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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant|_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to 14a-11(c) or 14a-12
TRANSMEDIA NETWORK INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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TABLE OF CONTENTS
Page
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INFORMATION ABOUT THE SPECIAL MEETING AND VOTING...............................1
Why Did You Send Me This Proxy Statement?.................................1
How Many Votes Do I Have?.................................................1
What Proposals Will Be Addressed At The Special Meeting?..................1
How Do I Vote In Person?..................................................2
Why Would The Special Meeting Be Postponed?...............................2
How Do I Vote By Proxy?...................................................2
May I Revoke My Proxy?....................................................3
Where Are Transmedia's Principal Executive Offices?.......................3
What Vote Is Required To Approve Each Proposal?...........................3
Are There Any Dissenters' Rights Of Appraisal?............................4
Who Bears The Cost Of Soliciting Proxies?.................................4
BACKGROUND.....................................................................4
Introduction..............................................................4
Rights Offering for Series A Preferred Stock..............................6
Standby Commitment.......................................................10
Increase in Samstock's Interest in Transmedia............................11
Use of Proceeds..........................................................12
Board of Directors' Review and Approval of the Financing Arrangements....12
PROPOSAL NO. 1: TO AMEND THE CERTIFICATE OF INCORPORATION.....................13
Purpose of Request for Increase in Authorized Shares of Capital Stock....13
Vote Required ..........................................................14
Board Recommendation.....................................................14
PROPOSAL NO. 2: TO APPROVE THE ISSUANCE OF WARRANTS ..........................15
Vote Required for Approval of Proposal 2.................................15
Board Recommendation.....................................................15
OTHER PROPOSED ACTION.........................................................16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS...............................17
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON .....................21
Director Relationships...................................................21
The GAMI Loan ...........................................................21
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Standby Purchase Agreement...............................................21
INDEPENDENT ACCOUNTANTS.......................................................22
OTHER BUSINESS................................................................22
PROPOSALS OF STOCKHOLDERS.....................................................22
WHERE YOU CAN FIND MORE INFORMATION...........................................22
EXHIBIT A - CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF
INCORPORATION OF TRANSMEDIA NETWORK INC.......................................25
ATTACHMENT: PROXY CARD
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[Letterhead of Transmedia Network Inc.]
FELLOW STOCKHOLDERS:
Our Board of Directors has called a Special Meeting of Stockholders as
described in the enclosed Notice of Special Meeting of Stockholders and Proxy
Statement. The Special Meeting is being called so that our stockholders may
consider and act upon certain matters that require their approval to enable
Transmedia to raise additional capital through an offering to our stockholders,
of a new class of convertible preferred stock. At the Special Meeting, our
stockholders will be asked to approve (1) an amendment to our Certificate of
Incorporation to increase the number of shares of common stock which we are
authorized to issue from 20,000,000 shares to 70,000,000 shares, and to increase
the number of shares of preferred stock which we are authorized to issue from
1,000,000 shares to 20,000,000 shares, and (2) the issuance of five-year
non-transferable warrants to purchase 1,000,000 shares of our common stock to
Samstock, L.L.C.
The Board of Directors has approved these proposals, and recommends
that our stockholders vote for these proposals.
I urge you to sign, date, and promptly return the enclosed proxy in the
enclosed postage-paid envelope.
To complete this vote, the Company will hold the Special Meeting of
Stockholders at 10:00 a.m. (Eastern Standard Time) on [Day], [Month], [Date],
1999, at the ___________, ___________, ________, __________.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company.
YOUR VOTE IS IMPORTANT
The approval of the proposals in our proxy statement are necessary
comply with our obligations under our existing credit facilities.
Please complete, date, sign and promptly return your proxy card in the
enclosed envelope regardless of whether you plan to attend the Special Meeting.
Sincerely yours,
Gene M. Henderson
President and Chief
Executive Officer
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TRANSMEDIA NETWORK INC.
11900 Biscayne Boulevard
Miami, Florida 33181
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
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Date: [ ]
Time: 10:00 a.m., Eastern Standard Time
Place: [ ]
TO THE STOCKHOLDERS:
At our Special Meeting we will ask you to:
1. Approve an amendment to our Certificate of Incorporation, as
amended to date, to increase the number of shares of common stock,
par value $0.02 per share, which we are authorized to issue from
20,000,000 shares to 70,000,000 shares, and to increase the number
of shares of preferred stock, par value $0.10 per share, which we
are authorized to issue from 1,000,000 shares to 20,000,000
shares;
2. Approve the issuance of five-year non-transferable warrants to
purchase 1,000,000 shares of our common stock to Samstock, L.L.C.;
3. Vote on such other business as may properly come before the
meeting or any adjournments or postponements thereof.
If you were a stockholder of record at the close of business on ______
__, 1999, you may vote at the Special Meeting.
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A list of our stockholders as of the close of business on _______ ___,
1999 will be available for inspection by you during normal business hours from
10:00 a.m., ________ __, 1999 through 5:00 p.m., _______ ___, 1999 at
_____________ ________________.
By Order of the Board of Directors,
KATHRYN M. FERARA
Secretary
Miami, Florida
__________ ___, 1999
YOUR VOTE IS IMPORTANT
In order to ensure your representation at the Special Meeting, you are
requested to complete, sign and date the enclosed proxy card as promptly as
possible and return it in the enclosed envelope.
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TRANSMEDIA NETWORK INC.
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PROXY STATEMENT
------------------------------------
SPECIAL MEETING OF STOCKHOLDERS
to be held on _______ __, 1999
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
Why Did You Send Me This Proxy Statement?
We have sent you this proxy statement and the enclosed proxy card
because the Board of Directors of Transmedia Network Inc., a Delaware
corporation, is soliciting your proxy vote at a Special Meeting of Stockholders.
This proxy statement summarizes the information you need to know to vote at the
Special Meeting. However, you do not need to attend the Special Meeting to vote
your shares. Instead, you may complete, sign and return the enclosed proxy card.
How Many Votes Do I Have?
We will be sending this proxy statement, the attached Notice of Special
Meeting and the enclosed proxy card on or about _____ __, 1999. Stockholders who
owned our common stock at the close of business on ____ __, 1999 (the "Record
Date") are entitled to one vote for each share of common stock they held on that
date, on all matters properly brought before the Special Meeting. The total
number of shares and the total votes at the Special Meeting is [Number].
What Proposals Will Be Addressed At The Special Meeting?
We will address the following proposals at the Special Meeting:
1. The amendment of our Certificate of Incorporation, as amended to date,
to increase the number of shares of common stock, par value $0.02 per
share, which we are authorized to issue from 20,000,000 shares to
70,000,000 shares and to increase the number of shares of preferred
stock, par value $0.10 per share, which we are authorized to issue from
1,000,000 shares to 20,000,000 shares.
2. The approval of the issuance of five-year warrants to purchase up to
1,000,000 shares of our common stock, with an exercise price per share
equal to the average closing price per share of the common stock for
the 20 days preceding the closing of a rights offering, to Samstock,
L.L.C. ("Samstock") in consideration of certain financing arrangements,
contingent upon stockholder approval of Proposal 1.
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3. The transaction of such other business as may properly come before the
Special Meeting or any adjournment thereof.
How Do I Vote In Person?
If you plan to attend the Special Meeting at 10:00 a.m. [Eastern
Standard Time] in [City], [State] on [Day], [Date], or a later date due to
postponement, and vote in person, we will provide you with a ballot when you
arrive. However, if your shares are held in the name of your broker, bank or
other nominee, you must bring a power of attorney executed by the broker, bank
or other nominee that owns the shares of record for your benefit and authorizing
you to vote the shares.
Why Would The Special Meeting Be Postponed?
The Special Meeting will be postponed if a quorum is not present on
[Date]. If more than half of all shares of stock entitled to vote at the Special
Meeting are present in person or by proxy, a quorum will be present and business
can be transacted at the Special Meeting. If a quorum is not present, the
Special Meeting may be postponed to a later date when a quorum is obtained.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but are not
counted as affirmative votes for purposes of determining whether a proposal has
been approved.
In addition, if sufficient votes rendered in person or by proxy in
favor of any one of the proposals set forth in this proxy statement are not
received on the date of, or prior to the conclusion of, the Special Meeting, we
may, in our sole discretion, propose one or more adjournments of the Special
Meeting to permit us to solicit more proxies. Any such adjournment will require
the affirmative vote of the holders of a majority of common stock present in
person or by proxy at the Special Meeting.
How Do I Vote By Proxy?
Whether you plan to attend the Special Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and return it promptly in the
envelope provided. Returning the proxy card will not affect your ability to
attend the Special Meeting and vote.
If you properly fill in your proxy card and send it to us in time to
vote, your "proxy" (one of the individuals named on your proxy card) will vote
your shares as you have directed. If you sign the proxy card, but do not make
specific choices, your proxy will vote your shares as recommended by the Board
as Directors as follows:
o FOR the approval of an amendment to our Certificate of
Incorporation, as amended to date, to increase the number of
shares of common stock which the Company is authorized to issue
from 20,000,000 shares to 70,000,000 shares and to increase the
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number of shares of preferred stock which the Company is
authorized to issue from 1,000,000 shares to 20,000,000 shares.
o FOR the approval of the issuance of warrants to purchase up to
1,000,000 shares of our common stock, with an exercise price per
share equal to the average closing price per share of the common
stock for the 20 days preceding the closing of a rights offering,
to Samstock.
May I Revoke My Proxy?
If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of three ways:
o You may send in another proxy with a later date.
o You may notify us in writing (by you or your attorney authorized
in writing or, if the stockholder is a corporation, under its
corporate seal, by an officer or attorney of the corporation), at
our principal executive offices before the Special Meeting, that
you have revoked your proxy.
o You may vote in person at the Special Meeting.
Where Are Transmedia's Principal Executive Offices?
Our principal executive offices are located at 11900 Biscayne
Boulevard, Miami, Florida 33181.
What Vote Is Required To Approve Each Proposal?
Proposal 1: To amend our Certificate of Incorporation, as amended to
date, to increase the number of shares of common stock which the Company is
authorized to issue from 20,000,000 shares to 70,000,000 shares and to increase
the number of shares of preferred stock which the Company is authorized to issue
from 1,000,000 shares to 20,000,000 shares.
The affirmative vote of the holders of a majority of the shares of
common stock outstanding on the Record Date and entitled to vote will be
required to approve the amendment to our Certificate of Incorporation.
Abstentions and broker non-votes are not affirmative votes and, therefore, will
have the same effect as votes against this proposal.
Proposal 2: The approval of the issuance of warrants to purchase up to
1,000,000 shares of our common stock, with an exercise price per share equal to
the average closing price per share of the common stock for the 20 days
preceding the closing of a rights offering, to Samstock.
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Proposal 2 must be approved by a majority of the votes cast on the
proposal, provided that the total votes cast represent more than 50% of all
common stock outstanding on the Record Date and entitled to vote on the
proposal. Abstentions and broker non-votes will have no effect, other than to
render more difficult obtaining votes constituting 50% of all common stock
outstanding on the Record Date.
Any other matter will be approved by a majority of the votes cast,
except as may otherwise be provided in our Certificate of Incorporation or
By-laws, by the rules of the New York Stock Exchange or by the General
Corporation Law of the State of Delaware. Abstentions and broker non-votes will
have no effect with respect to any other matter.
Are There Any Dissenters' Rights Of Appraisal?
The Board of Directors has not proposed any action for which the laws
of the State of Delaware, the Certificate of Incorporation or By-laws of
Transmedia provide a right to stockholders to dissent and obtain payment for
their shares.
Who Bears The Cost Of Soliciting Proxies?
We will bear the cost of soliciting proxies in the accompanying form
and will reimburse brokerage firms and others for those expenses involved in
forwarding proxy materials to beneficial owners and soliciting their execution.
We have made arrangements with brokers and other custodians, nominees and
fiduciaries to send proxies and the proxy materials to their principals. We have
engaged the firm Georgeson & Company to assist us in the distribution and
solicitation of proxies and have agreed to pay a fee of $ _______ plus
out-of-pocket costs and expenses for these services.
BACKGROUND
Introduction
Over the past year, we have continued to expend significant amounts of
cash in support of our operations and to fund an expanded marketing campaign
related to new member solicitations. We also made a major investment in the
acquisition of the Dining A La Card program. The proposals before you are being
made to enable Transmedia to raise the capital it needs to comply with its
financial covenants under certain financing arrangements and fund its future
working capital requirements. In particular, the amendments to our certificate
of incorporation, if approved, will provide us with the ability to raise
additional funds, if needed, from time to time through the issuance of our
equity securities.
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A principal requirement for additional funding was to complete in June
1999 the purchase from SignatureCard, Inc., a subsidiary of Montgomery Ward &
Co., Incorporated, of assets related to a discount dining membership 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 and, most
significantly, a registered card platform, among other things. As consideration
for the assets, we (1) 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 from merchants participating in the Dining
A La Card program), (2) issued to SignatureCard 400,000 shares of our common
stock and (3) 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 part of the 400,000 shares we issued at the closing at a price of $8.00
per share. In connection with this acquisition, we paid a fee for transaction
advisory services to Equity Group Investments, L.L.C., an affiliate of Samstock
("Equity Group"), of $386,000.
To finance this acquisition, we obtained a $35 million senior secured
revolving bridge loan from The Chase Manhattan Bank (of which $29 million was
drawn down at the closing of the Dining A La Card acquisition) and a $10 million
term loan from GAMI Investments, Inc., an affiliate of Samstock, which is
unsecured and subordinated to the Chase bridge loan. The Chase bridge loan
accrues interest, at our election, at either (1) one month LIBOR plus 1.25% or
(2) the greater of the prime rate (as announced by Chase in New York, New York)
plus 0.25% or the federal funds effective rate plus 1.75%. It is payable on
December 30, 1999 or upon the earlier effectiveness of a securitization facility
of the Dining A La Card rights-to-receive. The Chase bridge loan is secured by
liens on substantially all of our assets (including those purchased in the
acquisition), as well as the stock of our three principal subsidiaries:
Transmedia Restaurant Company Inc., Transmedia Service Company Inc. and TMNI
International Incorporated, but excluding those assets of ours that are subject
to an existing securitization facility. The agreement contains customary events
of default, as well a cross default to all other material indebtedness,
including our existing securitization facility and the GAMI loan. We intend to
replace the bridge loan with a securitization facility of the Dining A La Card
rights-to-receive to be arranged through Chase.
The GAMI loan bears interest at the prime rate (as announced by Chase
in New York, New York) plus 4%, and is payable on December 30, 1999 or upon the
earlier closing of a rights offering. The terms of the GAMI loan agreement
require us to conduct a rights offering of a new series of preferred stock and
to use the proceeds to repay all outstanding amounts under this loan. As
described below, Samstock has agreed to act as a standby purchaser in connection
with the rights
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offering whereby, after exercising its initial rights and any additional
subscription privileges, it will purchase any shares not otherwise subscribed
for by our other stockholders.
The terms of this loan required us to pay to GAMI at the loan closing a
cash fee of $500,000, which is reimbursable to us upon the completion of the
rights offering and the issuance to Samstock of warrants to purchase 1,000,000
shares of our common stock in consideration of its obligation to act as a
standby purchaser (as described below) and of GAMI's provision of the loan. If
the rights offering is not consummated or the warrants are not issued for any
reason (including the failure of stockholders to approve Proposals 1 and 2), we
are required to pay GAMI an additional $500,000 fee.
The failure to meet certain requirements relating to the rights
offering (including the failure of stockholders to approve Proposals 1 and 2)
would also constitute a default under the GAMI loan and would enable GAMI to
accelerate all amounts due. In such event, 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, 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. In addition, the declaration of a default
under the GAMI loan would trigger a default under the Chase bridge loan and
under our existing securitization facility.
Rights Offering for Series A Preferred Stock
Generally. The GAMI loan agreement obligates us to conduct a
$10,000,000 rights offering for [Number] shares of a newly created Series A
preferred stock. Under the offering, we will distribute to each record holder of
common stock, free of charge, non-transferable rights to purchase one Series A
preferred share for every [Number] shares of common stock held as of the record
date for the rights offering (the "basic subscription privilege"). Each share of
Series A preferred stock may be purchased for $[Number]. Each stockholder who
exercises his, her or its basic subscription privilege in full will also have
the right to subscribe for and purchase his, her or its pro rata share of all
shares not otherwise subscribed for by our other stockholders (the
"oversubscription privilege"). Samstock has agreed to exercise its basic
subscription privilege in full and to purchase additional Series A preferred
shares to the extent there are any unexercised rights. The offering will remain
open until __________, unless we elect to extend it. No partial or fractional
rights will be issued or exercisable and no partial or fractional shares of the
Series A Preferred Stock will be issued.
On August 10, 1999, we filed a registration statement to register the
rights, the Series A preferred shares, and the common stock into which the
Series A preferred shares will be convertible. We will commence the offering as
soon as practicable after the Securities and Exchange
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Commission (the "SEC") declares the registration statement effective. The
registration is subject to SEC review and comment; therefore, the time of the
commencement of the rights offering cannot be determined at this time. This
solicitation is not an offer to sell the Series A preferred shares nor a
solicitation to buy Series A preferred shares. The offering will be made only by
means of a prospectus, which is a part of our registration statement. We
anticipate that the Series A preferred shares will be registered and listed for
trading on the New York Stock Exchange under the symbol "TMNPrA."
Preferred Stock. The Board of Directors has the authority, within the
limitations and restrictions stated in our 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 thereon. 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 those
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.
Series A Preferred Shares. The shares designated as Series A preferred
shares will be senior convertible redeemable preferred stock.
Dividends. The Series A preferred shares shall 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, cash dividends per share at the
rate of $_____ per annum [insert number equal to 12% of liquidation preference],
at least $_____ [insert number equal to 6% of liquidation preference] of which
is payable quarterly in arrears on the first business day of January, April,
July and October ("current dividends"). Dividends in the amount of $_____ per
share [insert number equal to 6% of liquidation preference] shall not be payable
currently but shall be deferred, accrue and be payable upon a conversion,
redemption or liquidation, dissolution or winding up of Transmedia ("deferred
dividends"). Transmedia, however, may choose to pay any or all deferred
dividends currently. Dividends shall 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,
current 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 (without payment for fractional shares of common stock), if
dividends are paid on common stock.
If Transmedia defaults in its obligation to pay any portion of current
dividends when due (such portion, a "past due current dividend"), the holders
shall be entitled to receive, when, as and if declared by the Board of Directors
and to the extent funds are legally available for the payment of dividends, an
additional dividend per share ("additional dividends") at an annual rate equal
to the
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per share amount of the past due current dividend, multiplied by the prime rate
of interest plus 6% for the first 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 of prime plus 7 1/2% per annum. All additional dividends shall be
cumulative from the dividend payment date on which the default giving rise to a
past due current dividend had occurred.
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 the rights offering (upon satisfaction
of certain conditions), at our option. The number of shares of common stock
issuable upon any conversion will be determined by dividing the sum of $_______
[Note: insert liquidation preference], plus accrued but unpaid current,
additional (if any) and deferred dividends by the Series A conversion price then
in effect. The conversion price will initially be fixed at $_____ [Note: insert
liquidation preference], but is subject to adjustment on customary terms to
avoid dilution in the event of a merger, stock split, recapitalization or other
similar event or an issuance of common stock below the conversion price then in
effect.
We will have the right to effect a conversion if (1) the closing price
of the common stock at any time after such third anniversary exceeds $_______
[Insert number equal to 2x liquidation preference], plus accrued and unpaid
current, additional (if any) and deferred dividends, for 30 consecutive days, or
(2) we consummate an underwritten public offering of our equity securities which
results in gross proceeds to Transmedia or selling stockholders of at least $20
million 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 conversion price then in effect,
provided that we effect the conversion within 90 days thereafter. Holders of a
majority of the outstanding Series A 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 the rights offering.
Voting. The Series A preferred shares will vote along with 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 the
holders. In addition, if and whenever current dividends payable on the 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 shall 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 all additional
dividends with respect to the current dividends have been paid in full.
Subordination. Upon a liquidation, dissolution or winding up of
Transmedia, the holders of Series A preferred shares would be entitled to
receive, in cash, a sum per share equal to $_____ [insert liquidation
preference] plus all accrued but unpaid current dividends, additional dividends
and deferred dividends thereon, before any amounts are paid to holders of common
stock. If
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amounts available for distribution to stockholders are insufficient to permit
payment to all holders of Series A preferred shares of this preferential amount,
then Transmedia's entire funds available to holders of Series A preferred shares
will be distributed ratably among the holders in proportion to the number of
Series A preferred 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 Transmedia consolidates or merges into another entity, if Transmedia
sells or transfers 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, Transmedia will treat
that 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.
Redemption. Beginning on the fifth anniversary of the closing of the
rights offering, (1) and terminating ninety (90) days thereafter, each holder of
Series A preferred shares may cause Transmedia to redeem all, but not less than
all, of the Series A preferred shares then held by the holder, or (2) Transmedia
may elect to redeem all of the Series A preferred shares then outstanding, in
each case at a redemption price per share equal to $_____ [insert liquidation
preference] plus all accrued but unpaid current dividends, additional dividends
and deferred dividends thereon (the "redemption price"). In either case,
however, we may choose to effect the redemption in one-third increments ratably
during the fifth, sixth and seventh years following the closing of the rights
offering, subject to the holders' prior right of conversion. In the event that
we do not have sufficient funds legally available to redeem the total number of
shares requested or required to be redeemed, we will use those funds which are
legally available to redeem the maximum number of shares, ratably, (1) among the
holders then requesting redemption (in the event of a redemption at a holder's
election) or (2) among all holders (in the event of a redemption at our
election). If Transmedia defaults in its obligation to redeem any shares
required to be redeemed on a redemption date ("defaulted shares"), then (1) for
purposes of calculating the redemption price applicable to the defaulted shares,
the dividend rate shall be deemed increased to the prime rate then in effect (as
announced by The Chase Manhattan Bank) plus 6% for the first 90 days of the
default, increasing by an additional 1/2% at the beginning of each 90-day period
thereafter up to a maximum rate of the prime rate then in effect plus 7 1/2% per
annum, and (2) the conversion price applicable to the defaulted shares shall be
reduced by 50% of the conversion price then in effect, until the defaulted
shares are redeemed.
9
<PAGE>
Standby Commitment
Generally. In connection with the rights offering, Samstock has agreed
to act as a standby purchaser to ensure that $10.0 million in proceeds are
raised. Transmedia is required to use all proceeds of the offering to repay the
outstanding principal amount of the GAMI loan. See "Use of Proceeds" below.
Under the agreement, Samstock is obligated to exercise its basic subscription
privilege in full and to purchase, at the subscription price, all Series A
preferred shares offered pursuant to the rights offering which are not
subscribed for by other stockholders (including pursuant to any overscription
privilege).
The obligation of Samstock to effect the foregoing purchases is subject
to various conditions, including (1) approval by you, our stockholders, of
Proposals 1 and 2, (2) the expiration or termination of any required waiting
period applicable to the transactions contemplated by the standby purchase
agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and
(3) the accuracy and completeness of Transmedia's representations and warranties
contained in the agreement, among others.
The number of Series A preferred shares Samstock will be obligated to
purchase will depend upon the number of rights which remain unexercised upon
expiration of the exercise period of the rights. As of the date of this mailing,
we cannot determine the exact number of shares Samstock will be required to
purchase under the standby purchase agreement. If the number of Series A
preferred shares Samstock purchases under its standby commitment (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) exceeds 25% of the
amount issued as of the closing of the rights offering, then Samstock shall have
the right to designate an additional member to Transmedia's Board of Directors.
Seven members currently comprise our Board of Directors, two of whom have been
designated by Samstock. See " --Increase in Samstock's Interest in Transmedia"
below.
Fee. In consideration of Samstock's commitment under the standby
purchase agreement and of the provision of the $10 million loan by GAMI,
Transmedia has agreed to issue to Samstock a non-transferable five-year warrant
to purchase 1,000,000 shares of our common stock. The exercise price per share
of the warrant will be equal to the average of the closing price of the common
stock for the 20 trading days preceding the closing of the rights offering.
Samstock will have the right to require Transmedia to register for resale the
Series A preferred shares acquired by it under its standby commitment, the
shares of common stock into which the Series A preferred shares are convertible,
and the shares of common stock for which the warrants are exercisable. If
Proposals 1 and 2 are not approved, we will (1) withdraw the rights offering,
(2) not issue the warrant, and (3) be required to make additional cash payments
to GAMI under the GAMI loan. In addition, if Proposals 1 and 2 are not approved,
we will be in default under the GAMI loan, the Chase bridge facility and, upon a
declaration of acceleration of indebtedness due under either the GAMI loan or
the Chase bridge facility, our existing securitization facility. See
"Introduction" above.
10
<PAGE>
Increase in Samstock's Interest in Transmedia
As of July 30, 1999, Samstock and its affiliates beneficially held in
aggregate 4,656,285 shares of our common stock, representing approximately 32.3%
of our common stock outstanding. Of this amount, 2,106,695 shares were owned by
Samstock and its affiliate, EGI-Transmedia Investors, L.L.C. ("EGI-TNI"),
905,049 shares were issuable upon the exercise of warrants held by Samstock and
EGI-TNI, 1,478,314 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 [___________] shares of common
stock, or [__]% 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 the
rights offering, however, Samstock would be required to purchase all of the
shares offered. In such event, Samstock and its affiliates would beneficially
own [_________] shares of common stock, or [___]% 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
aforementioned 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
Transmedia 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 the 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 so that
11
<PAGE>
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.
Use of Proceeds
The proceeds from the rights offering will be used to repay the $10
million we borrowed under the GAMI loan.
Board of Directors' Review and Approval of the Financing Arrangements
The Board considered the terms of the transactions at two meetings held
on May 24, 1999 and June 25, 1999. Those terms, substantially in the form
currently proposed, were approved on June 25, 1999 by a vote of four to one,
with Mr. Gardner voting against approval and Messrs. Dammeyer and Handy
abstaining due to their association with Equity Group.
12
<PAGE>
PROPOSAL NO. 1:
TO AMEND THE CERTIFICATE OF INCORPORATION
In order to permit future capital raising activities and allow for the
financing arrangements, the Board of Directors recommends increasing the
authorized common stock from 20,000,000 shares to 70,000,000 shares and
increasing the authorized preferred stock from 1,000,000 shares to 20,000,000
shares. The 21,000,000 shares of capital stock currently authorized are not
sufficient to allow the issuance or conversion of the Series A preferred shares
to be offered under the rights offering or to satisfy our future capital raising
requirements. The proposed amendment to our Certificate of Incorporation is
attached to this Proxy Statement as Exhibit A.
Purpose of Request for Increase in Authorized Shares of Capital Stock
We have issued 500,000 shares of common stock and various options and
warrants that may be exercised for, or converted into, shares of common stock in
the future. As of the Record Date, we have reserved for issuance in the future
an additional [_______] shares of common stock, as follows:
<TABLE>
<CAPTION>
Why Common Stock Would Be Issued Common Stock Issuable
- -------------------------------- ---------------------
<S> <C>
Exercise of 1,200,000 warrants outstanding 1,200,000
Exercise of additional Samstock warrants (contingent on approval 1,000,000
of Proposals 1 and 2)
Exercise of outstanding SignatureCard option 400,000
Conversion of Series A preferred shares [to be determined]
Exercise of outstanding employee stock options 1,606,093*
- -----------------------------------------------------------------------------------------------
Total [ ]
</TABLE>
* Includes vested and unvested options as of July 30, 1999.
If Proposal 1 is approved, the Board of Directors may, at any time,
issue additional shares of common stock or preferred stock without any further
action or authorization by stockholders, unless applicable laws or regulations
would require approval.
Other than disclosed in this Proxy Statement, there are no present
plans, agreements or undertakings with respect to our issuance of any shares of
capital stock or related convertible securities. The issuance of any such
securities by us, however, could have anti-takeover effects
13
<PAGE>
insofar as such securities could be used as a method of discouraging, delaying
or preventing a change in our control.
Vote Required
The affirmative vote constituting a majority of the shares of
outstanding common stock on the Record Date and entitled to vote will be
required to approve the amendment to our ertificate of Incorporation.
Abstentions and broker non-votes are not affirmative votes and, therefore, will
have the same effect as votes against this proposal.
If Proposal 1 is not approved by stockholders, Proposal 2 will NOT be
presented to or voted upon by the stockholders at the Special Meeting and the
Special Meeting may be adjourned to a later date.
Board Recommendation
The Board of Directors recommends a vote FOR the approval of
Proposal 1.
14
<PAGE>
PROPOSAL NO. 2:
TO APPROVE THE ISSUANCE OF WARRANTS
Subject to receipt of stockholder approval, Transmedia is obligated to
issue to Samstock warrants to purchase 1,000,000 shares of common stock in
consideration of the GAMI loan and Samstock's standby commitment in connection
with the rights offering. All of the aforementioned warrants will contain
restrictions on transfer and customary anti-dilution provisions for stock splits
or other recapitalizations.
Since the full exercise of the 1,000,000 warrants would result in the
issuance by us of approximately 7% of the common stock outstanding as of July
30, 1999, as required by the rules of the New York Stock Exchange, the
stockholders must vote in favor of this Proposal 2 in order for the shares of
common stock underlying the warrants to be approved for listing on the New York
Stock Exchange.
Vote Required for Approval of Proposal 2
Proposal 2 must be approved by a majority of the votes cast on the
proposal, provided that the total vote cast represents over 50% of all common
stock outstanding on the Record Date and entitled to vote on the proposal.
Abstentions and broker non-votes will have no effect, other than to render more
difficult obtaining votes constituting 50% of all common stock outstanding on
the Record Date.
Board Recommendation
The Board of Directors recommends a vote FOR the approval of
Proposal 2.
15
<PAGE>
OTHER PROPOSED ACTION
The Board of Directors does not intend to bring any other matters
before the Special Meeting, nor does the Board know of any other matters that
others intend to bring before the Special Meeting. If, however, other matters
not mentioned in this Proxy Statement properly come before the Special Meeting,
the persons named in the accompanying proxy card will vote thereon in accordance
with the recommendation of the Board of Directors.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of common stock
of Transmedia as of July 30, 1999, by (i) each director, (ii) each of the Chief
Executive Officer and the other four most highly compensated executive officers
during the fiscal year ending September 30, 1998, (iii) all directors and
executive officers as a group (who were either directors or officers during the
fiscal year ending September 30, 1998) and (iv) to our knowledge, beneficial
owners of more than 5% of its common stock.
<TABLE>
<CAPTION>
Options and
Amount of Warrants
Common Stock Exercisable Percent
Beneficially Within of
Name and Address Owned 60 Days Total Class
- ---------------- ------ -------- ----- ------
<S> <C> <C> <C> <C>
Melvin Chasen.................................... 1,040,009 -- 1,040,009(1)(2) 7.79%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
Samstock, L.L.C.,................................ 1,784,636 905,049 4,656,285(2)(3) 32.28%
EGI-Transmedia Investors, L.L.C., and 322,059 --
Halmostock Limited Partnership 438,305 166,227
(see footnote 3 for addresses)
Pioneering Investment Management Inc............. 1,286,000 -- 1,286,000(4) 9.63%
60 State Street
Boston, MA 02109
SignatureCard, Inc. ............................. 400,000 400,000 800,000(5) 5.82%
200 North Martingale Road
Schaumberg, IL 60173-2096
F. Philip Handy ................................. 1,000 61,470 62,470(6) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
Gene M. Henderson................................ 100,000 -- 100,000(7) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
Jack Africk ..................................... 63,695 29,000 92,695(8) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Options and
Amount of Warrants
Common Stock Exercisable Percent
Beneficially Within of
Name and Address Owned 60 Days Total Class
- ---------------- ------ -------- ----- ------
<S> <C> <C> <C> <C>
James M. Callaghan............................... 85,662 169,375 255,037(9) 1.89%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, NY 10022
Rod F. Dammeyer................................. -- 5,000 5,000(10) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
Paul A. Ficalora................................. 186,035 32,500 218,535(11) 1.63%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, NY 10022
Herbert M. Gardner............................... 294,401 29,000 323,401(12) 2.42%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, NY 10022
Stephen E. Lerch................................. -- 21,250 21,250(13) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
George S. Wiedemann.............................. 1,000 25,000 26,000(14) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
Lester Wunderman................................. 26,000 50,000 76,000(15) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
All directors and executive officers as a group
(13 persons).......................... 757,793 450,220 1,208,013 8.75%
</TABLE>
- -------------------
* Represents less than 1%.
(1) Includes for Mr. Chasen (i) 605,131 shares held by Melvin Chasen, (ii)
234,100 shares held by a family partnership jointly controlled by Melvin
Chasen and Iris Chasen, and (iii) 200,778 shares held by Iris Chasen, the
wife of Mr. Chasen. Mr. Chasen disclaims beneficial ownership of 200,778
shares held by Iris Chasen. Pursuant to an Amended and Restated Agreement
Among Stockholders (the "Agreement Among Stockholders"), dated as of
March 3, 1998, among Samstock, L.L.C., EGI-Transmedia Investors, L.L.C.,
Melvin Chasen and Iris Chasen, and Transmedia, the Chasens' beneficially
owned shares are subject to shared voting and disposition power with
Samstock, L.L.C. and EGI-Transmedia Investors, L.L.C., which are
affiliates of Equity Group. The Agreement Among Stockholders will
terminate if Equity Group and its affiliates cease to own 5% in the
aggregate of Transmedia's voting securities.
18
<PAGE>
(2) Includes 1,040,009 shares which are beneficially owned by Melvin Chasen
and Iris Chasen, but which are subject to the voting and disposition
restrictions contained in the Agreement Among Stockholders.
(3) Based in part: (i) upon information set forth in Amendment No. 1 to the
Schedule 13D filed on March 4, 1998 by Samstock, L.L.C., (ii) upon other
information available to the Company, and (iii) on a Stockholders'
Agreement (the "Stockholders' Agreement"), dated as of March 3, 1998,
among the referenced entities. According to the Stockholders' Agreement,
Halmostock Limited Partnership and its affiliates appointed Samstock,
L.L.C. and/or EGI-Transmedia Investors, L.L.C. its true and lawful
attorney and proxy, during the period of such Stockholders' Agreement, to
appear for, represent, and vote the shares held by each of them. The
warrants held by each of them are exercisable in equal parts at $6.00 per
share, $7.00 per share and $8.00 per share and expire in March 2003. In
addition, Samstock, L.L.C., EGI-Transmedia Investors, L.L.C., Halmostock
Limited Partnership and Transmedia entered into an Investment Agreement
in March 1998, whereby they agreed on (1) certain voting arrangements for
the nomination for election of directors, (2) limitations on their future
acquisition of voting securities in Transmedia for five years, and (3)
engaging in certain proxy solicitations and other specified actions for
five years unless approved by a majority of the "disinterested
directors." The Investment Agreement will terminate if they and their
affiliates cease to collectively own 5% of the voting securities of
Transmedia. The addresses for these entities are as follows: Samstock,
L.L.C. and EGI-Transmedia Investors, L.L.C., each at Two North Riverside
Plaza, Chicago, Illinois 60606; Halmostock Limited Partnership, at 21 W.
Las Olas Boulevard, Fort Lauderdale, Florida 33301. The Stockholders'
Agreement will terminate if Equity Group and its affiliates cease to own
in the aggregate at least 5% of Transmedia's voting securities
outstanding.
(4) Based on Amendment No. 1 to Schedule 13G filed on January 14, 1999 by
Pioneering Investment Management Inc.
(5) Includes for SignatureCard, Inc. (i) 400,000 shares beneficially owned by
SignatureCard, Inc. and (ii) a three year option to purchase 400,000
shares at an exercise price of $4.00 per share. The option is not
exercisable until October 1999 and expires in June 2002.
(6) Includes for Mr. Handy (i) 1,000 shares beneficially owned by Mr. Handy,
(ii) options to purchase 5,000 shares of common stock at an exercise
price of $5.8750 per share, which options were granted under the 1996
Plan and expire in March 2008 and (3) warrants to purchase 56,470 shares
of common stock, which are exercisable in equal parts at $6.00 per share,
$7.00 per share and $8.00 per share and which expire in March 2003.
(7) Includes for Mr. Henderson (i) 100,000 shares beneficially owned by Mr.
Henderson, (ii) options to purchase 250,000 shares at an exercise price
of $2.00 per share, which were granted under the 1996 Plan and expire in
October 2008 and (iii) options to purchase 100,000 shares at an exercise
price of $2.375 per share, which were granted under the 1996 Plan and
expire in October 2008. These options vest ratably over four years from
the date of the grant, subject to accelerated vesting upon a certain
specified closing price over 20 consecutive trading days of the common
stock. None of these options are exercisable within 60 days of July 30,
1999.
(8) Includes for Mr. Africk (i) 63,695 shares beneficially owned by a family
corporation for which Mr. Africk exercises voting and investment
authority, (ii) options to purchase 7,500 shares of common stock at an
exercise price of $15.00 per share, which options were granted under the
1987 Stock Option and Rights Plan, as amended (the "1987 Plan"), and
expire in March 2004, (iii) options to purchase 5,000 shares of common
stock at an exercise price of $12.25 per share, which options were
granted under the 1987 Plan and expire in March 2005, (iv) options to
purchase 5,000 shares of common stock at an exercise price of $7.875 per
share, which options were granted under the 1996 Plan and expire in March
2006, (v) options to purchase 5,500 shares of common stock at an exercise
price of $4.3750 per share, which options were granted under the 1996
Plan and expire in June 2007, and (vi) options to purchase 6,000 shares
of common stock at an exercise price
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<PAGE>
of $5.8750 per share, which options were granted under the 1996 Plan and
expire in March 2008. All of these options are presently exercisable.
(9) Includes for Mr. Callaghan (i) 26,537 shares held in Mr. Callaghan's
Individual Retirement Account, (ii) options to purchase 84,375 shares of
common stock at an exercise price of $4.8333 per share, which options
were granted under the 1987 Plan and expire in May 2002, (iii) options to
purchase 33,751 shares of common stock at an exercise price of $7.4445
per share, which options were granted under the 1987 Plan and expire in
September 2003, (iv) options to purchase 7,500 shares of common stock at
an exercise price of $4.3750 per share, which options were granted under
the 1996 Plan and expire in April 2007, (v) options to purchase 37,500
shares of common stock at an exercise price of $5.8750 per share, which
options were granted under the 1996 Plan and expire in March 2008, and
(vi) options to purchase 6,250 shares of common stock at an exercise
price of $4.5000 per share, which options were granted under the 1996
Plan and expire in August 2008. All of these options are presently
exercisable. Does not include (i) options issued under the 1996 Plan to
purchase 26,250 shares, which are not exercisable within 60 days of July
30, 1999, or (ii) 5,724 shares held in the Individual Retirement Account
of Mr. Callaghan's wife, as to all of such shares Mr. Callaghan disclaims
beneficial ownership.
(10) Includes for Mr. Dammeyer options to purchase 5,000 shares of common
stock at an exercise price of $5.8750 per share, which options were
granted under the 1996 Plan and expire in March 2008.
(11) Includes for Mr. Ficalora (i) options to purchase 15,750 shares of common
stock at an exercise price of $7.4445 per share, which options were
granted under the 1987 Plan and expire in September 2003, (ii) options to
purchase 3,000 shares of common stock at an exercise price of $4.3750 per
share, which options were granted under the 1996 Plan and expire in April
2007, (iii) options to purchase 10,000 shares of common stock at an
exercise price of $5.8750 per share, which options were granted under the
1996 Plan and expire in March 2008, and (iv) options to purchase 3,750
shares of common stock at an exercise price of $4.5000 per share, which
options were granted under the 1996 Plan and expire in August 2008. All
of these options are presently exercisable. Does not include (i) options
to purchase 14,250 shares, which were granted under the 1996 Plan and are
not exercisable within 60 days of July 30, 1999, (ii) 6,075 shares held
by Mrs. Ficalora, and (iii) 1,350 shares held by Mr. Ficalora's child, as
to all of which shares Mr. Ficalora disclaims beneficial ownership.
(12) Includes for Mr. Gardner (i) 294,401 shares beneficially owned by Herbert
M. Gardner, (ii) options to purchase 7,500 shares of common stock at an
exercise price of $15.00 per share, which options were granted under the
1987 Plan and expire in March 2004, (iii) options to purchase 5,000
shares of common stock at an exercise price of $12.25 per share, which
options were granted under the 1987 Plan and expire in March 2005, (iv)
options to purchase 5,000 shares of common stock at an exercise price of
$7.875 per share, which options were granted under the 1996 Plan and
expire in March 2006, (v) options to purchase 5,500 shares of common
stock at an exercise price of $4.3750 per share, which options were
granted under the 1996 Plan and expire in June 2007, and (vi) options to
purchase 6,000 shares of common stock at an exercise price of $5.8750 per
share, which options were granted under the 1996 Plan and expire in March
2008. All of these options are presently exercisable. Does not include
3,834 shares held by Mr. Gardner's wife individually or as custodian for
their children, as to all of which shares Mr. Gardner disclaims
beneficial ownership.
(13) Includes for Mr. Lerch (i) options to purchase 10,000 shares of common
stock at an exercise price of $5.25 per share, which options were granted
under the 1996 Plan and expire in February 2007, (ii) options to purchase
5,000 shares of common stock at an exercise price of $4.3750 per share,
which options were granted under the 1996 Plan and expire in April 2007,
and (iii) options to purchase 6,250 shares of common stock at an exercise
price of $4.5000 per share, which options were granted under the 1996
Plan and expire in
20
<PAGE>
August 2008. Does not include options which were granted under the 1996
Plan to purchase 33,750 shares, which are not exercisable within 60 days
of July 30, 1999.
(14) Includes for Mr. Wiedemann (i) 1,000 shares beneficially owned by Mr.
Wiedemann and (ii) options to purchase 25,000 shares of common stock at
an exercise price of $5.8750 per share, which options were granted under
the 1996 Plan and expire in March 2008.
(15) Includes for Mr. Wunderman (i) 25,000 shares beneficially owned by Mr.
Wunderman and (ii) options to purchase 50,000 shares of common stock at
an exercise price of $5.8570 per share, which options were granted under
the 1996 Plan and expire in March 2008.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Director Relationships
Mr. Dammeyer is the Managing Partner of Equity Group, affiliates of
which are principal stockholders. Affiliates of Equity Group have provided us
with the $10 million subordinated loan and entered into the standby purchase
agreement. Messrs. Dammeyer and Handy are Equity Group's nominees to
Transmedia's Board of Directors. See "Background."
The GAMI Loan
During the third quarter of Transmedia's 1999 fiscal year, we entered
into a subordinated loan agreement with GAMI, an affiliate of our largest
stockholder, providing us with $10 million of interim financing. To finance the
acquisition of Dining A La Card, we drew down the entire principal amount
available under this loan on June 30, 1999, the net proceeds of which, after
payment of a $500,000 reimbursable loan fee to GAMI and a $386,000 transaction
advisory fee to Equity Group, were approximately $9.1 million. See "Background
- --Introduction." As at July 30, 1999, $10.0 million remained outstanding under
this loan. The loan accrues interest at the annual prime rate (as announced from
time to time by The Chase Manhattan Bank) plus 4% and is payable upon the
closing of the rights offering or December 30, 1999, whichever is earlier.
Standby Purchase Agreement
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 offered under
the rights offering. In consideration of Samstock's standby purchase commitment
and the provision of the GAMI loan described above, and subject to stockholder
approval of Proposals 1 and 2, Transmedia will issue to Samstock a
non-transferable warrant to purchase 1,000,000 shares of our common stock. The
warrant will be 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 the rights offering. See
"Background --Standby Commitment" and "--Increase in Samstock's Interest in
Transmedia."
21
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INDEPENDENT ACCOUNTANTS
KPMG LLP audited Transmedia's financial statements for the fiscal year
ended September 30, 1998 and will audit Transmedia's financial statements for
the fiscal year ending September 30, 1999.
A representative of KPMG LLP is expected to be present at the Special
Meeting and will be afforded an opportunity to make a statement if he or she
desires and respond to appropriate questions.
OTHER BUSINESS
It is not intended to bring before the Special Meeting any matters except
those proposed herein. Management is not aware at this time of any other matters
that are to be presented for action. If, however, any other matters properly
come before the meeting, the persons named as proxies in the enclosed form of
proxy intend to vote in accordance with their judgment on the matters presented.
PROPOSALS OF STOCKHOLDERS
Proposals, if any, of our stockholders that are intended to be presented
by such stockholders at our Annual Meeting of Stockholders in 2000 (the "Annual
Meeting") must be received by the Secretary of the Company no later than October
14, 1999 in order to be considered for possible inclusion in the proxy statement
and form of proxy relating to the Annual Meeting. Rule 14a-8 "Shareholder
Proposals" of the General Rules and Regulations under the Securities Exchange
Act of 1934 addresses when a company must include a stockholder's proposal in
its proxy statement and identify the proposal in its form of proxy when the
company holds an annual or special meeting of stockholders. Any proposals
submitted outside the processes of Rule 14a-8 must be received by December 27,
1999, to be considered for presentation at the Annual Meeting. All proposals
must be mailed to the Company's principal executive offices at 11900 Biscayne
Boulevard, Miami, Florida 33181, Attention: Secretary.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
public reference facilities in Washington, D.C., Chicago, Illinois and New York,
New York. Please call the SEC at 1-800-SEC-0330 for further information about
the public reference rooms. Our SEC filings are also available to the public on
the SEC web site at http://www.sec.gov.
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The SEC allows us to "incorporate by reference" the information we have
filed with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered a part of this proxy statement. We incorporate by reference the
following documents, which contain important about us and our finances:
(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 and March 31, 1999;
(3) Current Reports on Form 8-K, filed on April 1, 1999 and July 14, 1999.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, FL 33181
Attn.: Mr. Stephen E. Lerch
Executive Vice President and Chief Financial Officer
Tel: (305) 892-3306
By Order of the Board of Directors,
KATHRYN M. FERARA
Secretary
Miami, Florida
________ ___, 1999
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EXHIBIT A
---------
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
TRANSMEDIA NETWORK INC.
Gene M. Henderson and Kathryn M. Ferara certify that:
1. They are the President and Chief Executive Officer, and
Secretary, respectively, of Transmedia Network Inc., a Delaware corporation (the
"Corporation").
2. Paragraph 1 of Article 4 of the Certificate of Incorporation
of the Corporation now reads:
"The total number of shares of capital stock which the
Corporation shall have authority to issue is twenty-one
million (21,000,000), of which twenty million (20,000,000)
shares shall be shares of Common Stock (hereinafter called
"Common Stock"), with a par value of two cents ($.02) per
share, and one million (1,000,000) shares shall be shares of
Preferred Stock (hereinafter called "Preferred Stock"), with a
par value of ten cents ($.10) per share."
is amended to read as follows:
"The total number of shares of capital stock which the
Corporation shall have authority to issue is ninety million
(90,000,000), of which seventy million (70,000,000) shares
shall be shares of Common Stock (hereinafter called "Common
Stock"), with a par value of two cents ($.02) per share, and
twenty million (20,000,000) shares shall be shares of
Preferred Stock (hereinafter called "Preferred Stock"), with a
par value of ten cents ($.10) per share."
3. The foregoing Certificate of Amendment of the Certificate of
Incorporation has been duly approved by the Board of Directors.
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IN WITNESS WHEREOF, this Certificate of Amendment, which amends Paragraph
1 of Article 4 of the Certificate of Incorporation of this Corporation, and
which has been duly adopted in accordance with Section 242 of the General
Corporation Law of the State of Delaware, has been executed by its duly
authorized Officer the ____ day of ___________, 1999.
TRANSMEDIA NETWORK INC.
[Corporate Seal]
---------------------------------------
Name: Gene M. Henderson
Title: President and Chief Executive
Officer
ATTEST:
- --------------------------
Name: Kathryn M. Ferara
Title: Secretary
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TRANSMEDIA NETWORK INC.
Proxy for SPECIAL MEETING of Stockholders _______ __, 1999
The undersigned hereby appoints Gene M. Henderson and Stephen E. Lerch as
Proxies, each with power to appoint his substitute, and hereby authorizes them
to represent and vote, as designated on the reverse side of this card, all
shares of Common Stock of Transmedia Network Inc. (the "Company"), held of
record by the undersigned on _______ __, 1999, at the SPECIAL MEETING of
Stockholders (the "SPECIAL MEETING"), to be held on _______ __, 1999 or any
postponement or adjournment thereof.
1. To approve an amendment to the Company's Certificate of Incorporation, as
amended to date, to increase the number of shares of common stock, par value
$0.02 per share, which the Company is authorized to issue from 20,000,000 shares
to 70,000,000 shares and to increase the number of shares of preferred stock,
par value $0.10 per share, which the Company is authorized to issue from
1,000,000 shares to 20,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve the issuance of non-transferable warrants to purchase 1,000,000
shares of our common stock, at an exercise price per share equal to the average
closing price per share of the common stock for the 20 trading days preceding
the closing of a rights offering, to Samstock, L.L.C..
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION, AND FOR
THE APPROVAL OF THE ISSUANCE OF THE WARRANTS. ON ANY OTHER MATTERS THAT MAY COME
BEFORE THE MEETING, THIS PROXY WILL BE VOTED AT THE DISCRETION OF THE PERSONS
NAMED.
PLEASE DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
SIGNATURE(S):___________________________________ DATE: ___________, 1999
-----------------------------------
-----------------------------------
Title of Authority
Note: Please sign exactly as name or names appear(s) on stock certificate. If
stock is held jointly, each stockholder should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or authorized
officers. If a partnership, please sign in partnership name by authorized
person.
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