<PAGE>
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
/ / Preliminary Proxy Statement / / Confidential, For Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 14a-11(c) or 14a-12
TRANSMEDIA NETWORK INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / 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.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
[Letterhead of Transmedia Network Inc.]
Fellow Stockholders:
Please accept my personal invitation to attend our Annual Meeting of
Stockholders on March 1, 2000 at 10:00 a.m., Eastern Standard Time. This year's
meeting will be held in the Cypress Room at the Sheraton Bal Harbour, 9701
Collins Avenue, Bal Harbour, Florida 33154. The attached Notice of Annual
Meeting and Proxy Statement describe the formal business to be transacted at the
meeting. During the meeting, I will also report on the operations of the
Company.
We hope that you will attend. Regardless of whether you plan to attend or
not, please complete, date, sign and return the enclosed proxy as soon as
possible. It is important that your shares be represented at the meeting.
YOUR VOTE IS IMPORTANT
We encourage you to complete, date, sign and promptly return your proxy
card in the enclosed envelope regardless of whether you plan to attend the
annual meeting.
Sincerely yours,
----------------------------------
Gene M. Henderson
President and Chief
Executive Officer
<PAGE>
TRANSMEDIA NETWORK INC.
11900 Biscayne Boulevard
Miami, Florida 33181
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 1, 2000
--------------------
To the Stockholders
of Transmedia Network Inc.:
The 2000 Annual Meeting of Stockholders of Transmedia Network Inc. will be
held in the Cypress Room at the Sheraton Bal Harbour, 9701 Collins Avenue, Bal
Harbour, Florida 33154, on Wednesday, March 1, 2000 at 10:00 a.m., Eastern
Standard Time, to consider and act upon the following matters:
(1)The election of six (6) directors to serve until the next annual
meeting or until their successors have been elected and qualified.
(2)The approval of an amendment to our 1996 Long-Term Incentive Plan, as
amended, to increase the number of shares of Common Stock that may be
subject to outstanding awards at any point in time under the 1996 Plan
by 1,000,000 shares to an aggregate of 2,505,996 shares.
(3)Such other business as may properly come before the meeting or any
adjournments or postponements thereof.
Owners of record of the Common Stock of the Company, par value $.02 per
share, and the Series A Preferred Stock of the Company, par value $.01 per
share, at the close of business on January 26, 2000 are entitled to receive
notice of, and to vote at, the Annual Meeting and at any adjournment thereof. A
list of Stockholders of the Company as of the close of business on January 26,
2000 will be available for inspection during normal business hours from 10:00
a.m., February 16, 2000 through 5:00 p.m., February 29, 2000 at the Company's
Florida offices at 11900 Biscayne Boulevard, Miami, Florida 33181. The Company's
1999 Annual Report, which is not a part of the proxy soliciting material, is
enclosed.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING WHETHER OR
NOT YOU ARE PERSONALLY ABLE TO ATTEND. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND
THE MEETING IN PERSON ARE URGED TO PLEASE SIGN, DATE AND MAIL THE ACCOMPANYING
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THAT A QUORUM WILL BE PRESENT AT THE
ANNUAL MEETING.
By Order of the Board of Directors,
-----------------------------------
KATHRYN M. FERARA
Secretary
Miami, Florida
January 28, 2000
<PAGE>
TRANSMEDIA NETWORK INC.
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF STOCKHOLDERS
to be held on March 1, 2000
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Transmedia Network Inc., a Delaware
corporation, for use at the Company's Annual Meeting of Stockholders to be held
in the Cypress Room at the Sheraton Bal Harbour, 9701 Collins Avenue, Bal
Harbour, Florida 33154, on Wednesday, March 1, 2000 at 10:00 a.m., Eastern
Standard Time, and at any adjournment thereof.
This Proxy Statement and the enclosed form of proxy are first being sent
or given to Stockholders of the Company on or about January 28, 2000.
Purposes of Meeting
The purposes of the meeting are to consider and act upon the following
matters:
1. The election of six (6) directors to serve until the next annual
meeting or until their successors have been elected or qualified.
2. The approval of an amendment to our 1996 Long-Term Incentive Plan,
as amended, to increase the number of shares of Common Stock that may be
subject to outstanding awards at any point in time under the 1996 Plan by
1,000,000 shares to an aggregate of 2,505,996 shares.
3. Such other business as may properly come before the meeting or any
adjournment or postponements thereof.
Record Date; Proxy; Vote Required; Recommendation; Solicitation
Only owners of record of shares of Common Stock, par value $.02 per share
(the "Common Stock"), and Series A Preferred Stock, par value $.10 per share
(the "Series A Preferred Stock" and, together with the Common Stock, the "Voting
Stock"), at the close of business on January 26, 2000 are entitled to receive
notice of, and to vote at, the meeting or any adjournment thereof. Each owner of
record on the record date is entitled to one vote for each share of Voting Stock
of the Company so held and there is no cumulative voting. The Common Stock and
the Series A Preferred Stock are
<PAGE>
the only classes of securities issued by the Company that entitle an owner of
record to vote on the proposals contained herein. On January 26, 2000 there were
13,632,709 shares of Common Stock and 4,149,378 shares of Series A Preferred
Stock issued and outstanding. The presence at the meeting, in person or by
proxy, of the holders of the majority of the outstanding shares of the Voting
Stock entitled to vote is necessary to constitute a quorum.
Proxies in the accompanying form are solicited on behalf and at the
direction of the Board of Directors. All shares of Voting Stock represented by
properly executed proxies will be voted at the meeting in accordance with the
instructions made on the proxies, unless such proxies have previously been
revoked. Regarding the election of Directors to serve until the 2001 Annual
Meeting of Stockholders, in voting by proxy, Stockholders may vote in favor of
all nominees or withhold their votes as to all nominees or withhold their votes
as to specific nominees. With respect the proposal to approve the amendment to
the 1996 Long-Term Incentive Plan, as amended (the "1996 Plan") and with respect
to any other proposal to be voted upon, Stockholders may vote in favor of the
proposal, against the proposal or may abstain from voting. Stockholders should
specify their choices on the enclosed form of proxy. If authority to vote a
proxy has not been withheld and no instruction is indicated, the shares will be
voted FOR the election of the nominees for directors to the Board of Directors
and FOR the proposal to approve the amendment to the 1996 Plan. If any other
matters are properly presented at the meeting for action, including a question
of adjourning the meeting from time to time, the persons named in the proxies
and acting thereunder will have discretion to vote on such matters in accordance
with their best judgment.
The Company's Board of Directors unanimously recommends that all
Stockholders vote FOR the election of the Nominees for Director named in this
Proxy Statement and FOR the proposal to approve the amendment to the 1996 Plan.
A Stockholder executing and returning a proxy has the power to revoke
it before it is exercised, and may do so by delivering a subsequently signed and
dated proxy or other written notice to the Secretary of the Company at any time
prior to the vote at the meeting or by appearing at the meeting and voting in
person the shares to which the proxy relates. Any written notice revoking a
proxy should be sent to the Company, attention: Kathryn M. Ferara, Secretary.
The mailing address of the Company's executive offices is 11900 Biscayne
Boulevard, Miami, Florida 33181.
Directors will be elected by a plurality of the votes cast. Abstentions
and broker non-votes will have no effect on the election of directors. Approval
of the proposed amendment to the 1996 Plan will require the affirmative vote of
the holders of a majority of the shares of Voting Stock cast, provided that the
total vote cast on the proposal represents more than 50% of all Voting 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 Voting Stock outstanding on the Record
Date and entitled to vote on the proposal. Approval of any other matter will
require the affirmative vote of the holders of a majority of the shares of
Voting Stock cast, except as may otherwise be provided in the Certificate of
Incorporation or By-laws of the Company, by the rules of the New York Stock
Exchange, Inc., or by the General Corporation
2
<PAGE>
Law of the State of Delaware. Abstentions and broker non-votes will have no
effect with respect to any other matter.
After the initial mailing of this Proxy Statement, proxies may be
solicited by telephone, telegram or personally by directors, officers and other
employees of the Company (who will not receive any additional compensation
therefor). All expenses with respect to this solicitation will be paid by the
Company. Arrangements will be made with brokers and other custodians, nominees
and fiduciaries to send proxies and the proxy material to their principals, and
the Company will, upon request, reimburse them for their reasonable expenses in
doing so. We have engaged the firm of Georgeson & Company to assist us in the
distribution and solicitation of proxies and have agreed to pay a fee of $7,500
plus out-of-pocket costs and expenses for these services.
3
<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Board of Directors proposes for election as Directors of the Company
the following nominees: F. Philip Handy, Gene M. Henderson, Rod F. Dammeyer,
Herbert M. Gardner, George S. Wiedemann and Lester Wunderman, each of whom is
currently a Director of the Company.
Directors will be elected by a plurality of the votes cast.
The following table sets forth certain information relating to the
nominees for election to the Board of Directors. Unless otherwise instructed,
the proxy holders will vote the proxies received by them for the above named
nominees, who have consented to serve if elected. If a nominee is unable to
serve as a director (an event not now anticipated), the proxies will be voted by
the proxy holders for a substitute nominee.
The Company's Board of Directors recommends that the Stockholders vote FOR
the election to the Board of each of the following nominees.
NOMINEES FOR ELECTION
Position and/or Director
Nominee Age(1) Principal Occupation Since
------- ------ -------------------- -----
F. Philip Handy 55 Chairman of the Board 1998
and President, Winter
Park Capital Company
Gene M. Henderson 53 Director, President 1998
and Chief Executive
Officer of the
Company
Rod F. Dammeyer 59 Managing Partner, 1998
Equity Group Corporate
Investments
Herbert M. Gardner 60 Senior Vice President, 1983
Janney Montgomery
Scott Inc.
4
<PAGE>
George S. Wiedemann 55 Chairman of the Board 1998
and Chief Executive
Officer, Grey Direct Marketing Group, Inc.
Lester Wunderman 79 Chief Executive Officer, 1998
Wunderman, L.L.C.
- -------------
(1) As of January 1, 2000.
Business Experience
F. Philip Handy is Chairman and President of Winter Park Capital Company,
a private investment firm he founded in 1980. From 1996 through 1999, he was a
Managing Director of Equity Group Investments, Inc. Mr. Handy currently serves
as a director of each of Anixter International, Inc., Banca Quandium S.A., Chart
House Enterprises, Wink Communications Group Inc. and Davel Communications.
Gene M. Henderson was elected President and Chief Executive Officer of the
Company in October 1998. From March 1997 until June 1998, Mr. Henderson was
President and Chief Executive Officer of DIMAC Marketing, a full service direct
marketing company based in St. Louis. From 1977 until March 1997, Mr. Henderson
was employed in various capacities by Epsilon Data Management, a database
marketing firm based in Burlington, Massachusetts. From 1990 until 1998, Epsilon
was a wholly-owned subsidiary of American Express Company. Among his positions
at Epsilon, Mr. Henderson served as Chief Operating Officer and prior to that as
President of the division of Epsilon that provides services to membership and
fundraising organizations.
Rod F. Dammeyer is managing partner of Equity Group Corporate Investments
which has, among other things, investments in approximately 20 companies,
several of which are public entities. In addition, he is a director and
vice-chairman of Anixter International, Inc. where he has been employed since
1985. Mr. Dammeyer is also a director of Allied Riser Communications
5
<PAGE>
Corporation, Antec Corporation, CNA Surety Corp., Inc., GATX Corporation, Grupo
Azucarero Mexico (GAM), IMC Global, Inc., Matria Healthcare, Inc., Stericycle,
Inc. and TeleTech Holdings, Inc. He is also a trustee of the Van Kampen
Closed-End Funds.
Herbert M. Gardner has been a Senior Vice President of Janney Montgomery
Scott Inc., an investment banking firm, for more than five years. He was a
director of two predecessors of the Company from 1983 through 1987. Mr. Gardner
is a director of Nu Horizons Electronics Corp., an electronics components
distributor. He is Chairman of the Board of Supreme Industries, Inc., which
manufactures specialized truck bodies and shuttle buses. He is also a director
of TGC Industries, Inc., a company in the geophysical services industry, a
director of Hirsch International Corp., an importer of computerized embroidery
machines, a developer of embroidery machine application software and a provider
of other services to the embroidery industry, a director of Co-Active Marketing
Group, Inc., a marketing and sales promotion company, and an organizer and
proposed director of Rumson-Fair Haven Bank and Trust Company, a New Jersey
state independent commercial bank and trust company in the process of
organization.
George S. Wiedemann is the Chairman of the Board and Chief Executive
Officer of Grey Direct Marketing Group, Inc., a direct marketing agency he
founded in 1979, that specializes in multimedia direct response advertising. He
also co-founded and has served as Chairman and Chief Executive Officer of Grey
Interactive and Grey Direct e.Marketing in 1993 and 1995, respectively. Mr.
Wiedemann was elected to the Direct Marketing Association Board of Directors in
October 1990, and in 1999 served as Chariman of that Board and presently serves
as Chairman-Elect of that Board.
Lester Wunderman is founder and Chief Executive Officer of Wunderman,
L.L.C., a marketing consulting company. From 1988 through 1998, he was Chairman
of the Board of Wunderman Cato Johnson, a direct marketing advertising agency
which he founded in 1958, and a director of Dentsu Wunderman Direct, an
affiliated company in Japan. From 1958 until 1988 he served as President of
Wunderman Cato Johnson. He currently also serves as a Visiting Professor of
Direct Marketing at the School for Continuing Education and Professional Studies
at New York University. He is Chairman/Director of I-Behavior Inc. and also
serves as a director of each of InfoNautics Corporation and Mypoints. Mr.
Wunderman also serves on the Board of Directors of the Children's Television
Workshop. He was formerly a director of The Advertising Council and of Direct
Marketing Association. He was Secretary-Treasurer of the American Association of
Advertising Agencies and a member of its Operations Committee and Board of
Directors.
Meetings and Committees of Board of Directors
During the fiscal year ended September 30, 1999 ("Fiscal 1999"), the
Compensation Committee of the Company consisted of Rod F. Dammeyer, George S.
Wiedemann and, for the period through May 1999, Melvin Chasen. The Compensation
Committee was charged with administering the 1996 Plan, reviewing the
compensation of senior management and recommending to the Board of Directors
6
<PAGE>
such changes to the compensation of senior management, including changes to the
Company's compensation plans and programs, as the Compensation Committee
determines are appropriate.
During Fiscal 1999, the Audit Committee of the Company consisted of F.
Philip Handy, Jack Africk and Herbert M. Gardner. The Audit Committee is charged
with recommending to the Board of Directors the engagement of the Company's
independent public accountants, reviewing the plan and results of the auditing
engagement with the Chief Financial Officer of the Company and the independent
public accountants and reviewing the scope and nature of the Company's internal
auditing system with the Chief Financial Officer.
During the fiscal year ended September 30, 1999, the Board of Directors
held 8 meetings, the Compensation Committee held 2 meetings, and the Audit
Committee held 3 meetings. Each director attended at least 75% of the aggregate
number of meetings held by the Board and any committee on which he served.
Compensation of Directors
The Company pays each director who is not a full-time employee an
annual stipend of $18,000 in quarterly installments in arrears on January 1,
April 1, July 1 and October 1 of each fiscal year. Full-time employees of the
Company who also serve as directors do not receive compensation for attending
board meetings. The 1996 Plan allows non-employee directors to elect to take
their directors' fees in either cash or as deferred stock awards. The Company
also pays each member of the Audit Committee and the Compensation Committee an
attendance fee of $1,000 for each meeting of the respective committee attended
by such member.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes for the last three years compensation
earned by or awarded to those serving as chief executive officer and the other
four most highly compensated officers during Fiscal 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------- ------------
Awards
------------
Other Securities
Annual Underlying All Other
Salary Bonus Compen- Options/SARs Compensation
Name and Principal Position Year $ $ sation (#) ($)
- --------------------------- ---- ------ ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gene M. Henderson(1) 1999 $320,385 175,000 -- 390,000(2) $64,816(3)
President and Chief 1998 -- -- -- -- --
Executive Officer 1997 -- -- -- -- --
James M. Callaghan 1999 334,615 -- -- -- --
Vice President of the 1998 321,000 -- -- 58,750 --
Company and President 1997 300,000 30,000 -- 15,000 --
of Transmedia
Restaurant Company
Inc.
Stephen E. Lerch 1999 200,000 -- -- -- 37,400(4)
Executive Vice 1998 218,800 -- -- 25,000 --
President and Chief 1997 193,000 15,000 -- 30,000 --
Financial Officer
Paul A. Ficalora 1999 164,769 -- -- -- 68,173(5)
Executive Vice President 1998 168,500 -- -- 25,000 35,128(6)
of Transmedia Restaurant 1997 155,500 -- -- 6,000 --
Company Inc.
Christine M. Donohoo(7) 1999 177,692 150,000 -- 150,000 --
President of 1998 -- -- -- -- --
Transmedia Service 1997 -- -- -- -- --
Company Inc.
</TABLE>
- ------------
(1) Mr. Henderson became President and Chief Executive Officer of the Company on
October 13, 1998. See "Employment, Consulting and Other Agreements" for a
summary of the terms of his employment arrangements with the Company.
(2) Includes (i) 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, (ii) 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 and (iii) 40,000 shares of restricted stock granted under the
1996 Plan which will fully vest in July 2001, unless Mr. Henderson is
terminated before such date, at which time such shares will vest
immediately.
(3) Includes (i) $53,816 in moving expenses and (ii) an $11,000 car allowance.
(4) Includes (i) $25,000 in deferred moving expenses and (ii) a $12,000 car
allowance.
(5) Includes (i) $56,173 in sales commissions and (ii) a $12,000 car allowance.
(6) Includes (i) $23,128 in sales commissions and (ii) a $12,000 car allowance.
(7) Ms. Donohoo became President of Transmedia Service Company Inc. in January
1999. See "Employment, Consulting and Other Agreements" for a summary of the
terms of her employment arrangements with the Company.
8
<PAGE>
Options Granted
Shown below is further information regarding employee stock options
awarded during Fiscal 1999 under the 1996 Plan to the executive officers named
above. No stock appreciation rights were awarded during the year.
<TABLE>
<CAPTION>
OPTIONAL GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Total Annual Rates of
Number of Options Exercise Market Stock Price
Securities Granted to of Price Appreciation
Underlying Employees Base on Date for Option Term
Date of Options in Fiscal Price of Expiration -----------------------------
Name Grant Granted Year ($/sh) Grant Date 0% 5% 10%
---- ---- ---------- ---------- --------- ------- ---------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jack Africk March 4, 1999 6,500 0.67% $4.56 $4.56 March 4, 2009 $29,640 $48,280 $76,879
Rod F. Dammeyer March 4, 1999 5,500 1.55% $4.56 $4.56 March 4, 2009 $25,080 $40,852 $65,051
Christine M. Donohoo January 5, 1999 150,000 15.46% $2.63 $2.63 January 2009 $394,500 $642,597 $1,023,231
Herbert M. Gardner March 4, 1999 6,500 0.67% $4.56 $4.56 March 4, 2009 $29,640 $48,280 $76,879
F. Philip Handy March 4, 1999 5,500 0.57% $4.56 $4.56 March 4, 2009 $25,080 $40,852 $65,051
Gene M. Henderson October 26, 1998 250,000 25.77% $2.00 $2.375 October 26, 2008 $687,500 $1,060,903 $1,633,784
Gene M. Henderson October 26, 1998 100,000 10.31% $2.375 $2.375 October 26, 2008 $237,500 $386,861 $616,014
George Wiedemann March 4, 1999 5,500 0.57% $4.56 $4.56 March 4, 2009 $25,080 $40,852 $65,051
Lester Wunderman March 4, 1999 5,500 0.57% $4.56 $4.56 March 4, 2009 $25,080 $40,852 $65,051
</TABLE>
Employment, Consulting and Other Agreements
The following is a summary of the employment arrangements with the Named
Executive Officers:
Gene M. Henderson. In October 1998, the Board elected Mr. Henderson
President and Chief Executive Officer of the Company. The terms of his
employment include: (i) a base salary of $350,000 per year (subject to
adjustment annually in October of each year, with no adjustment applied in
October 1999) and a bonus of up to 100% of his base salary (with a guaranteed
minimum bonus of $175,000 for Fiscal 1999); (ii) ten-year options to purchase
250,000 shares of Common Stock at an exercise price of $2.00, and (iii) ten-year
options to purchase an additional 100,000 shares of Common Stock at an exercise
price of $2.375. All the options vest ratably over four years following their
date of grant. The vesting schedule of the options may be accelerated, however,
if the Company's stock price achieves certain closing price levels for 20
consecutive trading days as
9
<PAGE>
follows: (a) 50% of the options vest if the stock price is at or above $12.00
per share; (b) an additional 25% of the options vest if the stock price is at or
above $16.00 per share; and (c) 100% of the options vest if the stock price is
at or above $20.00 per share. The terms of Mr. Henderson's employment restrict
him from competing against the Company for a one-year period following the
termination of his employment with the Company and also provide that Mr.
Henderson will be entitled to receive a lump sum payment equal to 18 months base
salary from the employment termination date plus the greater of his guaranteed
bonus for that year (if any) or the pro rata bonus of the maximum bonus for that
year payable upon the occurrence of a "Change in Control" (as defined in the
1996 Plan). In addition, upon a Change in Control, all of Mr. Henderson's stock
options will vest as provided in the 1996 Plan.
James Callaghan. In October 1998, the Company and Mr. Callaghan amended
the terms of his employment to provide that he will serve the Company as Vice
President and as President of Transmedia Restaurant Company Inc. until September
30, 2001. His annual base salary will be $335,000 and he is eligible to receive
a bonus not to exceed one-half of his salary during each year. The Company also
agreed to maintain in force a $500,000 life insurance policy on his life, which
will be transferred to Mr. Callaghan, without cost, at the end of the employment
term (whether or not he becomes disabled during the term of his employment). If
Mr. Callaghan becomes disabled during the employment term, he will receive his
full compensation during the first six months of disability (including a pro
rata bonus, if any), and thereafter will be paid 75% of his salary until the end
of the term of his employment (including a pro rata bonus, if any). Upon a
Change of Control (as defined in the 1996 Plan), all unvested options would vest
and be exercisable in accordance with the terms of the 1996 Plan. The terms of
his employment restrict Mr. Callaghan from competing against the Company for a
two-year period following the termination of his employment.
Stephen E. Lerch. Mr. Lerch received a base salary of $200,000. The
terms of his employment also provide that Mr. Lerch will be entitled to
receive a lump sum payment of $500,000 in the event of a "change of control"
of the Company in which he was not offered a comparable position of
comparable salary. The terms of his engagement letter do not define a
"change of control".
Christine M. Donohoo. In January 1999, the Company appointed Ms. Donohoo
as President of Transmedia Service Company. The terms of her employment include:
(i) a base salary of $275,000 per year (subject to adjustment annually in
October of each year, with no adjustment applied in October 1999) and a bonus of
up to 85% of her base salary (with a guaranteed minimum bonus of $150,000 for
Fiscal 1999); and (ii) ten-year options to purchase 150,000 shares of Common
Stock at an exercise price of $2.63. All the options vest ratably over four
years following their date of grant. The vesting schedule of the options may be
accelerated, however, if the Company's stock price achieves certain closing
price levels for 20 consecutive trading days as follows: (a) 50% of the options
vest if the stock price is at or above $12.00 per share; (b) an additional 25%
of the options vest if the stock price is at or above $16.00 per share; and (c)
100% of the options vest if the stock price is at or above $20.00 per share. If
Ms. Donohoo is terminated by the Company (other than for cause, disability or
death) within one year of the occurrence of a "Change in Control" (as defined
10
<PAGE>
in the 1996 Plan), she will be entitled to receive severance payments equal to
18 months base salary from the employment termination date plus the greater of
her guaranteed bonus for that year (if any) or the pro rata bonus of the maximum
bonus for that year payable. In addition, upon a Change in Control, all of Ms.
Donohoo's stock options will vest as provided in the 1996 Plan. Ms. Donohoo will
also be entitled to continue participation for up to 12 months in those employee
benefit programs in which she was participating on her termination date. The
terms of Ms. Donohoo's employment restrict her from competing against the
Company following the termination of her employment with the Company for a
period of one year or, if longer, for as long as she receives severance payments
and benefits from the Company.
Compliance With Reporting Requirements
The Company believes that, during the fiscal year ended September 30,
1999, all filing requirements under Section 16(a) of the Securities Exchange Act
of 1934, as amended, applicable to its officers, directors and greater than ten
percent Stockholders were complied with on a timely basis.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
For the fiscal year ended September 30, 1999, the Compensation Committee
performed the functions of a board compensation committee. No executive officers
served on the Compensation Committee.
During Fiscal 1999, the Company retained the services of Equity Group
Corporate Investments to perform financial consulting and investment advisory
services for it. Rod F. Dammeyer is managing partner of Equity Group Corporate
Investments. The Company believes that such services have been on terms no less
favorable to the Company than could have been obtained with other independent
parties. In Fiscal 2000, the Company anticipates paying fees and expenses to
Equity Group Corporate Investments in the amount of $250,000.
In June 1999, the Company paid a $500,000 cash fee to GAMI Investments,
Inc., an affiliate of Samstock LLC, upon the closing of a $10,000,000 term loan
with GAMI (the "GAMI Loan"). Rod F. Dammeyer is Vice President of Samstock LLC,
which is also an affiliate of Equity Group Corporate Investments, of which Mr.
Dammeyer is managing partner. The $500,000 fee was refunded to the Company upon
the completion in November 1999 of a rights offering (the "Rights Offering") to
purchase shares of Series A Preferred Stock of the Company, par value $.10 per
share (the "Series A Preferred"), and the issuance to Samstock LLC of warrants
to purchase 1,000,000 shares of Common Stock at a price of $2.48 per share. The
Company believes that these transactions were on terms no less favorable to the
Company than could have been obtained with other independent parties.
11
<PAGE>
The following report of the Compensation Committee and the performance graph
that appears immediately after such report should not be deemed to be soliciting
material or to be filed with the Securities and Exchange Commission under the
Securities Act of 1933 or the Securities Exchange Act of 1934 or incorporated by
reference in any document so filed.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is designed to help attract,
retain, and motivate the highly qualified personnel needed to manage the
Company's business and affairs. To meet these goals, the Company has implemented
a compensation program with the following components:
o base salaries that reflect the scope and responsibilities of the
position, as well as the skills, knowledge, experience, abilities,
and contributions of each individual executive.
o short-term incentives that are based on the financial performance
of the Company.
o long-term incentives that balance the executive officer's short- and
long-term perspectives and provide rewards consistent with
Stockholder returns.
Compensation decisions are made following an assessment of the
individual's contributions to the Company's success, any significant changes in
the individual's role or responsibility, and internal equity of the Company's
compensation relationships.
The competitiveness of the Company's total compensation
program--incorporating base salaries, short-term incentives and long-term
incentives--is reviewed, and, where appropriate, with the assistance of outside
compensation consultants. Based on the these internal and external reviews, the
Company concluded that the compensation paid to its executives was fair and
reasonable. In general, the Company believes that the overall compensation
levels for the executive group should reflect competitive levels of compensation
for comparable positions in similarly sized companies over the long term.
The Company believes that it is essential to link executive compensation
and Company performance. To meet this objective, the Company maintains a stock
option program which provides option grants on a regular, though not necessarily
annual, basis to provide participants with an opportunity to share in the
Company's performance. Stock option grants and stock awards reflect the past
contributions of the individual, the individual's ability to affect Company
profitability, the scope of the individual's responsibilities, the need to
retain the individual's services over time and management's assessments and
recommendations. All executive officers, including the chief executive officer,
are eligible to participate in this program.
12
<PAGE>
The Company's policy of awarding cash bonuses is designed to specifically
relate executive pay to Company and individual performance. As a
pay-for-performance program, cash bonuses provide financial rewards for
achievement of substantive Company and personal objectives. Actual awards paid
are based primarily on actual Company performance. During Fiscal 1999, no cash
performance bonuses were awarded to executive officers of the Company, with the
exception that Mr. Henderson and Ms. Donohoo each received bonuses which were
required under the terms of their respective employment arrangements with the
Company.
Chief Executive Officer Compensation
Mr. Henderson's employment arrangements consist of a base salary of
$350,000; an annual bonus eligibility of up to 100% of his base salary (with a
guaranteed $175,000 bonus paid for Fiscal 1999). He also received ten-year
options to purchase 250,000 shares with an exercise price of $2.00 and an
additional 100,000 shares with an exercise price of $2.375. The options vest
ratably over a four year period, subject to earlier vesting in the event the
Company's stock price meets certain stipulated levels.
In recognition of Mr. Henderson's accomplishments on behalf of the Company
throughout Fiscal 1999, the Compensation Committee awarded him 40,000 shares of
restricted stock under the 1996 Plan which will fully vest in July 2001. The
Compensation Committee believes that such an award is appropriate in light of
the Company's achievements during Mr. Henderson's tenure as President and Chief
Executive Officer, including the acquisition on June 30, 1999 of the Dining a la
Card program, the completion in November 1999 of the $10,000,000 rights offering
with respect to the Company's Series A Preferred Stock and the completion
of the securitization of the Company's rights-to-receive, including those
rights-to-receive purchased in the Dining a la Card acquisition.
Additional information concerning the salary, bonus, and stock awards for
the Company's senior executive officers can be found in the section appearing
elsewhere in this Proxy Statement under the caption "Executive Compensation."
Compliance With Internal Revenue Code Section 162(m)
The Company will continue to analyze its executive compensation practices
and plans on an ongoing basis with respect to Section 162(m) of the Internal
Revenue Code. Where it deems advisable, the Company will take appropriate action
to maintain the tax deductibility of its executive compensation.
COMPENSATION COMMITTEE
Rod F. Dammeyer
George S. Wiedemann
January 28, 2000
13
<PAGE>
Performance Analysis
Set forth below is a line graph comparing the cumulative total return of
the Company, the Standard & Poor's 500 Stock Price Index ("S&P 500") and the
Standard & Poor's Financials Index ("S&P Financials Index") for the five fiscal
years commencing October 1, 1994 and ended September 30, 1999.
Stock Performance Graph and Table
Comparison of Five-Year
Cumulative Total Returns Among Transmedia Network Inc.,
S&P 500 and the S&P Financials Index
[Line Graph Omitted]
<TABLE>
<CAPTION>
Company 09/30/94 09/30/95 09/30/96 09/30/97 09/30/98 09/30/99
- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Transmedia Network Inc. ...... 100 76 44 32 24 23
S&P 500 Composite Index ...... 100 126 149 205 220 277
S&P Financials Index ......... 100 138 168 259 248 285
</TABLE>
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as otherwise specified, the following table sets forth certain
information, as of January 1, 2000, regarding ownership of the Company's Voting
Stock by each person who is known by the Company to own beneficially more than
5% of its Voting Stock. Except as otherwise specified, the named beneficial
owner has sole voting and investment power with respect to the shares
beneficially owned by him.
<TABLE>
<CAPTION>
Amount of Options and
Amount of Series A Warrants Percent of
Common Stock Preferred Stock Exercisable Total
Beneficially Beneficially Within Total Voting Voting
Name and Address Owned Owned(1) 60 Days Stock Stock
- ---------------- ------------ --------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Melvin Chasen ....................... 840,009 - - 840,009(2) 4.72%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Samstock, L.L.C. .................... 2,020,519 2,840,489 1,930,102(3) 8,443,674(4)(5) 42.47%
Halmostock Limited Partnership 438,305 206,204 168,046(6)
(see footnote 4 for addresses)
Pioneering Investment ............... 1,286,000(7) - - 1,286,000 9.43%
Management Inc.
60 State Street
Boston, Massachusetts 02109
</TABLE>
Except as otherwise specified, the following table sets forth certain
information regarding beneficial ownership of the Company's Common Stock, as of
January 1, 2000, by each nominee for election as a director of the Company, the
executive officers named in the "Summary Compensation Table" and the executive
officers and directors as a group, and includes options and warrants to purchase
shares of Common Stock which will become exercisable within 60 days of January
1, 2000. Except as otherwise indicated, each such Stockholder has sole voting
and investment power with respect to the shares beneficially owned by such
Stockholder.
<TABLE>
<CAPTION>
Amount of Options and
Amount of Series A Warrants Percent of
Common Stock Preferred Stock Exercisable Total
Beneficially Beneficially Within Total Voting Voting
Name and Address Owned Owned(1) 60 Days Stock Stock
- ---------------- ------------ --------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
F. Philip Handy ..................... 272,347 84,632 71,348 428,327(8) 2.40%
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Amount of Options and
Amount of Series A Warrants Percent of
Common Stock Preferred Stock Exercisable Total
Beneficially Beneficially Within Total Voting Voting
Name and Address Owned Owned(1) 60 Days Stock Stock
- ---------------- ------------ --------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Gene M. Henderson ................... 150,000 46,613 87,911 284,524(9) 1.59%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
James M. Callaghan .................. 85,662 27,153 169,614 282,429(10) 1.57%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Rod F. Dammeyer ..................... -- -- 5,000 5,000(11) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Paul A. Ficalora .................... 186,035 -- 32,500 218,535(12) 1.23%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Herbert M. Gardner .................. 294,401 91,486 38,939 424,826(13) 2.38%
c/o Transmedia Network Inc.
750 Lexington Avenue
New York, New York 10022
Stephen E. Lerch .................... -- -- 26,250 26,250(14) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Christine M. Donohoo ................ 15,000 -- 37,500 52,500(15) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
George S. Wiedemann ................. 6,000 -- 34,132 40,132(16) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Lester Wunderman .................... 26,000 -- 59,132 85,132(17) *
c/o Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
All directors and executive officers
as a group (10 persons).............. 1,035,445 249,884 562,326 1,847,655 10.07%
persons)
</TABLE>
- ------------
* Represents less than 1%.
16
<PAGE>
(1) Each share of Series A Preferred Stock is presently convertible into
1.00882 shares of Common Stock at the option of the holder.
(2) Includes for Mr. Chasen (i) 461,131 shares of Common Stock held by Mr.
Chasen, (ii) 178,100 shares of Common Stock held by a family partnership
jointly controlled by Mr. Chasen and his wife and (iii) 200,778 shares of
Common Stock held by Mr. Chasen's wife. Mr. Chasen disclaims beneficial
ownership of 200,778 shares of Common Stock held by his wife. Subject to
the terms of the Amended and Restated Agreement Among Stockholders (the
"Agreement Among Stockholders"), dated as of March 3, 1998, among
EGI-Transmedia Investors, L.L.C., Samstock, L.L.C. and Mr. Chasen and his
wife, the Chasen's beneficially owned shares of Common Stock 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
Corporate Investments of which Rod F. Dammeyer is managing partner.
(3) Includes 25,053 of the 2,865,542 shares of Common Stock issuable upon the
conversion of the 2,840,489 shares of Series A Preferred Stock held by
Samstock, L.L.C. (representing the additional voting power Samstock,
L.L.C. would gain upon conversion of it shares of Series A Preferred Stock
due to the conversion rate of 1.00882 shares of Common Stock per each
share of Series A Preferred Stock converted).
(4) Includes 840,009 shares of Common Stock which are owned by Mr. Chasen and
his wife, but which are subject to the voting and disposition restrictions
contained in the Agreement Among Stockholders.
(5) Based in part: (i) upon information set forth in Amendment No. 3 to the
Schedule 13D filed on November 13, 1999 by Samstock, L.L.C., (ii) other
information available to the Company and (iii) pursuant to a Stockholders'
Agreement (the "Stockholders' Agreement"), dated as of March 3, 1998,
among the referenced entities. According to the Stockholders' Agreement,
each entity appointed Samstock, L.L.C. and 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 of
Common Stock held by each stockholder, as defined in the Stockholders'
Agreement. The warrants to purchase share of Common Stock held by each
stockholder are exercisable in equal parts at $6.00 per share, $7.00 per
share and $8.00 per share and expire in March 2003. The addresses for
these entities are as follows: Samstock, L.L.C. at Two North Riverside
Plaza, Chicago, Illinois 60606 and Halmostock Limited Partnership at 21 W.
Las Olas Boulevard, Fort Lauderdale, Florida 33301.
(6) Includes 1,819 of the 208,023 shares of Common Stock issuable upon the
conversion of the 206,204 shares of Series A Preferred Stock held by
Halmostock Limited Partnership (representing the additional voting power
Halmostock Limited Partnership would gain upon conversion of it shares of
Series A Preferred Stock due to the conversion rate of 1.00882 shares of
Common Stock per each share of Series A Preferred Stock converted).
(7) Based on Amendment No. 1 to Schedule 13G filed on January 15, 1999 by
Pioneering Investment Management Inc.
(8) Includes for Mr. Handy (i) 272,347 shares of Common Stock beneficially
owned by Mr. Handy, (ii) 84,632 shares of Series A Preferred Stock
beneficially owned by Mr. Handy, (iii) 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, (iv) 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 expire
in March 2003, (v) 9,132 shares of Common Stock that Mr. Handy may elect
to take as a deferred stock award under the 1996 Plan in lieu of his
annual director's fees and (vi) 746 of the 85,378 shares of Common Stock
issuable upon the conversion of the 84,362 shares of Series A Preferred
Stock held by Mr. Handy (representing the additional voting power
17
<PAGE>
Mr. Handy would gain upon conversion of his shares of Series A Preferred
Stock due to the conversion rate of 1.00882 shares of Common Stock per
each share of Series A Preferred Stock converted).
(9) Includes for Mr. Henderson (i) 150,000 shares of Common Stock beneficially
owned by Mr. Henderson, (ii) 46,613 shares of Series A Preferred Stock
beneficially owned by Mr. Henderson, (iii) options to purchase 62,500
shares of Common Stock at an exercise price of $2.00 per share, which were
granted under the 1996 plan and expire in October 2008, (iv) options to
purchase 25,000 shares of Common Stock at an exercise price of $2.375 per
share, which were granted under the 1996 Plan and expire in October 2008
and (iv) 411 of the 47,024 shares of Common Stock issuable upon the
conversion of the 46,613 shares of Series A Preferred Stock held by Mr.
Henderson (representing the additional voting power Mr. Henderson would
gain upon conversion of his shares of Series A Preferred Stock due to the
conversion rate of 1.00882 shares of Common Stock per each share of Series
A Preferred Stock converted). Does not include options which were granted
under the 1996 Plan to purchase 262,500 shares of Common Stock, which are
not exercisable within 60 days of January 1, 2000.
(10) Includes for Mr. Callaghan (i) 59,125 shares of Common Stock beneficially
owned by Mr. Callaghan, (ii) 26,537 shares of Common Stock held in Mr.
Callaghan's Individual Retirement Account, (iii) 27,153 shares of Series A
Preferred Stock beneficially owned by Mr. Callaghan, (iv) 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, (v) 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, (vi) options to purchase 22,500 shares of
Common Stock at an exercise price of $5.8750 per share, which options
granted under the 1987 Plan and expire in March 2004 (the exercise price
of these options was adjusted in March 1998 from $15.00 per share to
$5.8750 per share, which was the closing price of the Common Stock on the
effective date of the grant), (vii) options to purchase 11,250 shares of
Common Stock at an exercise price of $5.8750 per share, which options were
granted under the 1987 Plan and expire in March 2005 (the exercise price
of these options was adjusted from $12.25 per share to $5.8750 per share,
which was the closing price of the Common Stock on the effective date of
the grant), (viii) options to purchase 3,750 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 (ix) 239 of the 27,392 shares of
Common Stock issuable upon the conversion of the 27,153 shares of Series A
Preferred Stock held by Mr. Callaghan (representing the additional voting
power Mr. Callaghan would gain upon conversion of his shares of Series A
Preferred Stock due to the conversion rate of 1.00882 shares of Common
Stock per each share of Series A Preferred Stock converted). All of such
options are presently exercisable. Does not include (x) options issued
under the 1987 and 1996 Plans to purchase 40,000 shares of Common Stock,
which are not exercisable within 60 days of January 1, 2000, or (y) 5,724
shares of Common Stock held in the Individual Retirement Account of Mr.
Callaghan's wife, as to all of which shares Mr. Callaghan disclaims
beneficial ownership.
(11) 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.
(12) 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 2005 (the exercise price of these options
was adjusted in March 1998 from $12.25 per share to $5.8750 per share,
which was the closing price of the Common Stock on the effective date of
the grant) and (iv) options to purchase 3,750 shares of Common Stock at an
exercise price of $4.50 per share, which options were granted under the
1996 Plan and expire in August 2008. All of such options are presently
exercisable. Does not include (x) options to purchase 14,250 shares of
Common Stock, which were granted under the 1996
18
<PAGE>
Plan and are not exercisable within 60 days of January 1, 2000, (y) 6,075
shares of Common Stock held by Mrs. Ficalora and (z) 1,350 shares of
Common Stock held by Mr. Ficalora's child, as to all of which shares Mr.
Ficalora disclaims beneficial ownership.
(13) Includes for Mr. Gardner (i) 294,401 shares of Common Stock beneficially
owned by Mr. Gardner, (ii) 91,486 shares of Series A Preferred Stock
beneficially owned by Mr. Gardner, (iii) options to purchase 7,500 shares
of Common Stock at an exercise price of $15.00 per share, which options
were granted under the 1987 Plan and expire in March 2004, (iv) options to
purchase 5,000 shares of Common Stock at an exercise price of $12.25 per
share, which options were granted under the 1987 Plan and expire in March
2005, (v) 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, (vi) 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, (vii) 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, (viii) 9,132 shares of Common Stock that Mr. Gardner may elect to
take as a deferred stock award under the 1996 Plan in lieu of his annual
director's fees and (ix) 807 of the 92,293 shares of Common Stock issuable
upon the conversion of the 91,486 shares of Series A Preferred Stock held
by Mr. Gardner (representing the additional voting power Mr. Gardner would
gain upon conversion of his shares of Series A Preferred Stock due to the
conversion rate of 1.00882 shares of Common Stock per each share of Series
A Preferred Stock converted). Does not include (x) options which were
granted under the 1996 Plan to purchase 6,500 shares of Common Stock,
which are not exercisable within 60 days of January 1, 2000, (y) 3,834
shares of Common Stock held by Mr. Gardner's wife individually or as
custodian for their children and (z) 1,191 shares of Series A Preferred
Stock held by Mr. Gardner's wife individually or as custodian for their
children, as to all of which shares Mr. Gardner disclaims beneficial
ownership.
(14) Includes for Mr. Lerch (i) options to purchase 15,000 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 of 2007
and (iii) options to purchase 6,250 shares of Common Stock at an exercise
price of $4.50 per share, which options were granted under the 1996 Plan
and expire in August of 2008. Does not include options which were granted
under the 1996 Plan to purchase 78,750 shares of Common Stock, which are
not exercisable within 60 days of January 1, 2000.
(15) Includes for Ms. Donohoo (i) 15,000 shares of Common Stock owned by Ms.
Donohoo and (ii) options to purchase 37,500 shares of Common Stock at
an exercise price of $2.63 per share, which options were granted under
the 1996 Plan and expire in February 2009. Does not include options
which were granted under the 1996 Plan to purchase 112,500 shares of
Common Stock, which are not exercisable within 60 days of January 1, 2000.
(16) Includes for Mr. Wiedemann (i) 6,000 shares of Common Stock owned by Mr.
Wiedemann, (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 and (iii) 9,132 shares of Common Stock
that Mr. Wiedemann may elect to take as a deferred stock award under the
1996 Plan in lieu of his annual director's fees.
(17) Includes for Mr. Wunderman (i) 26,000 shares of Common Stock owned by Mr.
Wunderman, (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 and (iii) 9,132 shares of Common Stock
that Mr. Wunderman may elect to take as a deferred stock award under the
1996 Plan in lieu of his annual director's fees.
19
<PAGE>
PROPOSAL NO. 2:
APPROVAL OF AMENDMENT TO
THE 1996 LONG-TERM INCENTIVE PLAN
General
The Stockholders are being asked to approve an amendment to the 1996 Plan,
in order to increase the number of shares of Common Stock that may be subject to
outstanding awards at any point in time under the 1996 Plan by 1,000,000 shares
to an aggregate of 2,505,996 shares. The 1996 Plan was adopted by the Board of
Directors on January 19, 1996, approved by the Company's stockholders on March
20, 1996. Under the 1996 Plan as it exists presently, a maximum of 1,505,966
shares of Common Stock may be subject to outstanding awards at any point in
time.
As of January 26, 2000, there were 206,996 shares of Common Stock
available for issuance under the 1996 Plan (exclusive of the increase in shares
subject to stockholder approval at this meeting). Options to purchase 1,259,000
shares and 40,000 shares of restricted stock granted pursuant to the 1996 Plan
were outstanding as of this date.
The 1996 Plan authorizes the Compensation Committee of the Board of
Directors (the "Committee") to administer the grant of awards thereunder. The
provisions of these awards are outlined below. The 1996 Plan is structured to
allow the Committee discretion in creating incentives in order to assist the
Company in attracting, retaining and rewarding directors, officers and other key
employees and consultants of the Company. The Board of Directors believes the
remaining shares under the 1996 Plan are insufficient to accomplish these
purposes. Therefore, the Board of Directors is proposing to increase the number
of shares of Common Stock that may be subject to outstanding awards at any point
in time under the 1996 Plan by 1,000,000 shares to an aggregate of 2,505,996
shares. If this proposal is approved, the 2,505,996 shares of Common Stock
available for issuance under the 1996 Plan would represent approximately 14% of
the total outstanding shares of Voting Stock.
Summary of the 1996 Plan
The following is a brief description of the material features of the
1996 Plan. A copy of the 1996 Plan will be furnished to any stockholder upon
oral or written request to: Transmedia Network Inc., 11900 Biscayne
Boulevard, Miami, Florida 33181, Attention: Secretary (Telephone No. (305)
892-3300).
Purpose. The purpose of the 1996 Plan is to advance the interests of the
Company and its stockholders by providing a means to attract, retain, and reward
directors, officers and other key employees and consultants of the Company and
its subsidiaries (including consultants providing services of substantial value)
and to enable such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between such persons
and the Company's stockholders.
20
<PAGE>
Shares Available and Award Limitations. Under the 1996 Plan, a maximum of
1,505,966 shares of Common Stock may be subject to outstanding awards at any
point in time. Subject to stockholder approval of the proposed amendment, the
maximum number of shares of Common Stock that may be subject to outstanding
awards at any point in time will be increased from 1,505,966 to 2,505,966.
Shares of Common Stock delivered under the 1996 Plan may consist, in whole or in
part, of authorized and unissued shares or treasury shares. In addition, the
1996 Plan includes a limitation on the amount of awards that may be granted to
any one participant in a given calendar year in order to qualify awards as
"performance-based compensation" not subject to the $1,000,000 cap on
deductibility under Section 162(m) of the Code. Under this annual per-person
limitation, no participant may in any calendar year be granted awards under the
1996 Plan with respect to more than 250,000 shares of Common Stock nor be paid
in connection with awards amounts of cash that exceed the greater of the fair
market value of that number of shares at the date of grant or the date of
settlement of the award. Adjustments to the exercise price as well as to the
number and kind of shares of stock, subject to the share limitations and annual
per-person limitations under the 1996 Plan and subject to outstanding awards,
are authorized in the event that the Committee determines that a dividend or
other distribution (whether in the form of cash, Common Stock, or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Common Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of participants under the 1996 Plan.
On January 26, 2000, the last reported sale price of the Company's Common
Stock on the composite tape for New York Stock Exchange-listed securities was
$5.00 per share.
Eligibility. Directors, executive officers and other key employees of the
Company and its subsidiaries, and persons who provide consulting or other
services to the Company deemed by the Committee to be of substantial value to
the Company, are eligible to be granted awards under the Plan. In addition, a
person who has been offered employment by the Company or its subsidiaries, and a
person who is employed by an entity expected to become a subsidiary, is eligible
to be granted an award under the Plan, provided that such award shall be
cancelled if such person fails to commence such employment, or if such entity
fails to become a subsidiary, and no payment of value may be made in connection
with such award until such person has commenced such employment or until such
entity has become a subsidiary.
Administration. The 1996 Plan is administered by the Committee. Subject to
the terms and conditions of the 1996 Plan, the Committee has full and final
authority to designate participants, determine the type or types and number of
awards to be granted, set terms and conditions of such awards, prescribe forms
of award agreements, interpret the 1996 Plan, adopt and construe rules and
regulations relating to the 1996 Plan, and make all other decisions and
determinations which the Committee may deem necessary or advisable for the
administration of the 1996 Plan. The 1996 Plan provides that Committee members
and officers and employees of the Company acting on behalf of the Committee will
not be personally liable, and will, to the extent permitted by law, be fully
21
<PAGE>
indemnified and protected by the Company, in connection with any action,
determination, or interpretation taken or made in good faith under the 1996
Plan.
Stock Options and SARS. The Committee is authorized to grant stock
options, including both ISOs, which can result in potentially favorable tax
treatment to the participant, and non-qualified stock options, and stock
appreciation rights ("SARs") entitling the participant to receive, upon the
exercise thereof, the excess of (A) the fair market value of a share of Common
Stock on the date of exercise (or other date specified by the Committee) over
(B) the grant price of the SAR. The exercise price per share of Common Stock
subject to an option and the grant price of an SAR is determined by the
Committee provided that the exercise price of an ISO generally may not be less
than the fair market value of the stock on the date of grant. The maximum term
of each option or SAR, the times at which each option or SAR will be
exercisable, and provisions requiring forfeiture of unexercised options at or
following termination of employment, generally will be fixed by the Committee,
except no ISO or SAR granted in tandem therewith may have a term exceeding ten
years. Options may be exercised by payment of the exercise price in cash, Common
Stock, other awards or other property (including notes or other contractual
obligations of participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements), as the Committee may determine from time to
time. Methods of exercise and settlement and other terms of the SARs will be
determined by the Committee. Unless otherwise determined by the Committee,
options will generally remain exercisable for a period of 90 days (one year in
the case of death or disability) following termination of employment.
Restricted and Deferred Stock. The 1996 Plan also authorizes the Committee
to grant restricted stock and deferred stock. Restricted stock is an award of
shares of stock which are subject to restrictions on transferability and which
may be forfeited and reacquired by the Company in the event of certain
terminations of employment prior to the end of a restriction period established
by the Committee. Such an award would entitle the participant to all of the
rights of a stockholder of the Company, including the right to vote the shares
and the right to receive any dividends thereon, unless otherwise determined by
the Committee. An award of deferred stock confers upon a participant the right
to receive shares of Common Stock at the end of a specified deferral period,
subject to possible forfeiture of the award in the event of certain terminations
of employment prior to the end of the applicable deferral period or portion
thereof to which forfeiture conditions apply. Deferred stock awards carry no
voting or dividend rights or other rights associated with stock ownership
(although dividend equivalents may be granted, as discussed below).
Dividend Equivalents. The Committee is authorized to grant dividend
equivalents conferring on participants the right to receive cash, Common Stock,
other awards, or other property equal in value to dividends paid on a specific
number of shares of Common Stock. Dividend equivalents may be awarded on a
free-standing basis or in connection with another award. The Committee may
provide that dividend equivalents will be paid or distributed when accrued or
will be paid or distributed on a deferred basis, and, if deferred, will be
deemed to have been reinvested in additional Common Stock, awards, or other
investment vehicles specified by the Committee.
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Other Stock-Based Awards, Bonus Stock, and Awards in Lieu of Cash
Obligations. In order to enable the Company to respond to material developments
in tax regulations, accounting principles, securities laws, and other
legislation and regulations (interpretations thereof), and to trends in
executive compensation practices, the 1996 Plan authorizes the Committee to
grant awards that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Common Stock and factors
that may influence the value of Common Stock. The Committee will determine the
terms and conditions of such awards, including consideration to be paid to
exercise awards in the nature of purchase rights, the period during which awards
will be outstanding, and forfeiture conditions and restrictions on awards. In
addition, the Committee is authorized to grant Common Stock as a bonus, or to
grant Common Stock or other awards in lieu of Company obligations to pay cash
under other plans or compensatory arrangements, subject to such terms as the
Committee may specify.
Non-Employee Directors Options. Each person who becomes a non-employee
director will automatically receive a non-qualified stock option under the 1996
Plan relating to the purchase of 5,000 shares of Common Stock on the day after
the date that he becomes a non-employee director. On the day after each of the
Company's annual meetings, each person who is a non-employee director on any
such day will automatically receive a non-qualified stock option under the 1996
Plan relating to the purchase of 5,000 shares of Common Stock, plus an
additional 500 shares for each full year of service as a non-employee director
performed from the date that the 1996 Plan was approved by the Company's
stockholders to the date of such annual meeting, provided, however, that any
non-employee director who was granted an option pursuant to the preceding
sentence within 30 days of the date of an annual meeting will not be granted an
option pursuant to this sentence on the day after such annual meeting.
The exercise price of each share of Common Stock subject to an option
granted to a non-employee director will equal the fair market value of a share
of Common Stock on the date of grant. Payment of the exercise price for the
shares being purchased may be made in cash, Common Stock, or a combination of
both. Such non-qualified stock options will be exercisable one year from the
date granted and will have a ten-year term from such date. An exercisable option
will generally remain exercisable for a period of 90 days (one year in the event
of death or disability) upon a non-employee director's cessation of his term.
Other Terms of Awards. Awards may be made in a single payment, single
transfer, or in installments, and awards may be settled in cash, Common Stock,
other awards, or other property, in the discretion of the Committee. The
Committee may require or permit participants to defer the distribution of all or
part of an award in accordance with such terms and conditions as the Committee
may establish, including payment of interest on any deferred amounts under the
plan. The 1996 Plan authorizes the Committee to place shares or other property
in trusts or make other arrangements to provide for payment of the Company's
obligations under the 1996 Plan. The Committee may condition the payment of an
award on the withholding of taxes and may provide that a portion of the Common
Stock or other property to be distributed will be withheld (or previously
acquired stock or other property surrendered by the participant) to satisfy
withholding and other tax obligations.
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Awards and other rights granted under the 1996 Plan may not be pledged or
otherwise encumbered and are not transferable except by will or by the laws of
descent and distribution (or to a designated beneficiary upon the participant's
death).
In addition, the Committee may require achievement of preestablished
performance targets as a condition of awards becoming exercisable or settleable
under the 1996 Plan. If and to the extent required in order to comply with
Section 162(m) under the Code and regulations thereunder (so that payments with
respect to such awards will be fully deductible by the Company) the business
criteria applicable to awards will be selected from among the following: (i)
annual return on capital; (ii) annual earnings per share; (iii) annual cash flow
provided by operations; (iv) changes in annual revenues; and/or (v) strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, market penetration, geographic business expansion goals, cost
targets, and goals relating to acquisitions or divestitures as specified by the
Committee.
Awards under the 1996 Plan are generally granted for no consideration
other than services. The Committee, however, may grant awards alone or in
addition to, in tandem with, or in substitution for, any other award under the
1996 Plan, any award granted under any other plan of the Company, any
subsidiary, or any business entity to be acquired by the Company or subsidiary,
or other rights to payment from the Company or subsidiary. Awards granted in
addition to or in tandem with other awards may be granted either as of the same
time or at different times.
Vesting, Forfeitures and Acceleration Thereof. The Committee may, in its
discretion determine the vesting schedule of options and other awards, the types
of terminations of employment that will result in forfeiture of the awards, the
post-termination exercise periods of options and similar awards, and the events
that will result in acceleration of the exercisability and the lapsing of
restrictions, or the expiration of deferral periods on any award. Unless
otherwise provided by the Committee, all conditions and/or restrictions relating
to the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability of an award will immediately lapse
upon a change in control as defined in the 1996 Plan.
Amendment and Termination of the 1996 Plan. The Board of Directors may
amend, alter, suspend, discontinue, or terminate the 1996 Plan or the
Committee's authority to grant awards thereunder without the consent of
stockholders or participants, except stockholder approval must be obtained
within one year after the effectiveness of such action if required by any
federal or state law or regulation or under the rules of any stock exchange or
automated quotation system on which the Common Stock is then listed or quoted.
Thus, stockholder approval will not necessarily be required for amendments which
might increase the cost of the plan or broaden eligibility. Unless earlier
terminated by the Board, the 1996 Plan will terminate at such time that no
shares remain available and the Company has no further obligation with respect
to any outstanding award.
Participation in the 1996 Plan. The grant of awards under the 1996 Plan to
eligible participants thereunder is subject to the discretion of the Committee.
As of the date of this Proxy
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Statement, there has been no determination by the Committee with respect to
future awards under the 1996 Plan. Accordingly, future awards are not
determinable.
Federal Income Tax Implications of the 1996 Plan. The following is a brief
description of the federal income tax consequences generally arising with
respect to awards that may be granted under the 1996 Plan. This discussion is
intended for the information of stockholders considering how to vote at the
Annual Meeting and not as tax guidance to participants in the 1996 Plan. The
grant of an option or SAR (including a stock-based award in the nature of a
purchase right) will create no tax consequences for the participant or the
Company. A participant will not have taxable income upon exercising an ISO
(except that the alternative minimum tax may apply) and the Company will receive
no deduction at that time. Upon exercising an option other than an ISO
(including a stock-based award in the nature of a purchase right), the
participant must generally recognize ordinary income equal to the difference
between the exercise price and fair market value of the freely transferable and
nonforfeitable stock acquired on the date of exercise, and upon exercising an
SAR, the participant must generally recognize ordinary income equal to the cash
or the fair market value of the freely transferable and nonforfeitable stock
received. In each case, the Company will be entitled to a deduction equal to the
amount recognized as ordinary income by the participant.
A participant's disposition of shares acquired upon the exercise of an
option, SAR, or other stock-based award in the nature of a purchase right
generally will result in short-term or long-term capital gain or loss measured
by the difference between the sale price and the participant's tax basis in such
shares (or the exercise price of the option in the case of shares acquired by
exercise of an ISO and held for the applicable ISO holding periods). Generally,
there will be no tax consequences to the Company in connection with a
disposition of shares acquired under an option or other award, except that the
Company will be entitled to a deduction (and the participant will recognize
ordinary taxable income) if shares acquired upon exercise of an ISO are disposed
of before the applicable ISO holding periods have been satisfied.
With respect to awards granted under the 1996 Plan that may be settled
either in cash or in stock or other property that is either not restricted as to
transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of stock or other property received. The Company will be
entitled to a deduction for the same amount. With respect to awards involving
stock or other property that is restricted as to transferability and subject to
a substantial risk of forfeiture, the participant must generally recognize
ordinary income equal to the fair market value of the shares or other property
received at the first time the shares or other property become transferable or
not subject to a substantial risk of forfeiture, whichever occurs earlier. The
Company will be entitled to a deduction in an amount equal to the ordinary
income recognized by the participant. A participant may elect to be taxed at the
time of receipt of shares or other property rather than upon lapse of
restrictions on transferability or the substantial risk of forfeiture, but if
the participant subsequently forfeits such shares or property he would not be
entitled to any tax deduction, including as a capital loss, for the value of the
shares
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<PAGE>
or property on which he previously paid tax. Such election must be made and
filed with the Internal Revenue Service within thirty days of the receipt of the
shares or other property.
The foregoing provides only a general description of the application of
federal income tax laws to certain types of awards under the 1996 Plan.
Different tax rules may apply with respect to participants who are subject to
Section 16 of the Exchange Act, when they acquire stock in a transaction deemed
to be a nonexempt purchase under that statute, upon exercise of a derivative
security within six months after the exempt grant of such derivative security
under the 1996 Plan, or in other kinds of transactions under the 1996 Plan (such
as payment of exercise price of an option by surrender of previously acquired
Common Stock). The summary does not address the effects of other federal taxes
(including possible "golden parachute" excise taxes) or taxes imposed under
state, local, or foreign tax laws. Because of the variety of awards that may be
made under the 1996 Plan and the complexities of the tax laws, participants are
encouraged to consult a tax advisor as to their individual circumstances.
Section 162(m) of the Code, which generally disallows a public company's
tax deduction for compensation to the chief executive officer and the four other
most highly compensated executive officers in excess of $1,000,000. Compensation
that qualifies as "performance-based compensation" is excluded from the
$1,000,000 deductibility cap, and therefore remains fully deductible by the
company that pays it. The Company intends that options granted with an exercise
price at least equal to 100% of fair market value of the underlying stock at the
date of grant, and other awards the settlement of which is conditioned upon
achievement of performance goals (based on performance criteria described above)
will qualify as such "performance-based compensation," although other awards
under the 1996 Plan will not so qualify.
The affirmative vote of holders of a majority of shares of Voting Stock
outstanding on the Record Date present, or represented by proxy, and entitled to
vote at the Annual Meeting is required for the approval of the amendment to the
1996 Plan, provided that the total vote cast on the proposal represent more than
50% of all Voting Stock outstanding on the Record Date and entitled to vote on
the proposal.
The Board of Directors considers the proposed amendment to the 1996 Plan
to increase the number of shares of Common Stock that may be subject to
outstanding awards at any point in time under the 1996 Plan by 1,000,000 shares
to an aggregate of 2,505,996 shares to be in the best interests of the Company
and its stockholders and recommends that the Stockholders vote FOR approval.
26
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Financial Advisors
See "Compensation Committee Interlocks and Insider Participation in
Compensation Decisions."
Investment Agreement
In connection with a Stock Purchase and Sale Agreement (the "Purchase
Agreement"), dated as of November 6, 1997, by and among Samstock, L.L.C.
("Samstock"), EGI-Transmedia Investors, L.L.C. ("EGI-TMI", and together with
Samstock, "Purchasers"), the Company, and for the purposes of Section 5 thereto
only, the Robert M. Steiner Trust, as trustee under declaration of trust dated
March 9, 1983, as amended, establishing the Robert M. Steiner Revocable Trust
(the "Steiner Trust"), Purchasers and Halmostock Limited Partnership purchased
2,500,000 shares of Common Stock (the "Shares") and 1,200,000 five-year warrants
(the "Warrants") exercisable into shares of Common Stock for $10,625,000. In
connection with the Purchase Agreement, the Company, Purchasers, Halmostock
Limited Partnership and, for the purposes of Section 5 thereto only, the Steiner
Trust, entered into an Amended and Restated Investment Agreement, dated as of
March 3, 1998 (the "First Amended Investment Agreement"). In connection with the
GAMI Loan and the Standby Purchase Agreement, dated as of June 30, 1999 (the
"Standby Purchase Agreement"), entered into between Samstock and the Company in
connection with the Rights Offering, the Company, Purchasers and, for the
purposes of Section 5 thereto only, the Steiner Trust, entered into an Second
Amended and Restated Investment Agreement, dated as of June 30, 1999 (the
"Second Amended Investment Agreement" and, collectively with the First Amended
Investment Agreement, the "Investment Agreement"), which amends, restates and
supersedes the First Amended Investment Agreement except with respect to the
rights and obligations of Halmostock Limited Partnership thereunder as they
relate to each of the other parties thereto. Samstock and EGI-TMI are affiliates
of Equity Group Investments, Inc. of which Rod F. Dammeyer is Managing Director.
Covenants. Until March 3, 2003, the Purchasers will be entitled to
designate two representatives, reasonably acceptable to the independent
directors of the Company, to serve on the Board of Directors as long as the
Purchasers, Halmostock Limited Partnership and their affiliates beneficially own
at least an aggregate 15% of the combined voting power of the Company's
outstanding voting securities (including, for these purposes, the shares
issuable upon exercise of the Warrants until such time as the Warrants expire)
or one such representative, in the event that the Purchasers, Halmostock Limited
Partnership and their affiliates collectively beneficially own less than 15%,
but at least 5%, of the combined voting power of the Company's outstanding
voting securities. The Company agreed that it will not increase the size of the
Board beyond seven members as long as the Purchasers are entitled to designate
one or two Board representatives.
Pursuant to the Investment Agreement, in addition to the right of the
Purchasers to designate directors discussed above, Samstock has the right to
designate, without the consent or approval of
27
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the independent directors of the Company, one additional representative to serve
on the Board of Directors for a period of three years or, if earlier, until such
time as the Purchasers, Halmostock Limited Partnership and their affiliates
beneficially own less than an aggregate 15% of the combined voting power of the
Company's outstanding voting securities. This right was granted because Samstock
purchased, pursuant to the Standby Purchase Agreement, more than 25% of the
total number of shares of Series A Preferred Stock issued by the Company in the
Rights Offering.
Voting Arrangements. The Purchasers and Halmostock Limited Partnership
agreed that, except to the extent otherwise provided in the Investment
Agreement, the Purchasers and Halmostock Limited Partnership would vote their
securities with respect to the election or removal of directors of the Company
either: (a) in accordance with the recommendations of a majority of the
disinterested directors of the Company or (b) in the same proportions (including
abstentions) as the owners of record of the Company's shares of Common Stock,
other than those beneficially owned by the Purchasers and Halmostock Limited
Partnership, vote their shares of Common Stock; provided that the Purchasers,
Halmostock Limited Partnership and their affiliates may vote in favor of the
election or retention of the one or two directors designated by the Purchasers
as described in the preceding paragraph.
Termination. The Investment Agreement will terminate if the Purchasers,
Halmostock Limited Partnership and their affiliates collectively cease to own
voting securities of the Company representing at least an aggregate 5% of the
combined voting power of the Company.
Amended and Restated Agreement Among Stockholders
In connection with the Purchase Agreement, the Company entered into an
Amended and Restated Agreement Among Stockholders, dated as of March 3, 1998,
with the Purchasers and Melvin Chasen and Iris Chasen (collectively, the
"Stockholders"). Pursuant to this Agreement, the Stockholders, who together are
the beneficial owners of 840,009 shares, or 6.16% of the outstanding shares of
Common Stock of the Company, have agreed to grant Purchasers (i) a proxy to vote
all of their shares, (ii) the right of first refusal on all public and private
sales of their shares, and (iii) certain rights to require them to sell their
share holdings in the event the Purchasers sell their shares; provided, however,
that they will not be required to sell during a two-year period following March
3, 1998 at a share price of $6.00 or less. The Agreement Among Stockholders will
terminate if the Purchasers and their affiliates cease to own voting securities
representing at least 5% of the combined voting power of the Company.
Stockholders' Agreement
In connection with the Purchase Agreement, the Company entered into a
Stockholders' Agreement, dated as of March 3, 1998, with Purchasers and
Halmostock Limited Partnership. Pursuant to this Agreement, Halmostock Limited
Partnership, who together with Purchasers are the beneficial owners of 8,443,674
shares, or 44.97% of the outstanding shares of Common Stock of the Company, have
agreed to grant Purchasers (i) a proxy to vote all of their shares, (ii) the
right of first
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<PAGE>
refusal on all public and private sales of their shares, and (iii) certain
rights to require them to sell their share holdings in the event the Purchasers
sell their shares; provided, however, that Halmostock Limited Partnership will
not be required to sell 92,000 shares of Common Stock at a share price of $7.11
or less. The Stockholders' Agreement will terminate if the Purchasers,
Halmostock Limited Partnership and their affiliates cease to own voting
securities presenting at least in the aggregate 5% of the combined voting power
of the Company.
Consulting Agreements
In March 1998, Messrs. Wiedemann and Wunderman entered into consulting
arrangements with the Company. As compensation for their services, Mr. Wiedemann
and Mr. Wunderman were granted fully vested ten-year options to purchase 20,000
and 45,000 shares of Common Stock, respectively, and exercisable at $5.875 per
share of Common Stock.
INDEPENDENT ACCOUNTANTS
KPMG LLP audited the Company's financial statements for the fiscal year
ended September 30, 1999. As has been the prior practice, the Board of Directors
will appoint an auditor for the current fiscal year prior to the commencement of
the audit.
A representative of KPMG LLP is expected to be present at the Annual
Meeting and will respond to appropriate questions; however, KPMG LLP will not be
afforded an opportunity to make a statement.
OTHER BUSINESS
It is not intended to bring before the Annual Meeting any matters except
those proposed herein. Management is not aware at this time that any other
matters 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.
PROVISION OF CERTAIN ADDITIONAL INFORMATION
The Company's Annual Report for the fiscal year ended September 30, 1999
is being furnished with this Proxy Statement.
<PAGE>
PROPOSALS OF STOCKHOLDERS
Proposals, if any, of stockholders of the Company intended to be presented
at the Annual Meeting of Stockholders in 2001 must be received by the Company no
later than October 14, 2000. All stockholder notice of proposals submitted
outside the processes of Rule 14a-8 of the General Rules and Regulations under
the Securities Exchange Act of 1934 must be received by December 27, 2000, to be
considered for presentation at the Annual Meeting of Stockholders in 2001. The
proposal must be mailed to the Company's principal executive offices at 11900
Biscayne Boulevard, Miami, Florida 33181, Attention: Secretary.
OTHER MATTERS
On written request, the Company will provide without charge to each record
or beneficial holder of the Company's Common Stock as of January 26, 2000, a
copy of the Company's Annual Report on Form 10-K, including the financial
statements and schedules thereto, as filed with the Securities and Exchange
Commission. Requests should be addressed to Mr. Stephen E. Lerch, Executive Vice
President and Chief Financial Officer, Transmedia Network Inc., 11900 Biscayne
Boulevard, Miami, Florida 33181.
By Order of the Board of Directors,
--------------------------------------------
KATHRYN M. FERARA
Secretary
Miami, Florida
January 28, 2000
<PAGE>
TRANSMEDIA NETWORK INC.
Proxy for Annual Meeting of Stockholders March 1, 2000
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 and Series A Preferred Stock of Transmedia Network Inc.
(the "Company"), held of record by the undersigned on January 26, 2000, at the
Annual Meeting of Stockholders (the "Annual Meeting"), to be held on March 1,
2000 or any postponement or adjournment thereof.
1.abElection of Directors.
Nominees (term expiring in 2001): F. Philip Handy
Gene M. Henderson
Rod F. Dammeyer
Herbert M. Gardner
George S. Wiedemann
Lester Wunderman
[ ] FOR
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
[ ] FOR all nominees listed (except as marked to the contrary below)
2. To approve an amendment to our 1996 Long-Term Incentive Plan, as amended, to
increase the number of shares of Common Stock that may be subject to
outstanding awards at any point in time under the 1996 Plan by 1,000,000
shares to an aggregate of 2,505,996 shares.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. In their discretion, upon such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof.
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
BOARD OF DIRECTORS' SIX NOMINEES FOR ELECTION AND FOR THE PROPOSAL TO APPROVE
THE AMENDMENT TO THE 1996 PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
THAT MAY BE SUBJECT TO OUTSTANDING AWARDS AT ANY POINT IN TIME UNDER THE 1996
PLAN BY 1,000,000 SHARES TO AN AGGREGATE OF 2,505,996 SHARES.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
SIGNATURES:___________________________________ DATE: ________________, 2000
Note: Please sign exactly as name or names appears on stock certificate (as
indicated hereon).
