference thereto.
(e) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993, and incorporated
by reference thereto.
(f) Filed as an exhibit to Transmedia's Annual Report on Form 10-K
for the fiscal year ended September 30, 1996, and incorporated
by reference thereto.
(g) Filed as an exhibit to Transmedia's Annual Report on Form
10-K/A for the fiscal year ended September 30, 1997, and
incorporated by reference thereto.
(h) Filed as an exhibit to Transmedia's Current Report on Form 8-K
dated as of November 6, 1997, and incorporated by reference
thereto.
(i) Filed as an exhibit to Transmedia's Current Report on Form 8-K
filed on March 3, 1998.
(j) Filed as an exhibit to Transmedia's Current Report on Form 8-K
filed on July 14, 1999, and incorporated by reference thereto.
(k) Previously filed.
</TABLE>
<PAGE>
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
<PAGE>
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 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
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<PAGE>
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:
(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
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<PAGE>
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 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
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<PAGE>
"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 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
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<PAGE>
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
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
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<PAGE>
(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 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.
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<PAGE>
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.
(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.
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<PAGE>
(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 reasonably incurred in connection with, and any amount paid in
settlement of, any
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<PAGE>
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
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<PAGE>
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 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.
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<PAGE>
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 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
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<PAGE>
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.
----------------------------------------
By: Gene Henderson, President and
Chief Executive Officer
SAMSTOCK, L.L.C.
----------------------------------------
By: Donald J. Liebentritt, Vice President
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<PAGE>
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.
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<PAGE>
(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 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
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<PAGE>
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 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.
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<PAGE>
(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.
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
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<PAGE>
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 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.
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<PAGE>
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.
TRANSMEDIA NETWORK INC.
By:
---------------------------
Its:
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<PAGE>
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>
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.
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<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A PREFERRED STOCK
(PAR VALUE $.10 PER SHARE)
OF
TRANSMEDIA NETWORK INC.
Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware
Transmedia Network Inc., a corporation (the "Corporation")
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by Article Fourth of the Certificate of Incorporation of the
Corporation, the Board of Directors at its meeting on Monday, September 27,
1999 adopted the following resolution creating a series of [4,149,378] shares of
Senior Convertible Redeemable Preferred Stock, par value $.10 per share,
designated as "Series A Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of Article
Fourth of its Certificate of Incorporation, a series of Preferred Stock, par
value $.10 per share of the Corporation is hereby created, and that the
designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are
as follows:
1. Designation and Number. The designation of the series of
preferred stock fixed by this resolution shall be "Series A Senior Convertible
Redeemable Preferred Stock" (hereinafter referred to as "Series A Preferred
Stock" or this "Series") and the number of shares constituting such series
shall be [4,149,378].
2. Rank. The Series A Preferred Stock shall rank: (i) prior
to all of the Corporation's Common Stock, par value $.02 per share ("Common
Stock") and (ii) prior to any class or series of capital stock of the
Corporation hereafter created either specifically ranking by its terms junior to
this Series or not specifically ranking by its terms senior to or on parity with
this Series (collectively with the Common Stock, "Junior Securities"),
<PAGE>
in each case, as to payment of dividends and as to distributions of assets upon
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary.
3. Dividends.
(a) General Dividend Obligation. (i) The holders of shares
of this Series shall be entitled to receive, when, as and if declared by the
Board of Directors of the Corporation, and to the extent of funds legally
available therefor, dividends per share (a) at the rate (the "Dividend Rate")
of $0.145 per annum which shall be payable in cash (hereinafter referred to as
"current dividends") quarterly in arrears, on the first business day of
January, April, July and October of each year, commencing in January 2000
(each, a "Dividend Payment Date") and (b) at the rate of $0.145 per annum
which shall not be payable currently but shall be deferred and shall accrue
(hereinafter referred to as "deferred dividends") and shall be payable as
hereinafter provided upon a conversion, redemption or liquidation, dissolution
or winding up of the Corporation. The Corporation shall have the option and
right to pay deferred dividends (or any portion thereof) currently.
(ii) In the case of the original issuance of shares
of this Series, such current dividends shall be cumulative from the date of
issue. Dividends payable on shares of this Series shall be computed on the basis
of a 360-day year consisting of twelve 30-day months.
(iii) Dividends shall be payable to holders of record
of this Series as they appear on the books of the Corporation on each record
date, not less than 15 days nor more than 60 days preceding the date for payment
thereof, as may be fixed by the Board of Directors of the Corporation. Accrued
current dividends not paid on a Dividend Payment Date may be declared and paid
at any time, without reference to any regular Dividend Payment Date.
(iv) If the funds legally available for the payment
of such dividends are insufficient to pay in full current dividends payable on
all outstanding shares of this Series on any Dividend Payment Date, the total
available funds may be paid in partial dividends to the holders of the
outstanding shares of this Series ratably in proportion to the fully accrued
current dividends to which they are entitled. In the event any portion of
accrued current dividends payable on a Dividend Payment Date (whether or not
declared) is unpaid as of the close of business on such Dividend Payment Date (a
"Past Due Current Dividend"), the holders of shares of this Series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Corporation, and to the extent of funds legally available therefor, an
additional dividend per share (an "additional dividend") at an annual rate equal
to the per share amount of the Past Due Current Dividend, multiplied by the
Additional Dividend Rate. The Additional Dividend Rate applicable to an
additional dividend that accrues by reason of any Past Due Current Dividend,
shall be equal to the prime interest rate in effect on the Dividend Payment Date
on which the Past Due Current Dividend first became payable (as announced by The
Chase Manhattan Bank or, in the absence thereof, another bank or financial
institution selected by the Board of Directors of the
2
<PAGE>
Corporation) (the "Prime Rate") plus 6% for the first 90 days after the
Dividend Payment Date with respect to such Past Due Current Dividend, and
shall be increased by an additional 1/2% at the beginning of each subsequent
90 day period up to a maximum rate equal to the Prime Rate plus 7-1/2% per
annum. All additional dividends shall be cumulative from the Dividend Payment
Date for the Past Due Current Dividend by reason of which the additional
dividend accrues.
(b) Participation. In addition to the dividends described in
paragraph (a) above, in the event that the Corporation at any time or from
time to time shall declare, order, pay or make a dividend or other
distribution on its Common Stock (other than a dividend payable in shares of
Common Stock or in rights, options, warrants or convertible securities
containing the right to subscribe for or purchase shares of Common Stock),
then the holders of shares of this Series shall be entitled to receive from
the Corporation with respect to each share of this Series held, a dividend or
other distribution which is equivalent to the dividend or distribution that
would be received by a holder of the number of whole shares of Common Stock
into which a share of this Series is convertible pursuant to paragraph 5
hereof on the record date for such dividend or distribution.
(c) Limitation on Dividends. For so long as any shares of
this Series are outstanding, no dividend (other than a dividend payable in
shares of, or warrants, rights or options exercisable for or convertible into
shares of, Common Stock or other Junior Security and cash in lieu of
fractional shares in connection with any such dividend) shall be declared or
paid or set aside for payment on or with respect to Junior Securities, and no
payment on account of the redemption, purchase or other acquisition or
retirement for value by the Corporation (except in connection with a
reclassification or exchange of Junior Securities through the issuance of
other Junior Securities (and cash in lieu of fractional shares in connection
therewith)) shall be made for any Junior Securities unless, in each case, the
full amount of accrued and unpaid current dividends (whether or not declared)
on all outstanding shares of this Series for all dividend periods ending on or
before the date of payment of such dividend and the full amount of all accrued
and unpaid additional dividends for all such periods shall have been paid or
set apart for payment or contemporaneously are declared and paid. Subject to
the foregoing limitations, dividends may be paid on the Common Stock or other
Junior Security out of any funds legally available for such purpose when and
as declared by the Board of Directors, provided that dividends are also paid
or set apart for payment on the shares of this Series in accordance with
subparagraph 3(b).
4. Voting Rights.
(a) General Voting Rights. In addition to any voting rights
provided by law and the special voting rights provided herein, the holders of
shares of this Series shall be entitled to vote upon all matters upon which
holders of the Common Stock have the right to vote, together with the holders
of Common Stock and not as a separate class, on the basis of one vote for each
share of Series A Preferred Stock held of record by such holders.
3
<PAGE>
(b) Special Voting Rights. (iIf and whenever at any time or
times current dividends payable on shares of this Series shall have been in
arrears and unpaid in an aggregate amount equal to or exceeding the amount of
current dividends due and payable thereon for six (6) quarterly dividend
periods (consecutive or otherwise), then the number of directors constituting
the Board of Directors shall be increased by two (2) and the holders of shares
of this Series shall have the right, voting separately as a class (and, if any
other series or class of stock is so entitled as provided in the certificate
of designation of such series or in the Certificate of Incorporation, voting
together with such other series or class collectively as a single class) to
elect two (2) directors of the Corporation to fill such newly-created
directorships.
(ii) Such special voting right may be exercised
initially either at a special meeting of the holders of this Series and such
other series or class of stock having such voting right, called as hereinafter
provided, or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at each such annual meeting. The right of the
holders of this Series to vote for the election of such members of the Board of
Directors of the Corporation as aforesaid shall continue until such time as all
current dividends accumulated on this Series shall have been paid in full and
all additional dividends with respect to such current dividends shall have been
paid in full, at which time the special voting right of the holders of this
Series to vote separately as a class with such other series or class of stock
shall terminate and, if such voting right of the holders of this Series and all
other series or class of stock so entitled shall have terminated, subject to the
requirements of the General Corporation Law of Delaware, the term of the
directors elected pursuant to subparagraph 4(b) shall terminate, subject to
revesting on the basis set forth in subparagraph 4(b).
(iii) At any time when such voting right shall have
vested in holders of this Series, and if such right shall not already have been
initially exercised, a proper officer of the Corporation shall, upon the written
request of the record holders of at least 10% of the aggregate voting power
represented by the then outstanding shares of this Series and of any other class
or classes of stock having voting power with respect to the election of such
directors, addressed to the Secretary of the Corporation, call a special meeting
of such holders for the purpose of electing directors pursuant to paragraph
4(b)(i). Such meeting shall be held at the earliest practicable date upon the
notice required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation or, if none, at a place
designated by the Board of Directors. If such meeting is not called by the
proper officers of the Corporation within thirty (30) days after the personal
service of such written request upon the Secretary of the Corporation, or within
thirty-five (35) days after mailing the same within the United States of
America, by registered mail, addressed to the Secretary of the Corporation at
its principal office (such mailing to be evidenced by the registry receipt
issued by the postal authorities), then the record holders of at least 10% of
the aggregate voting power represented by the then outstanding shares of this
Series and of any such other series or class of stock may designate in writing
one of their number to call such meeting at the expense of the Corporation, and
such meeting may be called by such person so designated upon the notice required
for annual meetings of stockholders
4
<PAGE>
and shall be held at the same place as is elsewhere provided for in this
subparagraph 4(b)(iii) or such other place as is selected by such designated
stockholder.
Any holder of this Series who would be entitled
to vote at such meeting shall have access to the stock books of the Corporation
for the purpose of causing a meeting of stockholders to be called pursuant to
the provisions of this subparagraph 4(b). Notwithstanding the provisions of
this subparagraph 4(b), no such special meeting shall be called during a period
within ninety (90) days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) At any meeting held for the purpose of electing
directors at which the holders of this Series and any other series or class of
stock shall have the right to elect two (2) directors as provided herein, the
presence in person or by proxy of the holders of a majority of the aggregate
voting power represented by the then outstanding shares of this Series and such
other series or class of stock having such right shall be required and shall be
sufficient to constitute a quorum of such class for the election of directors by
such holders. At any such meeting or adjournment thereof (x) the absence of a
quorum having such special voting right shall not prevent the election of
directors other than those to be elected by the holders of shares having such
special voting rights, and the absence of a quorum or quorums of the holders of
capital stock entitled to elect directors other than those to be elected by the
holders having such voting rights shall not prevent the election of directors to
be elected by the holders having such special voting rights and (y) except as
otherwise required by law, in the absence of a quorum of the holders of any
class of stock entitled to vote for the election of directors, a majority of the
holders present in person or by proxy of such class shall have the power to
adjourn the meeting for the election of directors which the holders of such
class are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum is present.
(v) Any vacancy in the Board of Directors in respect
of a director elected by holders of shares of this Series (and, if it is
entitled as provided in the certificate of designation of such series or in the
Certificate of Incorporation, by any other series or class of stock) pursuant to
the voting right created under this paragraph 4(b) shall be filled by vote of
the remaining director so elected, or if there be no such remaining director, by
the holders of shares of this Series and such other series or class of stock
entitled to elect such director or directors at a special meeting called in
accordance with the procedures set forth in subparagraph 4(b)(ii), or, if no
such special meeting is called, at the next annual meeting of stockholders.
(vi) So long as any shares of this Series remain
outstanding, the Corporation shall not, either directly or indirectly, without
the affirmative vote at a meeting or the written consent with or without a
meeting of the holders of at least two-thirds in number of shares of this Series
then outstanding, amend, alter or repeal any of the provisions of the
Certificate of Incorporation so as to affect adversely the preferences, special
rights or privileges or voting powers of shares of this Series; provided, that
the issuance of any class or series of capital stock of the Corporation
hereinafter created specifically ranking by its terms senior to or on parity
with this Series as to payments of dividends or as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, shall be deemed, for purposes of this subparagraph
(vi), to affect adversely the preferences, special rights and privileges of
shares of this Series.
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(vii) In exercising the voting rights set forth in
this paragraph 4(b), each share of this Series entitled to such voting right
shall have equal voting power, notwithstanding any greater or lesser general
voting powers of one or more series or classes of stock.
(viii) No consent of holders of shares of this Series
shall be required for (i) the creation of any indebtedness of any kind of the
Corporation, (ii) the authorization or issuance of any Junior Securities or
(iii) subject to subparagraph 4(b)(vi), the issuance of any shares of
preferred stock.
5. Conversion Rights.
(a) Optional Conversion. (i) Each whole share of this Series
may be converted, at the option of the holder, at any time and from time to
time, into fully-paid and non-assessable shares of Common Stock; provided, a
holder's right to so convert shares of Series A Preferred Stock shall
terminate as to shares thereof that are redeemed by the Corporation on the
redemption date therefor as provided in and subject to the terms and
conditions of paragraph 7 hereof. The number of shares of Common Stock to
which the holder of each share of this Series shall be entitled upon
conversion shall be the product obtained by multiplying the number of whole
shares of this Series to be converted by the Conversion Rate. The "Conversion
Rate" shall be determined by dividing the sum of $2.41 plus all accrued and
unpaid current dividends, additional dividends (if any), and deferred
dividends thereon by $2.41 (the "Conversion Price"); provided, that if the
Corporation fails to pay the redemption price of shares required to be
redeemed in accordance with paragraph 7, the Conversion Price shall be reduced
by 50% of the Conversion Price then in effect and shall remain at such reduced
price until such failure is remedied. The Conversion Price shall be adjusted
from time to time as set forth in subparagraph (e) hereof.
(ii) A holder of shares of this Series desiring to
convert all or a portion of the whole shares of this Series owned by such holder
shall give written notice thereof to the Corporation. Such notice shall be
accompanied by certificates, duly endorsed for conversion, evidencing the number
of whole shares of this Series such holder desires to convert, together with
cash, if any, required by subparagraph 5(c) hereof. The Corporation will, as
soon as practicable thereafter, deliver to such holder or to such holder's
nominee or nominees, a certificate or certificates for the appropriate number of
shares of Common Stock, together with cash, as provided in subparagraph 5(d),
with respect to any fractional shares otherwise issuable upon conversion and,
in the event of a partial conversion, a certificate representing the balance, if
any, of the whole shares of this Series represented by the surrendered
certificate or certificates but not converted to Common Stock.
(iii) If a holder has delivered notice to the
Corporation of its desire to convert all or a portion of its shares of this
Series, and certificates, duly endorsed for conversion in respect of such shares
and cash, if any, required by subparagraph 5(c) hereof, then all shares of this
Series so tendered to the Corporation shall be deemed to be no longer
outstanding and,
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notwithstanding the failure of the Corporation to issue the Common Stock, such
holder shall be deemed, for all purposes to be a holder of the number of
shares of Common Stock into which the shares of this Series such holder is
entitled to receive pursuant to the terms of this paragraph 5, in each case as
of the close of business on the date on which such conversion notice is
delivered.
(b) Mandatory Conversion. The Series A Preferred Stock is
subject to mandatory conversion as provided in this subparagraph 5(b).
(i) (A) Conversion by the Corporation. If (1) at any
time after [October 29], 2002, the closing price of the Common Stock, as
reported by the New York Stock Exchange Composite Tape (or the composite
reporting system of any other national securities exchange or quotation system
on which the Common Stock of the Corporation is then traded or quoted) exceeds
200% of the Liquidation Preference, plus accrued and unpaid current dividends,
additional dividends (if any) and deferred dividends thereon, for thirty
consecutive days, or (2) at any time (x) the Corporation shall consummate an
underwritten public offering of equity securities of the Corporation which
results in gross proceeds to the Corporation or selling stockholders of $20
million and (y) either the price to public of the securities sold or the average
of the high and low sales prices of the common stock of the Corporation on the
date of the closing of the offering is not less than the Conversion Price then
in effect, then the Corporation shall have the right, for a period of ninety
(90) days thereafter, to cause the automatic conversion of all outstanding
shares of this Series at the Conversion Rate then in effect. The Liquidation
Preference for each share of this Series shall be $2.41.
(B) Conversion by the Majority Holders. Holders
of a majority of the outstanding shares of this Series at any time shall have
the right to cause the conversion of all outstanding shares of this Series at
the Conversion Rate then in effect by delivering written notice thereof, sent by
first class mail, postage prepaid, to the Corporation.
(ii) The Corporation shall give all holders of record
of shares of this Series prior written notice of the exercise by it or the
majority holders, as the case may be, of the right set forth in this
subparagraph 5(b) not less than thirty (30) days prior to the date upon which
such conversion shall occur. Such notice shall specify the place designated for
exchanging shares of this Series for shares of Common Stock, and shall be sent
by first class mail, postage prepaid, to each holder of record of shares of this
Series at such holder's address as shown in the records of the Corporation.
(iii) From and after the date of conversion, all
rights of the holders of any shares of this Series, as such, shall cease and
terminate, regardless of whether the holders of such shares of this Series have
tendered their certificates therefor in accordance with this subparagraph 5(b).
(c) Payment of Dividends. In the event that shares of this
Series are surrendered for conversion on any date during the period from the
close of business on a record
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date fixed for determining the holders entitled to receive dividends to the
opening of business on the corresponding payment date designated for the payment
of such dividends, the holder must also deliver to the Corporation an amount
equal to the dividend payable with respect to such shares of this Series on
such dividend payment date and shall continue to be entitled to receive such
dividend on such dividend payment date. In the event that the date on which the
shares are converted is the payment date designated for the payment of such
dividends, such holder will be entitled to receive the dividend payable with
respect to such shares of this Series and shall not be required to include any
payment in the amount of the dividend payable with respect to such converted
shares of Series A Preferred Stock.
(d) Fractional Shares. The Corporation shall not issue
fractional shares of Common Stock upon conversion of this Series but, in lieu
thereof, shall pay to a holder cash in an amount equal to such fraction
multiplied by the closing price of the Common Stock, as reported by the New
York Stock Exchange Composite Tape (or the composite reporting system of any
other principal national securities exchange or quotation system on which the
Common Stock is then listed or quoted) on the trading day prior to the date on
which the shares are converted.
(e) Conversion Price Adjustments. (i) If, prior to the date
on which all shares of this Series are converted or redeemed, the Corporation
shall (1) pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock, (2) subdivide its outstanding Common Stock, (3) combine
its outstanding Common Stock into a smaller number of shares of Common Stock or
(4) issue by reclassification of its Common Stock other securities of the
Corporation, the Conversion Price in effect at the opening of business on the
record date for the determination of stockholders entitled to participate in
such transaction shall thereupon be adjusted, or, if necessary, the right to
convert shall be amended, such that the number of shares of Common Stock
receivable upon conversion of the shares of this Series immediately prior
thereto shall be adjusted so that the holder shall be entitled to receive, upon
the conversion of such shares of this Series, the kind and number of shares of
Common Stock or other securities of the Corporation which it would have owned or
would have been entitled to receive after the happening of any of the events
described above had its shares of this Series been converted immediately prior
to the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subparagraph 5(e)(i) shall become effective
immediately after the effective date of such event and such adjustment shall be
retroactive to the record date, if any, for such event. No adjustment with
respect to any cash dividends (made out of current or accumulated earnings) on
shares of Common Stock shall be made.
(ii) Except in respect of transactions described in
subparagraph 5(e)(i) above, if, prior to the date on which all shares of this
Series are converted or redeemed, the Corporation shall sell or issue Common
Stock or rights, options, warrants or convertible securities (or rights, options
or warrants to purchase convertible securities) containing the right to
subscribe for or purchase shares of Common Stock (collectively, "Rights"), and
the sale or issuance price per share of Common Stock (or in the case of Rights,
the sum of the consideration
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paid or payable for any such Right entitling the holder thereof to acquire one
share of Common Stock and such additional consideration paid or payable upon
exercise or conversion of any such Right to acquire one share of Common Stock)
is less than the lower of the then current Conversion Price or the closing
price of the Common Stock (as reported by the New York Stock Exchange
Composite Transactions or any other national securities exchange or quotation
system on which the Common Stock is then listed or quoted) for the trading day
immediately preceding the dates of such sale or issuance (the "Current Common
Stock Price"), the Conversion Price shall thereupon be adjusted such that the
number of shares of Common Stock receivable upon conversion of the Series A
Preferred Stock shall be the number determined by multiplying (1) the number
of shares of Common Stock receivable upon conversion of the shares of this
Series immediately prior to such issuance or sale by (2) a fraction (not to be
less than one) with a numerator equal to the product of the number of shares
of Common Stock outstanding after giving effect to such sale or issuance (and
assuming, in the case of Rights that such Rights had been fully exercised or
converted, as the case may be) and the Current Common Stock Price and a
denominator equal to the sum of (x) the product of the number of shares of
Common Stock outstanding immediately before the issuance or sale or the record
date, as the case may be, multiplied by the Current Common Stock Price and (y)
the aggregate consideration received or deemed to be received by the
Corporation for the shares of Common Stock to be issued or sold or to be
purchased or subscribed for upon exercise of such Rights. For the purposes of
such adjustments, the Common Stock which the holders of any such Rights shall
be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such issuance or sale or the record date, as the
case may be.
(iii) Except in respect of transactions described in
subparagraph 5(e)(i) above, if, prior to the date on which all shares of this
Series are converted or redeemed, the Corporation shall declare, order, pay or
make a dividend or other distribution (including without limitation any
distribution of cash, other or additional stock or other securities or property
or options, by way of dividend or spin-off, reclassification, recapitalization
or similar corporate rearrangement or otherwise, but excluding dividends on the
Common Stock described in paragraph 3(b) or in the last sentence of subparagraph
5(e)(i)), then, in each case, the Conversion Price shall thereupon be adjusted
such that the number of shares of Common Stock thereafter receivable upon the
conversion of shares of this Series shall be determined by multiplying (1) the
number of shares of Common Stock theretofore receivable upon conversion of the
shares of this Series by (2) a fraction of which the numerator shall be the then
Conversion Price on the record date for the determination of stockholders
entitled to receive such dividend or other distribution, and of which the
denominator shall be such Conversion Price on such date minus the amount of such
dividend or distribution applicable to one share of Common Stock. The Board of
Directors of the Corporation shall determine the amount of such dividend or
distribution allocable to one share of Common Stock and such determination, if
reasonable and based upon the Board of Directors' good faith business judgment,
shall be binding upon the holder. Such adjustment shall be made whenever any
such distribution is made and shall become effective on the date of distribution
retroactive to the record date for the determination of stockholders entitled to
receive such distribution.
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(iv) Upon the expiration of any Rights, if such shall
not have been exercised, the Conversion Price, to the extent that shares of this
Series have not been converted or redeemed, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (1) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such Rights and (2) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Corporation
(including for purposes hereof, any underwriting discounts or selling
commissions paid by the Corporation) for the issuance, sale or grant of all such
Rights, whether or not exercised; provided, that no such readjustment shall have
the effect of increasing the Conversion Price by a proportion (relative to the
Conversion Price in effect immediately prior to such readjustment) in excess of
the inverse of the aggregate proportional adjustment thereof made in respect of
the issue, sale, or grant of such Rights.
If the consideration provided for in any Right
or the additional consideration, if any, payable upon the conversion or exchange
of any right shall be reduced, or the rate at which any Right is exercisable or
convertible into or exchangeable for shares of Common Stock shall be increased,
at any time under or by reason of provisions with respect thereto designed to
protect against dilution, then, effective concurrently with each such change,
the Conversion Price then in effect shall first be adjusted to eliminate the
effects (if any) of the issuance (or deemed issuance) of such Right on the
Conversion Price and then readjusted as if such Right had been issued on the
date of such change with the terms in effect after such change, but only if as a
result of such readjustment the Conversion Price then in effect hereunder is
thereby reduced.
(v) For the purposes of this paragraph 5: (x) the
consideration for the issue or sale of any additional shares of Common Stock
shall, irrespective of the accounting treatment of such consideration, be deemed
to be the consideration actually received by the Corporation and (1) insofar as
it consists of cash, be computed at the net amount of cash received by the
Corporation, plus any expense paid or incurred by the Corporation and any
commissions or compensation paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in connection with
such issue or sale, (2) insofar as it consists of property (including
securities) other than cash, be computed at the fair value thereof at the time
of such issue or sale, as determined in good faith by the Board of Directors of
the Corporation, and (3) in case additional shares of Common Stock are issued or
sold together with other stock or securities or other assets of the Corporation
for a consideration which covers both, be the portion of such consideration so
received, computed as provided in clauses (1) and (2) above, allocable to such
additional shares of Common Stock, all as determined in good faith by the Board
of Directors of the Corporation; (y) additional shares of Common Stock deemed to
have been issued pursuant to subparagraphs 5(e)(iv) relating to Rights, shall be
deemed to have been issued for a consideration per share determined by dividing
(1) the total amount, if any, received by the Corporation as consideration for
the issue, sale or grant of the Rights in question, less the value of the Rights
not actually received by the Corporation as consideration therefor, plus the
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minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provisions contained
therein for a subsequent adjustment of such consideration to protect against
dilution) payable to the Corporation upon the exercise, conversion or exchange
of such Rights or, in the case of Rights which are rights, options or warrants
for convertible securities, the exercise of such Rights for convertible
securities and the conversion or exchange of such convertible securities, in
each case computing such consideration as provided in the foregoing clause (x)
of this subparagraph 5(e)(v), by (2) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein for subsequent adjustment of such number to
protect against dilution) issuable upon the exercise, conversion or exchange
of such Rights; and, (z) additional shares of Common Stock deemed to have been
issued pursuant to subparagraph 5(e)(i) and (iii), relating to stock
dividends, stock splits, etc., shall be deemed to have been issued for no
consideration. For the purposes of this paragraph 5, the term "Common Stock"
shall mean (i) the class of stock designated as Common Stock in the
Certificate of Incorporation of the Corporation as may be amended as of the
date hereof, or (ii) any other class of stock resulting from successive
changes or reclassification of such Common Stock consisting solely of changes
in par value or from par value to no par value, or from no par value to par
value.
(vi) No adjustment in the Conversion Price shall be
required unless explicitly provided for in this paragraph 5 and unless such
adjustment (plus any adjustments not previously made by reason of this
subparagraph 5(e)(vi)), would require an increase or decrease of at least five
percent (5%) in such price; provided, that any adjustments which by reason of
this subparagraph 5(e)(vi) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
subparagraph 5(e)(vi) shall be made to the nearest cent.
(vii) No adjustment shall be made (1) upon conversion
of the Series A Preferred Stock, (2) upon exercise of options and/or warrants of
the Corporation outstanding on the date hereof, (3) in respect of options
hereafter granted to employees, officers or directors of or consultants to the
Corporation, pursuant to stock option plans or other agreements in effect on
the date hereof or hereafter adopted, (4) in respect of dividends or
distributions declared, ordered, paid or made on the Common Stock in which
shares of this Series may participate pursuant to subparagraph 3(b), and (5) in
respect of any dividend of rights pursuant to a "poison pill" rights plan.
(viii) Whenever the Conversion Price is adjusted
pursuant to any of the foregoing provisions of this paragraph 5, the Corporation
shall forthwith prepare a written statement signed by the president or any vice
president and the treasurer or any assistant treasurer or the secretary or any
assistant secretary of the Corporation, setting forth the adjusted Conversion
Rate determine as provided in the paragraph 5, and in reasonable detail the
facts requiring such adjustment. Such statement shall be filed among the
permanent records of the Corporation and a copy thereof shall be furnished to
any holder requesting the same, and shall at all reasonable times during
business hours be open to inspection by the holders. Within 10 days of the event
requiring an adjustment, the Corporation shall also cause a notice, stating that
such
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an adjustment has been made and setting forth the adjusted Conversion Rate, to
be mailed, first-class, postage prepaid, to all then holders of record at
their addresses as the same appear on the stock records of the Corporation.
(f) Reservation of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized but unissued Common
Stock the full number or shares of Common Stock deliverable upon the conversions
of all the then outstanding shares of this Series (including all shares issuable
in payment of deferred dividends) and shall take all such action and obtain all
such permits or orders as may be necessary to enable the Corporation to validly
and legally issue fully paid and non-assessable shares of Common Stock upon the
conversion of Series A Preferred Stock. The Corporation shall use its best
efforts to obtain, prior to or concurrently with the first issuance of this
Series, the authorization for the listing of such shares and the shares of
Common Stock issuable upon conversion of this Series on The New York Stock
Exchange and shall use its best efforts to maintain for as long as any share of
this Series shall be outstanding such authorization or authorization for the
listing of such shares on a national securities exchange or quotation system.
The Corporation shall pay any and all transfer, stamp and other like taxes that
may be payable in respect of the issuance or delivery to a holder of shares of
Common Stock or conversion of the Series A Preferred Stock by such holder.
6. Liquidation
(a) Priority. Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
shares of this Series shall be entitled to receive, before any distribution or
payment is made upon the Common Stock or any other Junior Securities, an
amount per share equal to $2.41, plus all accrued but unpaid current
dividends, additional dividends (if any), and deferred dividends to such date
(collectively, the "Liquidation Payments"). If upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets and funds available for distribution to stockholders
shall be insufficient to permit payment to the holders of this Series of the
full aforesaid preferential amounts, then the entire assets and funds of the
Corporation available to the holders of this Series shall be distributed
ratably among such holders in proportion to the number of shares of this
Series A Preferred Stock owned by each such holder. Except in the case of a
"deemed liquidation" (as defined below) , after the Liquidation Payments are
made to the holders of the shares of this Series, any remaining assets and
funds of the Corporation shall be distributed to holders of this Series and
the Common Stock and any Junior Securities, ratably, on the basis that all
shares of this Series are deemed to have been converted into Common Stock in
accordance with the terms hereof..
(b) Certain Transactions Deemed a Liquidation. If (i) the
Corporation consolidates or merges into or with any other corporation or
corporations or any other entity or entities, or (ii) the Corporation sells or
transfers all or substantially all its assets, or (iii) a majority of the then
outstanding capital stock of the Corporation is sold in a transaction, and any
such transaction results in the stockholders of the Corporation immediately
prior to the transaction possessing less than fifty percent (50%) of the
voting securities of the surviving entity, then the
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Corporation shall treat such merger, consolidation, sale or transfer as a
liquidation, dissolution or winding up of the Corporation for purposes of this
paragraph 6 (a "deemed liquidation"), unless the transaction is approved by
the holders of a majority of the shares in this Series then outstanding. Upon
a deemed liquidation, the holders of shares of this Series shall receive from
the Corporation the Liquidation Payments. From and after the date of a deemed
liquidation, all rights of the holders of any shares of this Series, as such,
shall cease and terminate, such shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor other
than the Liquidation Payments.
(c) Notice. Written notice of a liquidation, dissolution or
winding up (including the transactions described in paragraph (b) above),
stating a payment date, the estimated amount of the Liquidation Payments and
the place where the Liquidation Payments shall be payable shall be given by
first class mail, postage prepaid, not less than 30 days prior to the payment
dated stated therein, to each holder of record of this Series at such holder's
address as the same appears on the stock records of the Corporation.
7. Redemption.
(a) Optional Redemption. (i) Subject to the holders' rights
of conversion under subparagraph 5(a), the Corporation may, at its option (by
action of the Board of Directors) and out of funds legally available therefor,
(x) redeem all outstanding shares of this Series at any time after [October 29],
2004, or (y) redeem at least one-third of the outstanding shares of this
Series, ratably, at any time during the 12-month period following [October 29],
2004, 2005 and 2006, respectively, in each case at a redemption price per
share equal to the Liquidation Preference plus all accrued but unpaid
dividends (including all additional dividends and deferred dividends, if any)
thereon (the "redemption price"), subject, in each instance, to the holders'
prior rights of conversion under subparagraph 5(a); provided, however, that if
record ownership of any shares of this Series has changed subsequent to the
record date for any dividend that has been declared but not paid as of the
redemption date, the redemption price with respect to such shares shall not
include an amount equal to such declared but unpaid dividend on such shares
and the holder of such shares as of the record date for such declared but
unpaid dividend shall be entitled to payment of such dividend on the
designated date for payment of such dividend. With respect to all shares of
this Series for which record ownership has not changed subsequent to the
record date for any dividend that has been declared but not paid as of the
redemption date, holders of such shares on such redemption date shall, in lieu
of receiving such dividend payment on the date designated for payment thereof,
receive such dividend payment together with all other accumulated and unpaid
dividends, if any, as part of the redemption price on the date fixed for
redemption (unless such holders convert such shares in accordance with Section
5 hereof, in which case such holders, subject to the provision of subparagraph
5(c) hereof, will receive such payment on the date designated for payment of
such dividend).
(ii) In the event the Corporation shall redeem shares
of this Series in accordance with this subparagraph 7(a), notice of such
redemption shall be given by first class mail,
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postage prepaid, mailed not less than thirty (30) nor more than ninety (90)
days prior to the redemption date, to each record holder of the shares to be
redeemed, at such holder's address as the same appears on the books of the
Corporation. For purposes of determining the holders entitled to receive
notice of a redemption in accordance with this paragraph 7(a), the Board of
Directors of the Corporation may set a record date, which record date shall
not be more than ten days prior to the date of mailing such notice, and in the
absence of Board action setting such record date, the record date for
determining the holders entitled to receive notice of a redemption in
accordance with this subparagraph 7(a) shall be the date immediately preceding
the date of giving such notice. Each such notice shall state: (i) the
redemption date or dates, if the Corporation elects to effect such redemption
in one-third increments; (ii) the total number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price and any requirements
as to endorsement of assignment for transfer; (v) that dividends on the shares
to be redeemed will cease to accrue on such redemption date; and (vi) that
conversion rights of the shares to be redeemed shall continue until the close
of business redemption date (provided no default by the Corporation in the
payment of the redemption price shall have occurred and be continuing, in
which event such conversion rights shall continue until such shares are
actually redeemed, exchanged or converted), and the conversion rate at the
time applicable.
(b) Effect of Redemption. (i) If notice shall have been
given as provided in subparagraph 7(a)(ii) and the Corporation shall have set
apart or provided monies at the time and place specified for the payment of the
redemption price pursuant to such notice, including any accrued and unpaid
current dividends, additional dividends (if any), and deferred dividends, then
from and after the redemption date, whether or not certificates for such
shares have been surrendered for cancellation, dividends on the shares of this
Series so called for redemption shall cease to accrue, such shares shall no
longer be deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price without interest thereon) shall cease;
provided that the Corporation shall not be required to redeem any shares of
this Series which have been converted to Common Stock prior to the close of
business on the redemption date. Upon surrender to the Corporation or its
designated agent (in accordance with the notice) of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the Board
of Directors of the Corporation shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the redemption
price. In case fewer than all the shares represented by any such certificate
are to be redeemed, a new certificate shall be issued representing the
unredeemed shares, without cost to the holder thereof.
(ii) Any shares of this Series which have been
redeemed or converted shall, after such redemption or conversion, ave the status
of authorized but unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series by the Board of Directors.
14
<PAGE>
(c) Failure to Redeem. In the event that on any date
fixed for redemption pursuant to paragraph 7, the Corporation does not have
sufficient funds legally available to permit the redemption of shares
requested or required to be redeemed, those funds which are legally available
for such payment shall be used to redeem the maximum number of shares of this
Series, selected by lot or in such other manner as the Board of Directors may
determine.
15
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be signed by Stephen E. Lerch, its Executive Vice President.
TRANSMEDIA NETWORK INC.
By:
--------------------------------
Stephen E. Lerch
Executive Vice President
16
<PAGE>
Exhibit 4.1
- --------------------------------------------------------------------------------
Number THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE Shares
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.
THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS OF THE CORPORATION'S PREFERRED STOCK ARE SET
FORTH IN THE AMENDED AND RESTATED CERTIFICATE OF DESIGNATION. THE CORPORATION
WILL FURNISH A COPY OF THE AMENDED AND RESTATED CERTIFICATE OF DESIGNATION TO
THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON REQUEST.
Incorporated under the Laws of the State of Delaware
TRANSMEDIA NETWORK INC.
The Corporation is Authorized to Issue
------------------------------------
__________ Shares of Series A
Preferred Stock, Par Value $.10 Each
------------------------------------
This Certifies that ___________________________________________________
is the owner of ________________________________________________________________
fully-paid and non-assessable Shares of Series A Preferred Stock, par value $.10
per share, of the above Corporation transferable on the books of the Corporation
in person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof the corporation has caused this certificate to be
executed by its duly authorized officers.
Dated:
- ------------------------------------- -------------------------------------
President Secretary
- --------------------------------------------------------------------------------
<PAGE>
For Value Received, _______________ hereby sells, assigns and transfers unto-
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------
| |
- ------------------------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER
______________________________________________________________Shares represented
by the within Certificate, and does hereby irrevocably constitute and
appoint ____________________________________________________Attorney to transfer
the said Shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated __________________
In the presence of
<PAGE>
SUBSCRIPTION AGENT AGREEMENT
THIS AGREEMENT is entered into as of October __ , 1999 by and between
Transmedia Network Inc., a Delaware corporation (the "Company") and American
Stock Transfer and Trust Company, as Subscription Agent.
WHEREAS, the Company intends to issue (the "Rights Offering") to the
holders of record of its outstanding common stock, $.02 par value per share (the
"Common Stock"), as of a certain record date, rights ("Rights") to purchase one
share of Series A Preferred Stock, $.10 par value per share, of the Company (the
"Series A Preferred Shares") for every 3.218 shares of Common Stock held; and
WHEREAS, the Company desires the Subscription Agent to act on the
Company's behalf, and the Subscription Agent is willing so to act, in connection
with the issuance, and distribution of the Rights, collection of funds from
Rights holders exercising Rights, and issuance and delivery of Series A
Preferred Shares upon the exercise of the Rights.
NOW THEREFORE, in consideration of the promises and mutual covenants
set forth herein, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms
have the following meanings:
(a) "Basic Subscription" means the right of Registered Holders
to subscribe for and purchase Series A Preferred Shares through the exercise of
Rights at the rate of one Series A Preferred Share for each Right held.
(b) "Common Stock" means the shares of common stock, $.02
par value per share, of the Company.
(c) "Company" means Transmedia Network Inc., a Delaware
corporation.
(d) "Foreign Record Date Stockholder" means a Record Date
Stockholder having an address outside of the United States of America (including
the District of Columbia, territories and possessions) or having an A.P.O. or
F.P.O. address, as shown on the stock transfer books maintained by the
Subscription Agent in its capacity as the Transfer Agent and Registrar of the
Common Stock.
(e) "Expiration Time" means 5:00 p.m., Eastern Standard Time,
on October 22, 1999 or on such other date as the Company may determine.
(f) "Offering Period" means the period commencing on October
7, 1999 and ending at the Expiration Time.
<PAGE>
(g) "Oversubscription Privilege" means the right of Record
Date Stockholders who fully exercise their Rights in the Basic Subscription to
subscribe for and purchase, subject to certain limitations and subject to
allocation, any Series A Preferred Shares not acquired by other holders of
Rights through the exercise of such Rights in the Basic Subscription.
(h) "Prospectus" means the Company's prospectus dated October
7, 1999 pertaining to the Rights Offering including the documents incorporated
by reference therein, as the same may from time to time be supplemented or
amended.
(i) "Record Date" means October 6, 1999.
(j) "Record Date Stockholder" means a holder of record of
Common Stock on the Record Date, as determined by the stock transfer books
maintained by the Subscription Agent in its capacity as Transfer Agent and
Registrar of the Common Stock; provided, that for the purpose of determining
persons entitled to exercise the Oversubscription Privilege, the term "Record
Date Stockholder" also includes persons who beneficially own Common Stock
registered in the name of a broker, dealer, trust company, or other nominee who
is a Record Date Stockholder.
(k) "Registered Holder" means each person in whose name a
Subscription Certificate shall be registered on the books maintained by the
Subscription Agent.
(l) "Rights" means the subscription rights issued by the
Company, each of which entitles Registered Holders to subscribe for and purchase
one Series A Preferred Share for every 3.218 shares of Common Stock held on the
Record Date, at a Subscription Price of $2.41 per share.
(m) "Series A Preferred Shares" means the shares of senior,
convertible redeemable preferred stock of the Company, $.10 par value per share,
designated as Series A Preferred Stock.
(n) "Standby Purchaser" means Samstock, L.L.C.
(o) "Subscription Agent" means American Stock Transfer and
Trust Company.
(p) "Subscription Certificate" means the certificate
evidencing the Rights.
(q) "Subscription Price" means $2.41 per share.
2. Form of Subscription Certificates. The Subscription
Certificates shall be substantially in the form attached to this Agreement as
Appendix A. Each Subscription
2
<PAGE>
Certificate shall be signed by duly authorized officers of the Company, dated
the date of issue (whether upon original issuance or in lieu of transferred,
exchanged, mutilated, destroyed, lost or stolen Subscription Certificates) and
countersigned by the Subscription Agent. All signatures may be facsimile
signatures.
3. Issuance of Subscription Certificates. The Subscription Agent shall
issue and deliver (by first class United States mail, postage prepaid) to each
Record Date Stockholder (other than Foreign Record Date Stockholders) a
Subscription Certificate evidencing one Right for every 3.218 shares of Common
Stock owned of record by such Record Date Stockholder on the Record Date. The
Subscription Agent shall not issue fractional Rights; the number of Rights each
Record Date Stockholder shall be issued shall be rounded up or down to the
nearest whole number. No Subscription Certificates shall be issued before or
after the Offering Period. All Subscription Certificates surrendered to the
Subscription Agent upon exercise shall be canceled by the Subscription Agent and
thereafter shall be retained by the Subscription Agent for a period of not less
than six years or such shorter period of time as the Company may permit. Upon
expiration of the retention period, the canceled Subscription Certificates shall
be delivered to the Company or destroyed by the Subscription Agent, as directed
by the Company.
4. Foreign Record Date Stockholders. The Subscription Agent shall
refrain from delivering Subscription Certificates to Foreign Record Date
Stockholders, and shall hold such Subscription Certificates for the account of
Foreign Record Date Stockholders subject to such Stockholder making satisfactory
arrangements with the Subscription Agent for the exercise or other disposition
of the Rights evidenced thereby, and shall follow the instructions of such
Stockholder for the exercise of such Rights if such instructions are received
prior to the Expiration Time.
5. Delivery of Prospectus and Other Documents. The Subscription Agent
shall deliver to each Record Date Stockholder, along with originally issued
Subscription Certificates (except as provided in Section 4), (i) a letter from
the President of the Company to its Stockholders, (ii) a Prospectus, (iii)
Instructions as to Use of the Subscription Certificates, (iv) a return envelope
addressed to the Subscription Agent, and (vi) such other documents and
information as the Company may provide. The Subscription Agent shall also
provide copies of the Prospectus and other documents prepared by the Company to
Registered Holders, holders of Common Stock and other persons upon request.
(a) The Company will provide the Subscription Agent with a
sufficient number of Prospectuses as the Subscription Agent may require.
(b) The Subscription Agent shall provide a sufficient number
of Subscription Certificates as required to distribute to Record Date
Stockholders and to replace lost, destroyed, mutilated or stolen Subscription
Certificates.
3
<PAGE>
(c) The Company has provided to the Subscription Agent a form
of letter to Foreign Record Date Stockholders, which shall be delivered only to
Foreign Record Date Stockholders, along with the Prospectus.
(d) The Company has provided to the Subscription Agent the
following documents that the Subscription Agent shall deliver to brokers,
dealers, commercial banks, trust companies and other nominee holders of
Subscription Certificates: (i) a letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees; (ii) a letter to the clients of nominee
holders described in clause (i); (iii) a letter to Foreign Record Date
Stockholders; (iv) a Notice of Guaranteed Delivery; and (v) a Nominee Holder
Certification.
6. Exercise. Rights may be exercised at any time during the Offering
Period upon the terms and conditions set forth in the Prospectus and in this
Agreement.
(a) Rights may be exercised by completing and executing the
exercise portion of the Subscription Certificate and delivering it to the
Subscription Agent along with payment of the Subscription Price for the
aggregate number of Series A Preferred Shares subscribed for prior to the
Expiration Time.
(b) A subscription will be accepted by the Subscription Agent
if, prior to the Expiration Time, the Subscription Agent has received (i)
payment of the full Subscription Price for the Series A Preferred Shares
subscribed for in the Basic Subscription and any additional Series A Preferred
Shares subscribed for pursuant to the Oversubscription Privilege (for Record
Date Stockholders), and (ii) a Notice of Guaranteed Delivery by facsimile
(telecopy) or otherwise from a bank, trust company, New York Stock Exchange
member or member of another national securities exchange guaranteeing delivery
of a properly completed and executed Subscription Certificate. The Subscription
Agent will not honor a Notice of Guaranteed Delivery unless a properly completed
and executed Subscription Certificate is received by the Subscription Agent by
the close of business on the third New York Stock Exchange trading day after the
Expiration Time.
(c) The Subscription Price shall be paid in United States
dollars, by (i) check or draft drawn on a United States bank, or an postal,
telegraphic or express money order payable to the Subscription Agent, or (ii) by
wire transfer of same day funds to an account maintained by the Subscription
Agent for the purpose of accepting subscriptions the Chase Manhattan Bank,
Account No. 323-062547 (Transmedia Network Inc.); ABA No. 021000021.
(d) Once a Registered Holder has exercised Rights, such
exercise may not be revoked or rescinded.
(e) If a Registered Holder does not indicate the number of
Rights being exercised in the Basic Subscription, or does not deliver full
payment of the Subscription Price for the number of shares indicated as being
subscribed through the exercise of Rights in the Basic
4
<PAGE>
Subscription, then such Registered Holder will be deemed to have exercised
Rights to purchase the maximum number of Series A Preferred Shares determined by
dividing the total Subscription Price paid by the Subscription Price per share,
but not in excess of the number of Series A Preferred Shares such holder may
purchase through the exercise of Rights in the Basic Subscription.
(f) If a Registered Holder does not indicate the number of
Rights being exercised or the number of Series A Preferred Shares such holder
wishes to purchase through the Oversubscription Privilege, but submits payment
for more shares than may be purchased through the exercise of such Registered
Holder's Rights in the Basic Subscription, the excess payment received from such
Registered Holder will be deemed to be a subscription payment for a number of
additional Series A Preferred Shares in the Oversubscription Privilege
determined by dividing the amount of such excess payment by the Subscription
Price per share.
7. Oversubscription Privilege. Series A Preferred Shares not sold by
the Company through the exercise of Rights in the Basic Subscription will be
offered by means of the Oversubscription Privilege to the Record Date
Stockholders who have exercised all exercisable Rights issued to them. Record
Date Stockholders such as broker-dealers, banks, and other professional
intermediaries who hold shares of Common Stock on behalf of clients, may
participate in the Oversubscription Privilege for the client if the client fully
exercises all Rights attributable to the client.
(a) If subscriptions for Series A Preferred Shares through the
Oversubscription Privilege exceed the Series A Preferred Shares available for
sale after the Basic Subscription, the Series A Preferred Shares will be
allocated among those who oversubscribe based on the number of Rights originally
issued to them, so that the number of Series A Preferred Shares issued to Record
Date Stockholders who subscribe pursuant to the Oversubscription Privilege will
generally be in proportion to the number of shares of Common Stock owned by them
on the Record Date. The percentage of remaining Series A Preferred Shares each
oversubscribing Record Date Stockholder may acquire may be rounded up or down to
result in delivery of whole shares. The allocation process may involve a series
of allocations in order to assure that the total number of shares available for
Oversubscriptions is distributed on a pro rata basis. A Record Date Stockholder
who is not allocated the full amount of shares that the holder subscribes for
pursuant to the Oversubscription Privilege will receive a refund of the
Subscription Price paid by such holder for shares that are not allocated to and
purchased by such holder. Such refund will be made by a check mailed by the
Subscription Agent.
(b) If a Registered Holder does not deliver full payment of
the Subscription Price for the number of Series A Preferred Shares indicated as
being subscribed through the exercise of the Oversubscription Privilege, then
such Registered Holder will be deemed to have exercised the Oversubscription
Privilege to purchase the maximum number of Series A Preferred Shares determined
by dividing the total Subscription Price paid (in excess of the Subscription
Price for the number of Series A Preferred Shares such holder purchased through
the exercise of
5
<PAGE>
Rights in the Basic Subscription) by the Subscription Price per share; provided,
that such Registered Holder is a Record Date Stockholder who fully exercised all
of his Rights in the Basic Subscription.
8. Standby Purchase. The Subscription Agent understands that the Series
A Preferred Shares not sold by the Company through the exercise of Rights in the
Basic Subscription or by means of the Oversubscription Privilege will be
purchased by the Standby Purchaser pursuant to the terms of a standby purchase
agreement between the Company and the Standby Purchaser. As soon as practicable
after the Expiration Time (but not later than 9:00 a.m., Eastern Standard Time,
on the day following the Expiration Time), the Subscription Agent shall advise
the Company and the Standby Purchaser in writing as to the number of Series A
Preferred Shares unsubscribed for (and, in the case of the exercise of Rights
pursuant to the guaranteed delivery procedures set forth in the Prospectus, such
communication shall be confirmed to the Company and the Standby Purchaser by
5:00 p.m., Eastern Standard time, three New York Stock Exchange trading days
after the Expiration Time).
9. Power of Attorney. The Company hereby constitutes and appoints the
Subscription Agent as the Company's true and lawful attorney in-fact, with full
power in such capacity to endorse, deposit, negotiate, and invest on behalf and
for the account of the Company, in accordance with the written instructions
provided by the Company, checks, drafts, money orders, wire transfers or other
payments received by the Subscription Agent as a payment of the Subscription
Price upon the exercise of Rights in the Basic Subscription or pursuant to the
Oversubscription Privilege.
10. Escrow and Investment of Funds. The Subscription Agent shall:
(a) Maintain a record of the date, amount of each payment of
the Subscription Price received upon the exercise of Rights in the Basic
Subscription and the Oversubscription Privilege, and the name and address of the
Registered Holder by whom or on whose behalf payment was made.
(b) Aggregate all payments received upon the exercise of
Rights in the Basic Subscription and deposit such payments in one or more bank
accounts, or invest such payments in Treasury bills or other investments
designated in writing by the Company, as soon as practicable after receipt of
such payments.
(c) Aggregate all payments received upon the exercise of
Rights pursuant to the Oversubscription Privilege and deposit such payments in
one or more bank accounts, or invest such payments in Treasury bills or other
investments designated in writing by the Company, as soon as practicable after
receipt of such payments.
6
<PAGE>
(d) Keep payments received upon the exercise of Rights in the
Basic Subscription segregated from payments, received upon the exercise of the
Oversubscription Privilege.
(e) Maintain a record of the number of Rights issued to each
Foreign Record Date Stockholder.
(f) Keep all funds deposited and invested in accounts in the
name of the Company for the benefit of the Company.
(g) Return as promptly as practicable to the Registered Holder
who made such payment, any payment of the Subscription Price in the Basic
Subscription or Oversubscription Privilege not accepted by the Company for any
reason.
11. Payment of Funds to the Company. Funds representing payment of the
Subscription Price in the Basic Subscription (including interest earned thereon)
shall be paid to the Company by wire transfer to such account and according to
such instructions as the Company may deliver to the Subscription Agent in
writing. Unless changed by subsequent written instructions, the Subscription
Agent shall follow the wiring instructions attached to this Agreement as
Appendix B. Such wire transfer of funds to the Company shall be made promptly
following the Expiration Time, at which time all funds (including payments in
respect of the Oversubscription Privilege) received by the Subscription Agent
from Rights holders shall be paid (together with interest thereon) to the
Company.
12. Reports. The Subscription Agent shall deliver daily to the Company
a written report showing the following: (i) the number of Rights exercised in
the Basic Subscription on such day, and the aggregate number of Rights exercised
in the Basic Subscription through such date; (ii) the amount of funds received
on such day in payment of the Subscription Price in the Basic Subscription, and
the aggregate amount of funds on deposit or invested for the account of the
Company from payment of the Subscription Price in the Basic Subscription through
such date; (iii) the number of Series A Preferred Shares subscribed for on such
day pursuant to the Oversubscription Privilege, and the aggregate number of
Series A Preferred Shares subscribed for through such date pursuant to the
Oversubscription Privilege; (iv) the aggregate amount of funds received on such
day in payment of the Subscription Price pursuant to the Oversubscription
Privilege, and the aggregate amount of funds on deposit or invested for the
account of the Company from payment of the Subscription Price through the
Oversubscription Privilege through such date; and (v) the aggregate number of
Series A Preferred Shares that would be allocated to the Standby Purchaser if no
further subscriptions were to be received.
13. Issuance of Series A Preferred Shares. Promptly after (i) the
receipt and acceptance of properly exercised Subscription Certificates and
receipt of payment of the Subscription Price for Series A Preferred Shares in
the Basic Subscription and (ii) the determination of the number of Series A
Preferred Shares, if any, to be issued to each Registered
7
<PAGE>
Holder who subscribes and pays for Series A Preferred Shares through the
Oversubscription Privilege, the Subscription Agent shall issue and deliver to
the Registered Holder so exercising Rights a stock certificate evidencing the
aggregate of (a) the number of Series A Preferred Shares purchased in the Basic
Subscription and (b) with respect to any Registered Holder whose
Oversubscription is accepted, the number of Series A Preferred Shares purchased
in the Oversubscription.
14. Validity and Form of Subscriptions. All questions concerning the
timeliness, validity, form and eligibility of any exercise of Rights in the
Basic Subscription or subscriptions pursuant to the Oversubscription Privilege
will be determined by the Company, whose determination will be final and
binding. The Subscription Agent shall examine the Subscription Certificates it
receives to ascertain whether they appear to have been completed and executed in
accordance with the Prospectus and the Instructions. In the event that the
Subscription Agent determines that the Subscription Certificate does not appear
to have been properly completed or executed, or where the Subscription
Certificates do not appear to be in proper form for subscription, or any other
irregularity in connection with the subscription appears to exist, the
Subscription Agent will follow its regular procedures to attempt to cause such
irregularity to be corrected. The Subscription Agent is not authorized to waive
any irregularity in connection with the subscription, unless it has received
from the Company notification, duly dated and signed by an authorized officer of
the Company, indicating that any irregularity in the Subscription Certificate
has been cured or waived and that such Subscription Certificate has been
accepted by the Company. The Subscription Agent will promptly notify the Company
in writing of all defects in the exercise of any Rights in the Basic
Subscription or through the Oversubscription Privilege. Subscription
Certificates and funds received by the Subscription Agent that are not properly
executed or submitted, and as to which all irregularities have not been timely
waived or cured, shall be returned by the Subscription Agent to the Registered
Holder who submitted such Subscription Certificate and/or payment. Such return
shall be made by either first class mail under a blanket surety bond or
insurance protecting the Subscription Agent and the Company from losses or
liabilities arising out of the non-receipt or nondelivery of Subscription
Certificates or by registered mail insured separately for the value of such
Subscription Certificates, and if determined to be required by the Company,
shall include a letter of notice to be furnished by the Company explaining the
reasons for the return of the Subscription Certificates and other documents.
15. Amendment, Extension or Termination of the Rights Offer. The
Company reserves the right, in its sole discretion, to: (a) terminate the offer
of Series A Preferred Shares through the Rights prior to delivery of the Series
A Preferred Shares for which Registered Holders have subscribed pursuant to the
exercise of Rights in the Basic Subscription or pursuant to the Oversubscription
Privilege; (b) extend the Expiration Time to a later date and time; or (c) amend
or modify the terms of the Rights. If the Company amends the terms of the
Rights, an amended Prospectus will be distributed to holders of record of Rights
and to holders of Rights who have previously exercised Rights. All holders of
Rights who exercised their Rights prior to such amendment or within four
business days after the mailing of the amended Prospectus will
8
<PAGE>
be given the opportunity to confirm the exercise of their Rights by executing
and delivering a consent form.
16. Loss or Mutilation. Upon receipt by the Company and the
Subscription Agent of evidence, satisfactory to them, of the ownership and loss,
theft, destruction or mutilation of any Subscription Certificate, and in the
case of loss, theft or destruction, receipt of indemnity satisfactory to the
Company and the Subscription Agent, and in the case of mutilation upon surrender
and cancellation of the mutilated Subscription Certificate, the Subscription
Agent shall deliver in place of such lost, stolen, destroyed or mutilated
Subscription Certificate a new Subscription Certificate representing an equal
aggregate number of Rights. Registered Holders requesting such substitute
Subscription Certificates shall also comply with such other reasonable
regulations, requirements or requests, and shall pay such reasonable charges, as
the Company or the Subscription Agent may prescribe.
17. Liability of Subscription Agent. The Subscription Agent shall not,
by issuing and delivering Subscription Certificates or stock certificates
evidencing Series A Preferred Shares, or receiving or holding funds for the
benefit of the Company, or by any other act under this Agreement, be deemed to
make any representations as to the validity or value or authorization of the
Subscription Certificates or the Rights represented thereby or the Series A
Preferred Shares issued upon the exercise of Rights, or whether the Series A
Preferred Shares issued upon the exercise of Rights are fully paid and
nonassessable. The Subscription Agent shall not be (i) liable for any statement
of fact made or contained in this Agreement or in the Prospectus or in any
documents prepared by the Company in connection with the offer of Series A
Preferred Shares through the Rights, (ii) liable for any action taken, suffered,
or omitted by it in reliance upon any Subscription Certificate or other document
or instrument believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties, (iii) responsible for any failure
on the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in the Subscription Certificates, or (iv) liable
for any act or omission in connection with the performance of its duties,
obligations, covenants and agreements under this Agreement, except for the
Subscription Agent's own negligence, wilful breach or misconduct.
18. Indemnification. The Company agrees to indemnify and hold harmless
the Subscription Agent from and against any and all losses, expenses, and
liabilities, including judgments, costs and reasonable attorneys' fees, arising
out of any act or omission of the Subscription Agent in the execution or
performance of its duties, obligations, covenants and agreements under this
Agreement, except for the Subscription Agent's own negligence, wilful breach or
misconduct.
19. Compensation for Services. The Company agrees to pay the
Subscription Agent a fee of $15,000 for all services rendered by the
Subscription Agent under this Agreement, and to reimburse the Subscription Agent
for all reasonable out-of-pocket expenses incurred in performing its duties
under this Agreement.
9
<PAGE>
20. Amendment; Modification; Waiver. This Agreement may be amended,
waived, discharged, or terminated in whole or in part only by a written
instrument signed by the party against whom enforcement of such amendment,
waiver, discharge, or termination is sought. Notwithstanding the immediately
preceding sentence, the parties shall supplement or amend this Agreement to
conform to any amendments or changes that the Company may make to the terms and
conditions of the Rights and the offer of the Series A Preferred Shares through
the Rights.
21. Notices. All notices under this Agreement shall be in writing and
shall be sent by telecopier with a confirming copy sent by United States mail,
first class postage prepaid, or by air courier, delivery charges prepaid, to a
Registered Holder at the address shown on the registry books maintained by the
Subscription Agent, or to the parties at the following telecopier numbers and
addresses:
To the Company: Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Telecopier: (305) 892-3342
Attention: Chief Financial Officer
To the Subscription Agent: American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Telecopier: (718) 236-4588
Attention: Reorganization Department
A notice sent by mail shall be deemed delivered on the fourth day after deposit
in the United States mail, postage prepaid, and addressed as aforesaid. Any
party may change its address or telecopier number for notice by giving notice to
the other party in the manner provided in this Section.
22. Delays or Omissions. No delay or omission to exercise any right,
power, or remedy accruing to any party to this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power, or remedy; nor shall it be construed to be a waiver of, or an
acquiescence in any such breach or default or any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character, on
the part of any party, of any breach or default under this Agreement, or any
waiver, on the part of any party, of any provisions or conditions of this
Agreement, must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law and otherwise afforded to any party, shall be cumulative and
not alternative.
10
<PAGE>
23. Unenforceable Provisions. If all or part of any one or more of the
provisions contained in this Agreement is for any reason held to be invalid,
illegal, or unenforceable in any respect, the invalidity, illegality, or
unenforceability shall not affect any other provisions, and this Agreement shall
be equitably construed as if it did not contain the invalid, illegal, or
unenforceable provision.
24. Gender. Whenever appropriate in this Agreement, terms in the
singular form shall include the plural (and vice versa) and any gender form
shall include all others.
25. Section Headings. Section headings are for the convenience of the
parties and do not form a part of this Agreement.
26. Binding Effect; Parties. This Agreement shall be binding on the
Company, the Subscription Agent and their respective successors and assigns; and
nothing in this Agreement shall confer upon any other person or entity any
right, remedy, or claim, or impose upon any other person any duty, liability, or
obligation.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRANSMEDIA NETWORK INC.
By:
------------------------------------
Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
------------------------------------
Title:
11
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APPENDIX B
Wire funds to:
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12
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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
<PAGE>
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 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 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:
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
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(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, 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
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<PAGE>
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.
(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,
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<PAGE>
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 Section 3.1 of the First Amended
Investment Agreement), and no other corporate
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<PAGE>
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
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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 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.
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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 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
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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 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
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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 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.
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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 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
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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 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;
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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.
(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.
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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
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,
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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 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
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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 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,
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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 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
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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 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
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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 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."
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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.
-20-
<PAGE>
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
-21-
<PAGE>
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.
-22-
<PAGE>
IN WITNESS WHEREOF, each of the Investors other than Halmostock 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.
---------------------------------------------
By: Sheli Z. Rosenberg
Vice President
SAMSTOCK, L.L.C.
---------------------------------------------
By: Sheli Z. Rosenberg
Vice President
SOLELY FOR PURPOSES OF SECTION 5 HEREOF:
STEINER TRUST:
--------------------------------------
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.
---------------------------------------
By: Gene Henderson, President and
Chief Executive Officer
-23-
<PAGE>
October 5, 1999
Transmedia Network, Inc.
11900 Biscayne Boulevard
North Miami, Florida 33181
Re: Registration Statement on Form S-2
----------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Transmedia Network, Inc.,
a Delaware corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-2 (Registration No. 333-84531), as the same may
be amended (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to (i)
rights (the "Rights") to purchase shares of Series A Preferred Stock of the
Company, par value $.10 per share (the "Series A Preferred Shares"), (ii) the
Series A Preferred Shares, and (iii) shares of the Company's common stock, par
value $.02 per share (the "Common Stock"), into which the Series A Preferred
Shares may from time to time be convertible (the "Conversion Shares"). In that
connection, you have requested our opinion with respect to certain matters of
Delaware law.
<PAGE>
Transmedia Network, Inc.
October 5, 1999
Page 2
For purposes of giving the opinion hereinafter set forth, we have
conducted no independent factual investigation of our own, and have examined
only the following documents, which you have provided to us:
(1) the Certificate of Incorporation of the Company filed with the
Secretary of State of the State of Delaware (the "Secretary") on June 10, 1987,
as amended by a Certificate of Merger filed with the Secretary on July 17, 1987,
a Certificate of Amendment filed with the Secretary on June 22, 1987, two
Certificates of Amendment filed with the Secretary on October 5, 1988, a Change
of Address of Registered Agent filed with the Secretary on October 27, 1989, a
Certificate of Amendment filed with the Secretary on May 19, 1992, a Certificate
of Amendment filed with the Secretary on March 22, 1994, and a Certificate of
Amendment filed with the Secretary on May 3, 1998 (collectively, the
"Certificate of Incorporation");
(2) a form of Certificate of Amendment to the Certificate of
Incorporation (the "Charter Amendment") relating to the proposed increase in the
authorized number of shares of the class of preferred stock, par value $.10 per
share (the "Preferred Stock"), and the class of Common Stock;
(3) A form of Certificate of Designations, Preferences and Rights
relating to the Series A Preferred Shares approved by the Board of Directors of
the Company (the "Board") on September 27, 1999 and, as revised, on October 5,
1999 (the "Certificate of Designations");
(4) the Bylaws of the Company, as amended to date;
<PAGE>
Transmedia Network, Inc.
October 5, 1999
Page 3
(5) a copy of resolutions of the Board adopted (i) at a meeting of the
Board held on May 24, 1999 concerning, among other things, a proposed offering
of the Rights and the Charter Amendment, (ii) at a meeting of the Board held on
June 25, 1999 concerning, among other things, revisions to the proposed offering
of the Rights, (iii) at a meeting of the Board held on September 27, 1999
concerning, among other things, approval of the Certificate of Designation and
authorization of Series A Preferred Shares, and (iv) by unanimous written
consent of the Board of Directors dated September 27, 1999 concerning approval
of the Charter Amendment and certain revisions thereto;
(6) the Registration Statement;
(7) the form of Proxy Statement dated September 13, 1999 mailed to the
stockholders of the Company;
(8) the Summary Terms of Rights Offering dated June 24, 1999 relating
to the proposed investment by Equity Group Investments, L.L.C., or its
affiliates, in the Company;
(9) a certificate of an officer of the Company dated September 30,
1999; and
(10) a certificate of good standing for the Company obtained from the
Secretary dated September 27, 1999.
We have assumed that all signatures on documents examined by us are
genuine, that all documents submitted to us as originals are authentic, and that
all documents submitted to us as copies are complete, accurate, and authentic
copies that conform to the authentic originals. We have not reviewed any other
documents other than those expressly referenced above, and we
<PAGE>
Transmedia Network, Inc.
October 5, 1999
Page 4
have assumed that no provision of any other document is inconsistent with or
would otherwise alter our opinion expressed herein.
Based upon and subject to the foregoing and further subject to the
assumptions, qualifications, limitations, and exceptions set forth herein, we
are of the opinion that:
1. The Rights to be issued by the Company have been duly authorized.
2. Upon the filing of the Charter Amendment and the Certificate of
Designation with the Secretary, the Series A Preferred Shares to be issued and
sold by the Company pursuant to the exercise of the Rights will be duly
authorized and, when issued and sold pursuant to the exercise of the Rights in
the manner contemplated by the Registration Statement and when certificates
representing such shares are duly and properly endorsed and delivered, will be
validly issued, fully paid, and nonassessable.
3. Upon the filing of the Charter Amendment and the Certificate of
Designations with the Secretary, the Conversion Shares will be duly authorized
and, when and if issued upon conversion of the Series A Preferred Shares in
accordance with the Certificate of Designations and when certificates
representing such shares are duly and properly endorsed and delivered, the
Conversion Shares will be validly issued, fully paid, and nonassessable.
The opinions expressed herein are subject in all respects to the
following assumptions, limitations and qualifications:
<PAGE>
Transmedia Network, Inc.
October 5, 1999
Page 5
(i) The foregoing opinions are limited to the General Corporation Law
of the State of Delaware presently in effect. We have not considered, and have
not expressed any opinion with regard to, or as to the effect of, the Delaware
Securities Act (6 Del. C. Section 7301 et seq.) or the requirements of any other
law, rule, or regulation, state or federal, applicable to the Company; nor have
we considered or expressed any opinion regarding rules and regulations of stock
exchanges, the National Association of Securities Dealers, Inc., or any other
regulatory body.
(ii) We have assumed that: (a) if the aggregate par value of Conversion
Shares issuable upon conversion of the Series A Preferred Shares exceeds the
amount originally allocated to capital in connection with the issuance of the
Series A Preferred Shares, the Company will have sufficient surplus to allocate
and will allocate to surplus an amount equal to such excess; and (b) the number
of shares of Conversion Shares available for issuance upon the conversion of the
Series A Preferred Shares will be sufficient to effectuate the conversion at the
then current Conversion Rate (as defined in the Certificate of Designation) for
the Series A Preferred Shares.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Registration Statement. In giving this consent, we do not admit that we are
acting within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended. We further consent to the reliance by
Morgan Lewis & Bockius LLP on this opinion in connection with any opinions it
may be delivering on the date hereof with respect to the matters set forth
herein. Except as otherwise noted in the preceding three sentences, this opinion
is rendered solely for
<PAGE>
Transmedia Network, Inc.
October 5, 1999
Page 6
your benefit in connection with the matters set forth herein and, without our
prior written consent, may not be furnished to, or quoted or relied upon by, any
other person or entity for any purpose.
Very truly yours,
POTTER ANDERSON & CORROON LLP
<PAGE>
[Transmedia Network Inc. Letterhead]
January 5, 1999
Christine M. Donohoo
6807 Seton House Lane
Charlotte, North Carolina 28277
Dear Christine:
On behalf of Transmedia Network, Inc. ("the Company"), I am very pleased to
offer you the position of President, Transmedia Service Company. In this
position, you will report directly to the President and CEO of the Company.
The terms of our offer include the following:
1. Duties and Responsibilities - As President of Transmedia Service
Company, you will be responsible for the day-to-day management and
operating decisions of the membership side of the Company (Transmedia
Network, Inc.). In addition, you will have full responsibility for all
personnel decisions relating to the development and execution of the
Company's overall marketing plan.
2. Starting Date - We would like you to start as soon as possible,
however, we would expect you to assume this position on or before
January 31, 1999.
3. Base Salary - Your annual base salary is $275,000 and is paid weekly.
Your compensation (both base salary and target bonus) will be reviewed
in October 1999 and annually thereafter.
4. Annual Bonus - Your annual target cash bonus opportunity for fiscal
1999 (FYE September 30, 1999) and thereafter is equal to 85% of your
base salary at plan. Based upon the achievement of specific goals to be
set and agreed to at the beginning of each fiscal year you may earn
from zero up to 100% of your annual target bonus amount. If plan is
exceeded, variable compensation will track linearly upward. Any bonus
award for a fiscal year shall be calculated and paid during the first
fiscal quarter of the following fiscal year. For the fiscal 1999 year
you will be guaranteed a minimum bonus of 150,000 if your start date is
January 31, 1999, or before. If your start date is February 1 or after,
the guaranteed bonus will be a pro rata portion of the $150,000.
<PAGE>
5. Car Allowance and Transmedia Card - You will receive a car allowance of
$1,000 per month and a Transmedia Card for your business and personal
use.
6. Stock Options - Subject to the terms and conditions of the Company's
existing 1996 Long Term Incentive Plan ("LTIP"), you will receive
150,000 stock options upon the starting date of your employment. The
strike price of the options will be the closing price of Transmedia
stock on the starting date of your employment.
o Vesting - These options will vest ratably on each of the first
through fourth anniversaries of your starting date. Vested
options will remain exercisable by you for ten years following
the date of their grant or, in the event of the termination of
your employment, for the period provided in the LTIP. If you
are terminated for any reason other than "Cause" (as defined
below), that period is ninety days from the date of
termination. All unvested options will terminate upon the
termination of your employment for any reason. During the term
of your employment, you will be provided with accelerated
vesting subject to the Company's stock price achieving certain
closing price levels for 20 consecutive trading days as
follows: 50% (of the total options granted you) vests if stock
price is at or above $12; an additional 25% (of the total
options granted you) vests if stock price is at or above $16;
100% (of the total options granted you) vests if stock price is
at or above $20.
o Annual grants - You will be eligible for annual option grants
at the discretion of the CEO and the Compensation Committee of
the Board.
7. Employee Benefits - In addition to all normal Company benefit plans,
you will participate in the following Executive Benefit Plan:
o Severance Arrangements - If your employment is terminated by
Transmedia Network, Inc. for any reason other than "Cause" (as
defined below), disability or death, you will receive payments
equal to twelve months base salary (paid pursuant to Company's
normal payroll practices) plus the guaranteed bonus (if any)
for the fiscal year. You will have the option to continue
coverage in the Company's health care plan for the statutory
period provided by COBRA and we will pay for your costs
associated with such participation. In addition, prior to the
second anniversary of your starting date, the Company will
provide accelerated vesting of your options on a pro rata basis
(using the actual period elapsed from your start date to the
date of termination divided by two years).
The Company will require that you sign and comply with a
Termination Agreement as a condition of receiving severance
benefits. This agreement will include a Non-compete Agreement
(as described in paragraph 9 below),
<PAGE>
a general release of liability and a covenant not to sue the
Company or any affiliated company or any officer, director or
employee thereof (provided however, that no provision of such
release shall excuse the Company from full performance of its
obligations as set forth in this offer). You will be deemed to
have been terminated without Cause if there is any material
diminution of the scope of your duties and responsibilities or
a reduction in your base salary, target bonus, bonus plan
parameters and a reduction, not applicable to executive
employees generally, in employee welfare benefits (it being
understood that the changes, if any, in employee welfare
benefits shall be viewed in their entirety and not on a plan by
plan basis). "Cause" shall mean (a) your willful failure to
substantially perform the duties hereunder, (b) your willful
failure to follow a written, lawful order or written directive
from the President and CEO or (c) your conviction of a felony
of any kind or any misdemeanor involving moral turpitude. Your
receipt of any severance payments or benefits hereunder shall
be conditioned upon your compliance with the non-compete
provision below.
o Change of Control - Upon a Change of Control event as defined
in the LTIP and for a period of one year after such date, if
you are terminated by the Company other than for cause,
disability or death, the severance payments will be eighteen
months base salary from the separation date plus the greater of
the guaranteed bonus for that year (if any) or the pro rata
portion of the full bonus potential for that year. Upon a
change of control, unvested options will immediately vest as
provided in the LTIP. You shall be entitled, for a 12 month
period (or shorter if you receive coverage and benefits under
the plans and program of a subsequent employer), to continued
participation in employee welfare benefit plans in which you
were participating on the termination date. You shall be deemed
to have been terminated without cause if, after a change of
control, there is any material diminution of the scope of your
duties and responsibilities or a reduction in your base salary,
target bonus, bonus plan parameters and a reduction, not
applicable to executive employees generally, in employee
welfare benefits (it being understood that the changes, if any,
in employee benefits shall be viewed in their entirety and not
on a plan by plan basis).
o Annual Physical Examination - You shall be entitled to a
comprehensive physical on an annual basis at Company expense.
The Company suggests you schedule a comprehensive physical
examination prior to the starting date of your employment.
8. Additional Benefits -The Company will establish an office in Charlotte,
North Carolina to accommodate the marketing team that will be resident
there. At some point in the future but not prior to June, 2000, the
Company may request that you relocate to Corporate
<PAGE>
Headquarters. It is understood that such request will not be
unreasonably denied. A comprehensive relocation package will accompany
such request.
9. Non-Compete - In the event you voluntarily or involuntarily leave
Transmedia's employ, for a period of one year following your
termination date or, if longer, for as long as you are receiving
severance payments and benefits as provided above, you will not
directly or indirectly (i) be employed by or perform work as a
director, officer, independent contractor, partner, or consultant for
any business in which the Company or any of its affiliates is engaged
at such date in any geographic region in which the Company conducts
business ("business" shall be defined as the marketing and sale of any
card substantially similar to the Transmedia Card and/or the marketing
and sale of discount restaurant, hotel, resort, travel or leisure
products or services as more particularly set forth in the Company's
10-K filing effective as of the date of this offer).
10. Confidentiality - You shall treat as confidential and not disclose to
any person not affiliated with Transmedia all non-public and
proprietary information and data about the business, operations,
employees, programs, plans and financial results, projections and
budgets of Transmedia and its affiliates which are disclosed to you
during your employment. The confidentiality agreement shall survive the
termination of your employment for any reason.
On behalf of the entire Board of Directors of Transmedia Network, Inc., I am
delighted to offer you the position of President of Transmedia Service Company
and I look forward to your joining our team. If you have any questions, please
contact me directly at 305-892-3314.
Sincerely,
/s/ Gene M. Henderson
- -----------------------------
Gene M. Henderson
President and CEO
Agreement Accepted:
/s/ Christine M. Donohoo
- -----------------------------
Christine M. Donohoo
Date: 1.5.99
--------------
<PAGE>
[Transmedia Network Inc. Letterhead]
October 13, 1998
Mr. Gene Henderson
8017 Clayton Lane Court
Clayton, MO 63105
Dear Gene:
On behalf of Transmedia Network, Inc., we are very pleased to offer you the
position of President and Chief Executive Officer. In this position, you will
report directly to the Board of Directors.
The terms of our offer include the following:
1. Duties and Responsibilities - As President and Chief Executive Officer,
you will be responsible for the day-to-day management and operating
decisions of the Company. In addition, you will have full
responsibility for all personnel decisions and for the execution of the
Company's business plan.
2. Board Seat - The Company will appoint you to the Board of Directors
upon commencement of employment.
3. Starting Date - We would like you to start as soon as possible,
however, we would expect you to assume this position on or before
October 26, 1998.
4. Base Salary - Your annual base salary is $350,000 and is paid weekly.
Your compensation (both base salary and target bonus) will be reviewed
in October 1999 and annually thereafter.
5. Annual Bonus - Your annual target cash bonus opportunity for fiscal
1999 (FYE September 30, 1999) and thereafter is equal to $350,000
annually (or up to 100% of your base salary). Based upon the
achievement of specific goals to be set and agreed to between you and
the Board of Directors beginning in fiscal 1999, you may earn from zero
up to 100% of your annual target bonus amount. Any bonus award for a
fiscal year shall be calculated and paid during the first fiscal
quarter of the following fiscal year. For the fiscal 1999 year you will
be guaranteed a minimum bonus of 50% of your base salary or $175,000.
<PAGE>
6. Stock Options - Subject to the terms and conditions of the Company's
existing 1996 Long Term Incentive Plan ("LTIP"), you will receive
250,000 stock options upon the starting date of your employment and
100,000 stock options on January 4, 1999. The strike price of the
initial 250,000 options will be fair market value of Transmedia stock
on the starting date of your employment. The strike price of the
100,000 options will be the fair market value of Transmedia stock on
January 4, 1999.
o Vesting - These options will vest ratably on each of the first
through fourth anniversaries of your starting date. Vested
options will remain exercisable by you for ten years following
the date of their grant or, in the event of the termination of
your employment, for the period provided in the LTIP. All
unvested options will terminate upon the termination of your
employment for any reason. During the term of your employment,
you will be provided with accelerated vesting subject to the
Company's stock price achieving certain closing price levels
for 20 consecutive trading days as follows: 50% (of the total
options granted you) vests if stock price is at or above $12;
an additional 25% (of the total options granted you) vests if
stock price is at or above $16; 100% (of the total options
granted you) vests if stock price is at or above $20.
o Annual grants - You will be eligible for annual option grants
at the discretion of the Compensation Committee of the Board.
7. Employee Benefits - In addition to all normal Company benefit plans,
you will participate in the following Executive Benefit Plan:
o Severance Arrangements - If your employment is terminated by
Transmedia Network, Inc. for any reason other than "Cause" (as
defined below), disability or death, you will receive payments
equal to twelve months base salary (paid pursuant to Company's
normal payroll practices) plus the guaranteed bonus (if any)
for that fiscal year. You will have the option to continue
coverage in the company's health care plan for the statutory
period provided by COBRA and we will pay for your costs
associated with such participation. In addition, prior to the
second anniversary of your starting date, the Company will
provide accelerated vesting of your options on a pro rata basis
(using the actual period elapsed from your start date to the
date of termination divided by two years).
The Company will require that you sign and comply with a
Termination Agreement as a condition of receiving severance
benefits. This agreement will include a Non-compete Agreement
(as described in paragraph 9 below), a general release of
liability and a covenant not to sue Transmedia Network, Inc. or
any affiliated company or any officer, director or employee
thereof. You will be deemed to have been terminated without
Cause if there is any
<PAGE>
material diminution of the scope of your duties and
responsibilities or a reduction in your based salary, target
bonus, bonus plan parameters and a reduction, not applicable to
executive employees generally, in employee welfare benefits (it
being understood that the changes, if any, in employee welfare
benefits shall be viewed in their entirety and not on a plan by
plan basis). "Cause" shall mean (a) your willful failure to
substantially perform the duties hereunder, (b) your willful
failure to follow a written, lawful order or written directive
from the Board of Directors or Chairman of Transmedia Network,
Inc., or (c) your conviction of a felony of any kind or any
misdemeanor involving moral turpitude. Your receipt of any
severance payments or benefits hereunder shall be conditioned
upon your compliance with the non-compete provisions below.
o Change of Control - Upon a Change of Control event as defined
in the LTIP and for a period of one year after such date, if
you are terminated by the Company other than for Cause,
disability or death, the lump such severance payment will be
eighteen months base salary from the separation date plus the
greater of the guaranteed bonus for that year (if any) or the
pro rata portion of the full bonus potential for that year.
Upon a Change of Control options will vest as provided in the
LTIP. You shall be entitled, for a 12 month period (or shorter
if you receive coverage and benefits under the plans and
program of a subsequent employer), to continue participation in
employee welfare benefit plans in which you were participating
on the termination date. You shall be deemed to have been
terminated without Cause if, after a Change of Control, there
is any material diminution of the scope of your duties and
responsibilities or a reduction in your base salary, target
bonus, bonus plan parameters and a reduction, not applicable to
executive employees generally, in employee welfare benefits (it
being understood that the changes, if any, in employee benefits
shall be viewed in their entirety and not on a plan by plan
basis).
o Annual Physical Examination - You shall be entitled to a
comprehensive physical on an annual basis at Company expense.
The Company suggests you schedule a comprehensive physical
examination prior to the starting date of your employment.
8. Relocation Benefits - A condition of this offer is that you relocate
your permanent residence to Southeast Florida within 180 days of
starting your employment with the Company. To assist you in this
relocation, the Company will provide the following relocation benefits:
o Temporary Housing - The Company will reimburse you for
temporary living costs in Southeast Florida for a period up to
90 days from the starting date of your employment.
<PAGE>
o Weekend Round Trips Home - For a period of 90 days (if needed).
o Househunting Trips - Reimbursement of reasonable airfare,
hotel, car rental and meal expenses for you and your spouse.
o Sale of Present Residence - The Company will reimburse you for
all closing costs in connection with the sale of your residence
in Clayton, Missouri. If within 90 days from the date you make
your present residence available for sale no satisfactory
offers are received, the Company will facilitate the purchase
of your home on terms satisfactory to you and the Company. Such
purchase may be facilitated through a third party relocation
company.
o Closing Costs on Purchase of New Home - The Company will
reimburse you for all closing costs in connection with the
purchase of a home in Southeast Florida.
o Movement of Household Goods - The Company will reimburse you
for the cost of transporting your household goods from Clayton,
Missouri to Southeast Florida.
o Reimbursement gross-up - Reimbursement of any relocation costs
incurred will be grossed up to cover applicable taxes.
9. Non-Compete - In the event you voluntarily or involuntarily leave
Transmedia's employ, for a period of one year following your
termination date or, if longer, for as long as you are receiving
severance payments and benefits as provided above, you will not
directly or indirectly (i) be employed by or perform work as a
director, officer, independent contractor, partner, or consultant for
any business in which Transmedia or any of its affiliates is engaged at
such date in any geographic region in which Transmedia conducts
business; or (ii) on behalf of yourself or any business with which you
may be associated, offer employment or a consulting relationship to any
person who is an employee of or a consultant to Transmedia or any of
its affiliates.
10. Confidentiality - You shall treat as confidential and not disclose to
any person not affiliated with Transmedia all non-public and
proprietary information and data about the business, operations,
employees, programs, plans and financial results, projections and
budgets of Transmedia and its affiliates which are disclosed to you
during your employment. The confidentiality agreement shall survive the
termination of your employment for any reason.
<PAGE>
On behalf of the entire Board of Directors of Transmedia Network, Inc., we are
delighted to offer you the President and CEO position, Gene, and we look forward
to your joining our team. If you have any questions, please contact me directly
at 312-466-3799.
Sincerely,
/s/ Phil Handy
- -----------------------------
F. Philip Handy
Chairman
Agreed and Accepted:
by: /s/ Gene M. Henderson
--------------------------
Gene Henderson
date: 14 Oct 98
--------------
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Transmedia Network Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
----------------------
<PAGE>
[Letterhead of Arthur Andersen LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 19, 1999 (and to all references to our Firm) included in or made a
part of this Amendment No. 1 to Registration Statement on Form S-2 (Registration
Statement No. 333-84531).
/s/ Arthur Andersen, LLP
------------------------
Chicago, Illinois
September 29, 1999
<PAGE>
Exhibit 99.1
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
COMPANY'S PROSPECTUS DATED OCTOBER 7, 1999 (THE "PROSPECTUS) AND ARE
INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE
AVAILABLE UPON REQUEST FROM AMERICAN STOCK TRANSFER & TRUST COMPANY AS
SUBSCRIPTION AGENT.
<TABLE>
<S> <C> <C>
CERTIFICATE NUMBER: TRANSMEDIA NETWORK INC. NUMBER OF RIGHTS:____________
Incorporated under the laws of the State of Delaware
SUBSCRIPTION CERTIFICATE
Evidencing Non-transferable Rights to Purchase One Share of
Series A Preferred Stock, $.10 par value, for each Right Issued
Subscription Price: $2.41 per share
VOID IF NOT EXERCISED BEFORE THE EXPIRATION TIME (AS DEFINED IN THE PROSPECTUS).
THIS SUBSCRIPTION CERTIFICATE IS NOT TRANSFERABLE
</TABLE>
REGISTERED OWNER:
<TABLE>
<S> <C>
THIS CERTIFIES THAT the registered owner, whose "Oversubscription Privilege"). The
name is inscribed herein is the owner of the non-transferable Rights represented by this
number of Rights set forth above, each of which Subscription Certificate may be exercised by duly
entitles the owner to subscribe for and purchase completing Section 1 on the reverse side hereof.
one share of Series A Preferred Stock, $.10 par Special delivery instructions may be specified by
value per share, of Transmedia Network Inc., a completing Section 2 on the reverse side hereof.
Delaware corporation (the "Basic Subscription THE RIGHTS EVIDENCED BY THIS SUBSCRIPTION
Privilege"), on the terms and subject to the CERTIFICATE ARE NOT TRANSFERABLE. SUCH RIGHTS MAY
conditions set forth in the Prospectus, the NOT BE EXERCISED UNLESS THE REVERSE SIDE HEREOF IS
accompanying Instructions as to Use of COMPLETED AND SIGNED. ANY EXERCISE OF RIGHTS
Subscription Certificates and the Instructions PURSUANT TO THE BASIC SUBSCRIPTION PRIVILEGE AND
relating hereto on the reverse side hereof. The ANY EXERCISE OF THE OVERSUBSCRIPTION PRIVILEGE ARE
valid exercise of all of the Rights represented by IRREVOCABLE.
this Subscription Certificate also entitles its
owner to subscribe for and purchase additional
shares of Series A Preferred Stock not purchased
by other Rights holders in the exercise of the
Basic Subscription Privilege (the
Dated: ___________________, 1999
TRANSMEDIA NETWORK INC. COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
As Subscription Agent
(New York, N.Y.)
By:_________________________________
Authorized Signatory
By:________________________________
Authorized Signatory
</TABLE>
<PAGE>
SECTION 1 - EXERCISE AND SUBSCRIPTION
The undersigned irrevocably exercises Rights to subscribe for one share of
Series A Preferred Stock, $.10 par value, for each Right, as indicated below, on
the terms and subject to the conditions specified in the Prospectus, receipt of
which is hereby acknowledged.
(a) Number of whole Series A preferred shares subscribed for pursuant to
the Basic Subscription Privilege:__________
(b) Number of whole Series A preferred shares subscribed for pursuant to
the Oversubscription Privilege:_________
(A Rights holder may not exercise the Oversubscription Privilege unless
such holder's Basic Subscription Privilege has been exercised in full.)
(c) Total Subscription Price (total number of whole Series A preferred
shares subscribed for pursuant to both the Basic Subscription
Privilege and the Oversubscription Privilege multiplied by the
Subscription Price of $ 2.41 per share): $__________.
METHOD OF PAYMENT (CHECK ONE)
|_| Uncertified personal check. Please note that funds paid by uncertified
personal check may take at least five business days to clear.
Accordingly, Rights holders who wish to pay the subscription price by
means of an uncertified personal check are urged to make payment
sufficiently in advance of the Expiration Time to ensure that such
payment is received and clears by such time, and are urged to consider
payment by means of certified or bank check, money order or wire
transfer of immediately available funds.
|_| Certified check or bank check drawn on a U.S. bank, or money order,
payable to American Stock Transfer & Trust Company, as Subscription
Agent.
|_| Wire transfer directed to the account maintained by American Stock
Transfer & Trust Company at the Chase Manhattan Bank, Account No.
323-062547 (Transmedia Network Inc.); ABA No. 021000021.
If the amount enclosed or transmitted is not sufficient to pay the Subscription
Price for all Series A preferred shares that are stated to be subscribed for, or
if the number of Series A preferred shares being subscribed for is not
specified, the number of Series A preferred shares subscribed for will be
assumed to be the maximum number that could be subscribed for upon payment of
such amount. If the amount enclosed or transmitted exceeds the Subscription
Price for all Series A preferred shares that the undersigned has the right to
purchase pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege (such excess amount, the "Subscription Excess"), the Subscription
Agent shall return the Subscription Excess to the subscriber without interest or
deduction.
- --------------------------------------------------------------------------------
SECTION 2 - SPECIAL DELIVERY INSTRUCTIONS
Name and/or address for mailing of any securities or Subscription Excess, if
other than as shown on the reverse hereof:
Name:___________________________________________________________________________
Address:________________________________________________________________________
- --------------------------------------------------------------------------------
IMPORTANT - ALL RIGHTS HOLDERS EXERCISING RIGHTS SIGN HERE AND COMPLETE
SUBSTITUTE FORM W-9
______________________________ Date: _________________________, 1999
______________________________
(Signature of Holder(s))
(Must be signed by the Rights holder(s) exactly as name(s) appear on the reverse
side of this Subscription Certificate. If signature is by trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation or
another acting in fiduciary or representative capacity, please provide the
following information. See instructions accompanying this Subscription
Certificate.)
<PAGE>
Name: __________________________ Taxpayer Identification or
(Please Print) Social Security Number: ________________
(Complete substitute Form W-9)
Capacity:_______________________ Home Telephone Number: _________________
Address: _______________________ Business Telephone Number: _____________
<PAGE>
Exhibit 99.2
INSTRUCTIONS AS TO USE OF TRANSMEDIA NETWORK INC.
SUBSCRIPTION CERTIFICATES
CONSULT THE SUBSCRIPTION AGENT, YOUR BANK OR YOUR BROKER
AS TO ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights
Offering") by Transmedia Network Inc., a Delaware corporation ("Transmedia"), to
the holders of its common stock, $.02 par value per share (the "Common Stock"),
as described in Transmedia's prospectus dated October 7, 1999 (the
"Prospectus"). Holders of record (the "Record Date Holders") of shares of Common
Stock at the close of business on October 6, 1999 (the "Record Date"), are
receiving one non-transferable subscription right (individually, a "Right" and
collectively, the "Rights") for each 3.218 shares of Common Stock held on the
Record Date. Each Right entitles the holder thereof (the "Rights Holder") to
subscribe for and purchase from Transmedia one share of Series A Preferred
Stock, $.10 par value per share, of Transmedia (the "Series A Preferred Shares")
(the "Basic Subscription Privilege") at the subscription price of $2.41 (the
"Subscription Price"). No fractional Rights or cash in lieu thereof will be
distributed or paid by Transmedia. An aggregate of up to 4,152,000 Series A
Preferred Shares will be distributed in connection with the Rights Offering.
In addition, subject to the proration and possible reduction described
below, each Right also entitles any Record Date Holder exercising the Basic
Subscription Privilege in full to subscribe at the Subscription Price for
additional Series A Preferred Shares that have not been purchased through the
exercise of Rights (the "Oversubscription Privilege"). The Oversubscription
Privilege is not transferable. If the Record Date Holder elects to exercise the
Oversubscription Privilege, such Holder must do so concurrently with the
exercise of the Basic Subscription Privilege. If the Series A Preferred Shares
that are not subscribed for through the exercise of the Basic Subscription
Privilege (the "Excess Shares") are not sufficient to satisfy all subscriptions
pursuant to the Oversubscription Privilege, the Excess Shares will be allocated
pro rata (subject to elimination of fractional shares) among the Record Date
Holders who exercise the Oversubscription Privilege in proportion to the number
of shares they have subscribed for pursuant to the Basic Subscription Privilege;
provided, however, that if such pro rata allocation results in any Record Date
Holder being allocated a greater number of Excess Shares than such Holder
subscribed for pursuant to the exercise of such Holder's Oversubscription
Privilege, then such Holder will be allocated only such number of Excess Shares
as such Holder subscribed for and the remaining Excess Shares will be allocated
among all other Rights Holders exercising their Oversubscription Privileges. See
"--The Rights Offering" in the Prospectus.
The Rights will expire at 5:00 p.m., Eastern Standard Time, on October
22, 1999, unless extended by Transmedia (as it may be extended, the "Expiration
Time"). The number of Rights to which you are entitled is printed on the face of
your subscription certificate (the "Subscription Certificate"). You should
indicate your wishes with regard to the exercise of your Rights by
<PAGE>
completing the appropriate section on the back of your Subscription Certificate
and returning the Subscription Certificate to the Subscription Agent in the
envelope provided.
YOUR SUBSCRIPTION CERTIFICATE MUST BE RECEIVED BY THE SUBSCRIPTION
AGENT, OR GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION
CERTIFICATES MUST BE COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION PRICE
INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION
AGENT, ON OR PRIOR TO THE EXPIRATION TIME. YOU MAY NOT REVOKE ANY EXERCISE OF A
RIGHT.
1. SUBSCRIPTION PRIVILEGES; EXERCISE.
To exercise Rights, complete the reverse side of your Subscription
Certificate and send your properly completed and executed Subscription
Certificate, together with payment in full of the Subscription Price for all
Series A Preferred Shares subscribed for pursuant to the Subscription
Privileges, to the Subscription Agent. FACSIMILE DELIVERY OF THE SUBSCRIPTION
CERTIFICATE WILL NOT CONSTITUTE VALID DELIVERY. Payment of the Subscription
Price must be made (a) in U.S. dollars for the full number of Series A Preferred
Shares being subscribed for by check or bank draft drawn upon a U.S. bank or
postal telegraphic or express money order payable to American Stock Transfer and
Trust Company, as Subscription Agent; or (b) by wire transfer of same day funds
to the account maintained by the Subscription Agent for such purpose at the
Chase Manhattan Bank, Account No. 323-062547 (Transmedia Network Inc.); ABA No.
021000021.
Acceptance of Payments.
Payment of the Subscription Price will be deemed to have been received
by the Subscription Agent only upon the (a) clearance of any uncertified check,
(b) receipt by the Subscription Agent of any certified check or bank draft drawn
upon a U.S. bank or postal, telegraphic or express money order, or (c) receipt
of good funds in the Subscription Agent's account designated above. IF PAYING BY
UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT THE FUNDS PAID THEREBY MAY TAKE AT
LEAST FIVE (5) BUSINESS DAYS TO CLEAR. ACCORDINGLY, RIGHTS HOLDERS WHO WISH TO
PAY THE SUBSCRIPTION PRICE BY MEANS OF AN UNCERTIFIED PERSONAL CHECK ARE URGED
TO MAKE PAYMENTS SUFFICIENTLY IN ADVANCE OF THE EXPIRATION TIME TO ENSURE THAT
SUCH PAYMENT IS RECEIVED AND CLEARED BY SUCH TIME AND ARE URGED, IN THE
ALTERNATIVE, TO CONSIDER PAYMENT BY MEANS OF A CERTIFIED OR CASHIER'S CHECK,
BANK DRAFT OR MONEY ORDER OR WIRE TRANSFER OF FUNDS.
Exercise through Bank or Broker; Procedures for Guaranteed Delivery.
You may make arrangements for the delivery of funds on your behalf and
request a bank or broker to exercise the Rights represented by the Subscription
Certificate on your behalf.
<PAGE>
Alternatively, you may cause a written guarantee substantially in the form
attached to these instructions (the "Notice of Guaranteed Delivery") from a
member firm of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, to be received
by the Subscription Agent at or prior to the Expiration Time, guaranteeing
delivery of your properly completed and executed Subscription Certificate within
three New York Stock Exchange trading days following the date of the Notice of
Guaranteed Delivery, together with payment in full of the applicable
Subscription Price. If this procedure is followed, your Subscription
Certificates must be received by the Subscription Agent within three (3) New
York Stock Exchange trading days of the Notice of Guaranteed Delivery.
Additional copies of the Notice of Guaranteed Delivery may be obtained upon
request from the Subscription Agent at the address, or by calling the telephone
number, indicated below.
Bankers, brokers and other nominee holders of Rights who exercise the
Basic Subscription Privilege and the Oversubscription Privilege on behalf of
beneficial owners of Rights will be required to certify to the Subscription
Agent and Transmedia, as to: (1) the names of the beneficial owners on whose
behalf they are acting; (2) the nominee holder's authority to so act; (3) the
aggregate number of Rights being exercised on behalf of each beneficial owner;
and (4) the aggregate number of Series A Preferred Shares that are being
subscribed for pursuant to the Subscription Privileges of each beneficial owner
of Rights on whose behalf such nominee holder is acting.
If more Series A Preferred Shares are subscribed for pursuant to the
Oversubscription Privilege than are available for sale, Series A Preferred
Shares will be allocated, as described above, among persons exercising the
Oversubscription Privilege in proportion to such persons' exercise of Rights
pursuant to the Basic Subscription Privilege.
Contacting the Subscription Agent.
The address, telephone and facsimile numbers of the Subscription Agent
are as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Att: Reorganization Department
Telephone: (800) 937-5449
Facsimile: (718) 234-5001
To Confirm Facsimile: (718) 921-8200
<PAGE>
Partial Exercises; Effect of Overpayment and Underpayment.
If you exercise less than all of the Rights evidenced by your
Subscription Certificate by so indicating in Section 1 of your Subscription
Certificate, the Subscription Agent will issue to you a new Subscription
Certificate evidencing the unexercised Rights. If you choose to have a new
Subscription Certificate sent to you, however, you may not receive any such new
Subscription Certificate in sufficient time to permit you to exercise the Rights
evidenced thereby.
If you have not specified the number of Series A Preferred Shares being
subscribed for pursuant to the Basic Subscription Privilege, you will be deemed
to have exercised such Basic Subscription Privilege with respect to the maximum
whole number of Series A Preferred Shares that may be acquired for the
Subscription Price payment delivered after allowances for the Subscription Price
of any specified Series A Preferred Shares. If you do not specify the number of
Series A Preferred Shares being subscribed for, or you do not forward full
payment of the Subscription Price for the number of Rights you indicate are
being exercised or if the payment you deliver exceeds the required Subscription
Price, the payment delivered will be applied, until depleted, to subscribe for
Series A Preferred Shares in the following order: (1) to subscribe for the
number of Series A Preferred Shares indicated, if any, pursuant to the Basic
Subscription Privilege; (2) to subscribe for Series A Preferred Shares until the
Basic Subscription Privilege has been fully exercised with respect to all of the
Rights represented by your Subscription Certificate; and (3) to subscribe for
additional Series A Preferred Shares pursuant to the Oversubscription Privilege
(subject to any applicable proration).
2. DELIVERY OF STOCK CERTIFICATES, ETC.
The following deliveries and payments will be made to the address shown
on the face of your Subscription Certificate:
(A) BASIC SUBSCRIPTION PRIVILEGE. As soon as practical after the
Expiration Time, the Subscription Agent will mail to each
Record Date Holder who validly exercises the Basic
Subscription Privilege certificates representing Series A
Preferred Shares purchased pursuant to the Basic Subscription
Privilege.
(B) OVERSUBSCRIPTION PRIVILEGE. As soon as practical after the
Expiration Time, the Subscription Agent will mail to each
Record Date Holder who validly exercises the Oversubscription
Privilege a certificate representing the number of Series A
Preferred Shares allocated to such Holder pursuant to the
Oversubscription Privilege.
(C) CASH PAYMENTS. As soon as practical after the Expiration Time,
the Subscription Agent will mail to each Record Date Holder
who exercises the Oversubscription Privilege, without
interest, any excess funds received in payment of the
Subscription
<PAGE>
Price for Series A Preferred Shares that are subscribed for by
such Holder but not allocated to such Holder pursuant to the
Oversubscription Privilege.
3. EXECUTION.
(A) EXECUTION BY REGISTERED HOLDER. The signature on the Subscription
Certificate must correspond with the name of the registered Record Date Holder
exactly as it appears on the face of the Subscription Certificate without any
alteration or change whatsoever. Persons who sign the Subscription Certificate
in a representative or other fiduciary capacity must indicate their capacity
when signing and, unless waived by the Subscription Agent in its sole and
absolute discretion, must certify to the Subscription Agent and Transmedia as to
their authority to so act.
(B) EXECUTION BY PERSON OTHER THAN REGISTERED HOLDER. If the
Subscription Certificate is executed by a person other than the Record Date
Holder named on the face of the Subscription Certificate, proper evidence of
authority of the person executing the Subscription Certificate must accompany
the same unless, for good cause, the Subscription Agent dispenses with proof of
authority.
4. METHOD OF DELIVERY.
The method of delivery of Subscription Certificates and payment of the
Subscription Price to the Subscription Agent will be at the election and risk of
the Record Date Holder, but, if sent by mail, it is recommended that they be
sent by registered mail, properly insured, with return receipt requested, and
that a sufficient number of days be allowed to ensure delivery to the
Subscription Agent and the clearance of any checks sent in payment of the
Subscription Price prior to the Expiration Time.
<PAGE>
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
FOR SUBSCRIPTION CERTIFICATES ISSUED BY
TRANSMEDIA NETWORK INC.
--------------------------------------------
This form, or one substantially equivalent hereto, must be used to
exercise Rights pursuant to the Rights Offering described in the Prospectus
dated October 7, 1999 (the "Prospectus"), of Transmedia Network Inc., a Delaware
corporation ("Transmedia"), if a holder of Rights cannot deliver the
subscription certificate(s) evidencing the Rights (the "Subscription
Certificate(s)") to the Subscription Agent listed below (the "Subscription
Agent"), at or prior to 5:00 p.m. Eastern Standard Time, on October 22, 1999,
unless extended (the "Expiration Time"). Such form must be delivered by hand or
sent by facsimile transmission or mail to the Subscription Agent, and must be
received by the Subscription Agent on or prior to the Expiration Time. See "The
Rights Offering--Exercise of Rights" in the Prospectus. Payment of the
Subscription Price of $2.41 for each Series A preferred share, $.10 par value
per share, of Transmedia subscribed for upon exercise of such Rights must be
received by the Subscription Agent in the manner specified in the Prospectus at
or prior to the Expiration Time, even if the Subscription Certificate evidencing
such Rights is being delivered pursuant to the procedure for guaranteed delivery
thereof. The Subscription Certificate evidencing such Rights must be received by
the Subscription Agent within three (3) New York Stock Exchange trading days
after the Expiration Time.
The Subscription Agent is:
American Stock Transfer & Trust Company
By Hand, Courier or Mail:
American Stock Transfer & Trust Company
Reorganization Department
40 Wall Street
New York, N.Y. 10005
By Facsimile Transmission:
(Eligible Institutions Only)
(718) 234-5001
To Confirm Receipt of Facsimile Only:
(718) 921-8200
For inquiries, information or requests for additional information, call
the Subscription Agent at (800) 937-5449.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A TELECOPY OR FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby represents that he, she or it is the holder of
Subscription Certificate(s) representing _______________ Rights and that such
Subscription Certificate(s) cannot be delivered to the Subscription Agent at or
before the Expiration Time. Upon the terms and subject to the conditions set
forth in the Prospectus, receipt of which is hereby acknowledged, the
undersigned hereby elects to irrevocably exercise one or more
<PAGE>
Rights evidenced by the Subscription Certificate to subscribe for Series A
preferred shares as indicated below:
(a) Number of Series A preferred shares subscribed for pursuant to the
BASIC SUBSCRIPTION PRIVILEGE.
Number of shares subscribed for: ______ at $2.41 per share equals $_____.
(b) Number of Series A preferred shares subscribed for pursuant to the
OVERSUBSCRIPTION PRIVILEGE.
Number of shares subscribed for: ______ at $2.41 per share equals $_____.
(c) Total Subscription Price: $__________.
The undersigned understands that payment in full of the Subscription
Price, as computed above, of $2.41 for each Series A preferred share subscribed
for pursuant to the Basic Subscription and Oversubscription Privilege must be
received by the Subscription Agent at or before the Expiration Time and
represents that such payment either (check the appropriate box):
o is being delivered to the Subscription Agent herewith; or
o has been delivered separately to the Subscription Agent, and is or
was delivered in the manner set forth below (check appropriate box
and complete information relating thereto):
o wire transfer of funds
name of transferor institution_________________________
date of transfer_______________________________________
confirmation number (if available)_____________________
o uncertified check (Payment of uncertified check will not be
deemed to have been received by the Subscription Agent until such
check has cleared. Holders paying by such means are urged to make
payment sufficiently in advance of the Expiration Time to ensure
that such payment clears by such date.)
o certified check
o bank draft (cashier's check)
o postal, telegraphic or money order
If by certified check, bank draft or money order,
please provide the following information:
name of maker____________________________________________
date of check, draft or money order______________________
check, draft or money order number_______________________
bank on which check is drawn or issuer of
money order_________________________
<PAGE>
- ------------------------------------- --------------------------------------
Signature(s) Address(es)
- ------------------------------------- --------------------------------------
Name(s) Area Code and Telephone Number(s)
- ------------------------------------
Subscription Certificate No(s).
(if available)
GUARANTEE OF DELIVERY
The undersigned, a member firm of a registered national securities exchange or
member of the National Association of Securities Dealers, Inc., commercial bank
or trust company having an office or correspondent in the United States or
another "Eligible Guarantor Institution" within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, hereby guarantees that the
undersigned will deliver to the Subscription Agent the certificates representing
the Rights being exercised hereby, with any required signatures and any other
required documents, all within three (3) New York Stock Exchange trading days
after the date hereof.
- ----------------------------------- ------------------------------------
Name of Firm Date
- ----------------------------------- ------------------------------------
Address Authorized Signature
- ----------------------------------- ------------------------------------
Zip Code Title
- ----------------------------------- ------------------------------------
Telephone Number Name (Please print or type)
The institution which completes this form must communicate the guarantee to the
Subscription Agent and must deliver the Subscription Certificates to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
<PAGE>
Exhibit 99.4
TRANSMEDIA NETWORK INC.
To Securities Dealers, Commercial Banks,
Brokers, Trust Companies and Other Nominees:
We are sending you this letter in connection with our offering (the
"Rights Offering") to holders of our common stock on October 6, 1999 (the
"Record Date") of non-transferable rights ("Rights") to purchase shares of a new
series of convertible preferred stock, $.10 par value per share, designated as
Series A Preferred Stock (the "Series A Preferred Shares"). We have described
the Rights and the Rights Offering in the enclosed prospectus and evidenced the
Rights by a subscription certificate registered in your name or the name of your
nominee.
Each beneficial owner of shares of our common stock registered in your
name or the name of your nominee is entitled to one Right for every 3.218 shares
of common stock owned by the beneficial owner on the Record Date. No fractional
Rights or cash in lieu thereof will be distributed or paid.
We are asking you to contact your clients for whom you hold our common
stock registered in your name or in the name of your nominee to obtain
instructions with respect to the Rights. We have enclosed several copies of the
following documents for you to use:
1. A form letter which may be sent to your clients for whose accounts you
hold common stock registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard
to the Rights;
2. The Prospectus;
3. A Subscription Certificate (if your shares are registered in your name);
4. The Instructions as to Use of Subscription Certificates;
5. A Notice of Guaranteed Delivery;
6. A Nominee Holder Certification Form; and
7. A return envelope addressed to American Stock Transfer and Trust
Company, the Subscription Agent.
We request that you act promptly. The Rights will expire at 5:00 p.m.
Eastern Standard Time on October 22, 1999, unless extended by us (the
"Expiration Time").
<PAGE>
TO EXERCISE RIGHTS, PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION
CERTIFICATE(S) (UNLESS THE GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH) AND
PAYMENT IN FULL FOR ALL RIGHTS EXERCISED MUST BE DELIVERED TO THE SUBSCRIPTION
AGENT AS INDICATED IN THE PROSPECTUS AND THE INSTRUCTIONS PRIOR TO THE
EXPIRATION TIME. EXERCISE OF THE OVERSUBSCRIPTION PRIVILEGE (AS DEFINED IN THE
PROSPECTUS) MUST BE ACCOMPANIED BY A COMPLETED NOMINEE HOLDER CERTIFICATION.
In the case of Rights that are held of record through Depository Trust
Company ("D.C."), you may exercise the Basic Subscription Privilege and the
Oversubscription Privilege by instructing D.C. to transfer Rights from the D.C.
account of the Rights holder to the D.C. account of American Stock Transfer and
Trust Company, the Subscription Agent, together with payment of the Subscription
Price for (i) each Series A Preferred Share subscribed for pursuant to the Basic
Subscription Privilege and (ii) the number of Excess Shares (as defined in the
Instructions) for which the Oversubscription Privilege is exercised. If you
elect to exercise the Oversubscription Privilege, you must do so concurrently
with your exercise of the Basic Subscription Privilege.
You may obtain additional copies of the enclosed materials and may
request assistance or information from the Subscription Agent at (800) 937-5449.
Very truly yours,
TRANSMEDIA NETWORK INC.
Gene Henderson
President and Chief Executive Officer
YOU ARE NOT AN AGENT OF TRANSMEDIA NETWORK INC., AMERICAN STOCK
TRANSFER AND TRUST COMPANY, OR ANY OTHER PERSON WHO IS DEEMED TO BE MAKING OR
WHO IS MAKING OFFERS OF SERIES A PREFERRED SHARES IN THE RIGHTS OFFERING, AND
YOU ARE NOT AUTHORIZED TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM, EXCEPT
FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS.
<PAGE>
Exhibit 99.5
To Our Clients:
We are sending this letter because we hold shares of Transmedia Network
Inc. common stock for you. Transmedia Network Inc. has commenced an offering to
stockholders of record on October 6, 1999 of non-transferable rights ("Rights")
to subscribe for and purchase a new series of its convertible preferred stock,
$.10 par value per share (the "Series A Preferred Shares").
As described in the enclosed Prospectus, you will receive one Right for
every 3.218 shares of common stock carried by us in your account as of the
Record Date. Each Right will entitle you to subscribe for and purchase from
Transmedia one Series A Preferred Share (the "Basic Subscription Privilege") at
$2.41 per share (the "Subscription Price"). If you exercise all of your Rights,
you will also have the right to subscribe for, at the Subscription Price,
additional Series A Preferred Shares (the "Oversubscription Privilege") that
have not been purchased by other holders of Rights pursuant to their Basic
Subscription Privileges (the "Excess Shares"). If you elect to exercise the
Oversubscription Privilege, you must do so concurrently with your exercise of
the Basic Subscription Privilege. If the number of Excess Shares is not
sufficient to satisfy all subscriptions pursuant to the Oversubscription
Privilege, the Excess Shares will be allocated pro rata among those Rights
holders exercising the Oversubscription Privilege.
We have enclosed your copy of the (1) Prospectus and (2) Instructions
as to Use of Subscription Certificates. The materials enclosed are being
forwarded to you as the beneficial owner of common stock carried by us in your
account but not registered in your name. Exercises of Rights may be made only by
us as the registered holder of Rights and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to elect to
subscribe for any Series A Preferred Shares to which you are entitled pursuant
to the terms and conditions set forth in the enclosed Prospectus and
Instructions.
You should forward your instructions to us as promptly as possible to
permit us to exercise Rights on your behalf in accordance with the terms of the
Rights Offering. The Rights Offering will expire at 5:00 p.m. Eastern Standard
Time on October 22, 1999, unless extended by Transmedia (the "Expiration Time").
Any exercise of the Basic Subscription or Oversubscription Privilege may not be
revoked.
If you wish to have us, on your behalf, exercise Rights to purchase any
Series A Preferred Shares to which you are entitled, please so instruct us by
completing, executing and returning to us the instruction form on the reverse
side of this letter. IF WE DO NOT RECEIVE COMPLETE WRITTEN INSTRUCTIONS, WE WILL
NOT EXERCISE YOUR RIGHTS, AND YOUR RIGHTS WILL EXPIRE WITHOUT VALUE.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING SHOULD
BE DIRECTED TO AMERICAN STOCK TRANSFER & TRUST COMPANY.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of non-transferable
rights ("Rights") to purchase shares of Series A Preferred Stock, $.10 par value
per share (the "Series A Preferred Shares") of Transmedia Network Inc.
This will instruct you whether to exercise Rights to purchase the
Series A Preferred Shares distributed with respect to the shares of common stock
held by you for the account of the undersigned, pursuant to the terms and
subject to the conditions set forth in the Prospectus and the related
Instructions as to Use of Subscription Certificates.
1. Please DO NOT EXERCISE RIGHTS for Series A Preferred Shares.
2. Please EXERCISE RIGHTS for Series A Preferred Shares as set forth
below:
<TABLE>
<S> <C>
Basic Subscription: __________________ _ x $2.41 per share = $___________________
(number of shares)
Oversubscription Privilege: __________________ x $2.41 per share = $_____________
(number of shares)
</TABLE>
Total Payment Required = $ ________________
Payment Enclosed: $________________________
Please deduct payment from the following account maintained by you
as follows:
Type of Account ______________________ Account No. ________________
Amount to be Deducted: $______________
- -------------------------------------
Signature(s)
Please type or print name(s) below
__________________________________ Date: ___________________, 1999
__________________________________
<PAGE>
Exhibit 99.6
Special Notice to Holders of Common Stock of Transmedia Network Inc.
Whose Addresses are outside the United States
Dear Stockholder:
Enclosed you will find materials relating to the offering (the "Rights
Offering") by Transmedia Network, Inc. ("Transmedia") to holders of record of
its common stock as of the close of business October 6, 1999 (the "Record
Date") of non-transferable rights ("Rights") to purchase shares of a new series
of convertible preferred stock, $.10 par value per share (the "Series A
Preferred Shares"). You will receive one Right for every 3.218 shares of common
stock held on the Record Date. Each Right will entitle you to subscribe for and
purchase from Transmedia one Series A Preferred Share (the "Basic Subscription
Privilege") at a subscription price of $2.41 per share (the "Subscription
Price"). If you exercise all of your Rights, you will also have the right to
subscribe for, at the Subscription Price, additional Series A Preferred Shares
that have not been purchased by other holders of Rights pursuant to their Basic
Subscription Privileges (the "Oversubscription Privilege").
If you wish to exercise any or all of these Rights, you must so
instruct American Stock Transfer and Trust Company, the Subscription Agent, by
completing, executing and returning to the Subscription Agent the International
Holder Subscription Form on the reverse side of this letter by 5:00 p.m.,
Eastern Standard Time in the United States, on October 22, 1999 unless extended
by Transmedia (the "Expiration Time"). Rights not exercised by such time will
expire without value.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE RIGHTS
OFFERING SHOULD BE DIRECTED TO THE SUBSCRIPTION AGENT, AT (800) 937-5449.
<PAGE>
INTERNATIONAL HOLDER SUBSCRIPTION FORM
The undersigned acknowledge(s) receipt of the special notice and the
enclosed materials referred to therein relating to the offering of
non-transferable rights ("Rights") to purchase Series A Preferred Shares, $.10
par value per share (the "Series A Preferred Shares"), of Transmedia Network
Inc.
This will instruct you whether I wish to exercise Rights to purchase
the Series A Preferred Shares distributed with respect to my shares of common
stock pursuant to the terms and subject to the conditions set forth in the
Prospectus and the related instructions as to Use of Subscription Certificates.
1. I do NOT wish to exercise rights for Series A Preferred Shares.
2. I wish to EXERCISE RIGHTS for Series A Preferred Shares as set forth below:
Basic Subscription:__________________ x $2.41 per share = $_________________
(number of shares)
Oversubscription Privilege:_________________ x $2.41 per share = $___________
(number of shares)
Total Payment Required = $___________________________________
Payment in the following amount is enclosed: $_______________
Method of Payment (check one):
o Uncertified Check. (Please note that funds paid by uncertified
personal check may take at least five business days to clear.
Accordingly, registered holders who wish to pay the
Subscription Price by means of an uncertified personal check
are urged to make payment sufficiently in advance of the
Expiration Time to ensure that such payment is received and
clears by such date, and are urged to consider payment by
means of certified or cashier's check, money order or wire
transfer of funds.)
o Certified Check or Bank Check drawn on a U.S. bank or Money
Order payable to [American Stock Transfer and Trust Company]
o Wire transfer directed to American Stock Transfer and Trust
Company. (Call (800) 937-5449 for wire instructions).
If the amount enclosed or transmitted is not sufficient to pay the
Subscription Price for all Series A Preferred Shares that are stated to be
subscribed for, or if the number of Series A Preferred Shares being subscribed
for is not specified, the number of Series A Preferred Shares subscribed for
will be assumed to be the maximum number that could be subscribed for upon
payment of such amount. If the amount enclosed or transmitted exceeds the
aggregate Subscription Price for all Series A Preferred Shares that the
undersigned has the right to purchase pursuant to the Basic Subscription and/or
the Oversubscription Subscription Privilege (the "Subscription Excess"), the
Subscription Agent shall return the Subscription Excess to the subscriber
without interest or deduction.
<PAGE>
Please mail or deliver check or money order or wire transfer payable to
American Stock Transfer and Trust Company for the aggregate Subscription Price
due to the Subscription Agent at the address below:
By Hand, Regular Mail or Overnight Courier:
American Stock Transfer and Trust Company
Reorganization Department
40 Wall Street
New York, NY 10005
If you have any questions, call: American Stock Transfer and Trust
Company at (800) 937-5449.
- ----------------------------
(Signatures)
Please type or print name(s) below
__________________________________ Date:__________________________, 1999
<PAGE>
Exhibit 99.7
FORM OF NOMINEE HOLDER CERTIFICATION
TRANSMEDIA NETWORK INC.
NOMINEE HOLDER CERTIFICATION
The undersigned, a bank, broker, or other nominee holder of rights
("Rights"), in order to purchase shares of Series A Preferred Stock, $.10 par
value per share ("Series A Preferred Shares"), of Transmedia Network Inc.
("Transmedia") pursuant to the rights offering described and provided for in
Transmedia's prospectus dated October 7, 1999 (the "Prospectus"), hereby
certifies to Transmedia and to American Stock Transfer and Trust Company, as
Subscription Agent for such rights offering, that (1) the undersigned has
subscribed for, on behalf of the beneficial owners thereof (which may include
the undersigned), the number of Series A Preferred Shares specified below for
the Basic Subscription Privilege and Oversubscription Privilege (as defined in
the Prospectus) and (2) each such beneficial owner's Basic Subscription
Privilege has been exercised in full.
1. Number of Series A Preferred Shares subscribed
for pursuant to the Basic Subscription Privilege _________________
2. Number of Series A Preferred Shares subscribed
for pursuant to the Oversubscription Privilege _________________
--------------------------------------------
Name of bank, broker or other nominee holder
Address:
--------------------------------------------
--------------------------------------------
By: __________________________________
Name:
Title:
Dated: ____________________, 1999
