<PAGE>
As filed with the Securities and Exchange Commission on October 6, 1999
Registration Statement No. 333-84947
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 2
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 5.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<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 $1.938 -
Second Quarter....................................... 5.125 2.375 -
Third Quarter........................................ 4.188 3.000 -
Fourth Quarter ...................................... 4.375 2.688 -
</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% 31% 31%
Earnings to fixed charges (1).............. 147,260% 1,774% 582% 73% -245% -297% -119% -72%
</TABLE>
(1) The Company did not have earnings adequate to cover fixed charges for the
year ended September 30, 1998 and 1997, respectively, and for the nine months
ended June 30, 1999. The deficiency for the year ended September 30, 1998 and
1997 was $10,436 and $684, respectively, and for the nine months ended June 30,
1999 was $5,289. Also, the Company did not have earnings adequate to cover
fixed charges for the proforma year and six months ended September 30, 1998 and
June 30, 1999, respectively. The deficiency for the proforma year and six
months ended September 30, 1998 and June 30, 1999 was $29,249 and $6,429,
respectively.
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.
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<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.
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<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>
================================================================================
Transmedia Network Inc.
Subscription Rights
Shares of Series A Preferred Stock
-------------------
P R O S P E C T U S
-------------------
October 7, 1999
- --------------------------------------------------------------------------------
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. (k)
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. (k)
3.6 By-Laws of Transmedia Network Inc. (c)
4.1 Form of Series A Preferred Stock certificate. (k)
4.2 Form of Subscription Agreement Rights between Transmedia Network Inc. and
American Stock Transfer & Trust Company, as subscription agent. (k)
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. (k)
5.1 Opinion of Potter Anderson & Corroon LLP. (k)
10.1 Asset Purchase Agreement, dated as of March 17, 1999, between Transmedia
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. (j)
10.2 Option Agreement, dated as of June 30, 1999, between Transmedia Network
Inc. and SignatureCard, Inc. (j)
10.3 Services Collaboration Agreement, dated as of June 30, 1999, between
Transmedia Network Inc. and SignatureCard, Inc. (j)
</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.
and The Chase Manhattan Bank. (j)
10.5 Security Agreement, dated as of June 30, 1999, between Transmedia Network
Inc. and The Chase Manhattan Bank. (j)
10.6 Pledge Agreement, dated as of June 30, 1999, between Transmedia Network
Inc. and The Chase Manhattan Bank. (j)
10.7 Credit Agreement, dated as of June 30, 1999, between GAMI Investments, Inc.,
Transmedia Network Inc., Transmedia Restaurant Company Inc., Transmedia
Service Company Inc. and TMNI International Incorporated. (j)
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. (k)
10.30 Employment Agreement dated as of October 14, 1998 between Transmedia
Network Inc. and Gene M. Henderson. (k)
12.1 Statement regarding calculation of earnings to fixed charges.
21.1 Subsidiaries of Transmedia Network Inc. (a)
23.1 Consent of Potter Anderson & Corroon 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. (k)
99.2 Form of Instructions to Stockholders as to use of subscription certificates. (k)
</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. (k)
99.4 Form of letter to Securities Dealers, Commercial Banks, Brokers, Trust
Companies, and Other Nominees. (k)
99.5 Form of Broker client letter. (k)
99.6 Form of Special Notice to holders of Common Stock of Transmedia Network
Inc. whose addresses are outside the United States. (k)
99.7 Form of Nominee Holder Certification Form (k)
<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 6th 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 6, 1999
Gene M. Henderson
Executive Vice President and Chief
/s/ Stephen E. Lerch Financial Officer (Principal
- ------------------------------------ Financial and Accounting Officer) October 6, 1999
Stephen E. Lerch
/s/ F. Philip Handy*
- ------------------------------------ Chairman of the Board October 6, 1999
F. Philip Handy
/s/ Jack Africk*
- ------------------------------------ Director October 6, 1999
Jack Africk
/s/ Rod F. Dammeyer*
- ------------------------------------ Director October 6, 1999
Rod F. Dammeyer
/s/ Herbert M. Gardner*
- ------------------------------------ Director October 6, 1999
Herbert M. Gardner
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ George S. Wiedemann*
- ------------------------------------ Director October 6, 1999
George S. Wiedemann
/s/ Lester Wunderman*
- ------------------------------------ Director October 6, 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. (k)
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. (k)
3.6 By-Laws of Transmedia Network Inc. (c)
4.1 Form of Series A Preferred Stock certificate (k)
4.2 Form of Rights Agreement between Transmedia Network Inc. and American
Stock Transfer & Trust Company, as subscription agent. (k)
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. (k)
5.1 Opinion of Potter Anderson & Corroon LLP. (k)
10.1 Asset Purchase Agreement, dated as of March 17, 1999, between Transmedia
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. (j)
10.2 Option Agreement, dated as of June 30, 1999, between Transmedia Network
Inc. and SignatureCard, Inc. (j)
10.3 Services Collaboration Agreement, dated as of June 30, 1999, between
Transmedia Network Inc. and SignatureCard, Inc. (j)
10.4 Credit Agreement, dated as of June 30, 1999, between Transmedia Network Inc.
and The Chase Manhattan Bank. (j)
10.5 Security Agreement, dated as of June 30, 1999, between Transmedia Network
Inc. and The Chase Manhattan Bank. (j)
</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
Inc. and The Chase Manhattan Bank. (j)
10.7 Credit Agreement, dated as of June 30, 1999, between GAMI Investments, Inc.,
Transmedia Network Inc., Transmedia Restaurant Company Inc., Transmedia
Service Company Inc. and TMNI International Incorporated. (j)
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. (k)
10.30 Employment Agreement dated as of October 14, 1998 between Transmedia
Network Inc. and Gene M. Henderson. (k)
12.1 Statement regarding calculation of earnings to fixed charges.
21.1 Subsidiaries of Transmedia Network Inc. (a)
23.1 Consent of Potter Anderson & Corroon 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. (k)
99.2 Form of Instructions to Stockholders as to use of subscription certificates. (k)
99.3 Form of Notice of Guaranteed Delivery for subscription certificates. (k)
99.4 Form of letter to Securities Dealers, Commercial Banks, Brokers, Trust
Companies, and Other Nominees. (k)
99.5 Form of Broker client letter. (k)
99.6 Form of Special Notice to holders of Common Stock of Transmedia Network
Inc. whose addresses are outside the United States. (k)
99.7 Form of Nominee Holder Certification Form (k)
</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>
Exhibit 12.1
Calculation of Earnings to Fixed Charges
(all dollar amounts in thousands)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
-------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total interest $5 $411 $852 $2,414 $2,743
Amortization of financing cost - - - 158 278
-------------- -------------- -------------- ------------- -------------
Fixed charges $5 $411 $852 $2,572 $3,021
Less GAMI loan interest - - - - -
Add preferred stock dividend (adjusted
for tax rate) - - - - -
-------------- -------------- -------------- ------------- -------------
Fixed charges adjusted for rights offering 5 411 852 2,572 3,021
============== ============== ============== ============= =============
Pretax income $7,358 $6,879 $4,107 $(684) $(10,436)
Add fixed charges 5 411 852 2,572 3,021
-------------- -------------- -------------- ------------- -------------
Adjusted earnings $7,363 $7,290 $4,959 $1,888 $(7,415)
-------------- -------------- -------------- ------------- -------------
Earnings to fixed charges ratio 147,260% 1,774% 582% 73% -245%
============== ============== ============== ============= =============
Surplus/(Deficiency) 7,358 6,879 4,107 (684) (10,436)
<CAPTION>
Pro Forma
Pro Forma Six
Year Months
Ended As of Ended
September June 30, June 30,
30, 1998 1999 1999
------------- ------------- -------------
<S> <C> <C> <C>
Total interest $6,021 $2,213 $2,793
Amortization of financing cost 567 202 567
Fixed charges $6,638 $2,415 $3,360
Less GAMI loan interest $ (1,200) - $ (600)
Add preferred stock dividend (adjusted
for tax rate) (1,935) - 968
------------- ------------- -------------
Fixed charges adjusted for rights offering 7,373 2,415 3,728
============= ============= =============
Pretax income $(28,514) $(5,289) $(6,061)
Add fixed charges 6,638 2,415 3,360
------------- ------------- -------------
Adjusted earnings $(21,876) $(2,874) $(2,701)
------------- ------------- -------------
Earnings to fixed charges ratio -297% -119% -72%
============= ============= =============
Surplus/(Deficiency) (29,249) (5,289) (6,429)
</TABLE>
<PAGE>
[KPMG LETTERHEAD]
The Board of Directors
Transmedia Network Inc.
We consent to incorporation by reference in the registration statement (No.
333-84947) on Form S-2 of Transmedia Network, Inc. of our report dated December
10, 1998, relating to the balance sheets of Transmedia Network, Inc. as of
September 30, 1998 and 1997; and related statements of income and comprehensive
income, shareholders' equity, and cash flows for each of the years in the three
year period ended September 30, 1998, and all related schedules, which report
appears in the September 30, 1998, annual report on Form 10-K/A of Transmedia
Network, Inc.
We also consent 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. 2 to Registration Statement on Form S-2 (Registration
Statement No. 333-84947).
/s/ Arthur Andersen, LLP
------------------------
Chicago, Illinois
October 6, 1999
