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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)
TRANSMEDIA NETWORK INC.
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $0.02 PER SHARE
(TITLE OF CLASS OF SECURITIES)
893767103
(CUSIP NUMBER)
JOSEPH M. PAOLUCCI
EQUITY GROUP INVESTMENTS, L.L.C.
TWO NORTH RIVERSIDE PLAZA, SUITE 600
CHICAGO, ILLINOIS 60606
(312) 466-3885
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
AUGUST 23, 2000
(DATE OF EVENT WHICH REQUIRES
FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
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<TABLE>
<CAPTION>
CUSIP No. 893767-103 SCHEDULE 13D PAGE 2 OF ___
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<S> <C>
1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock L.L.C. FEIN: 36-4156890
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF
SHARES ----------------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 9,191,124(1)
PERSON WITH ----------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
7,634,550
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10 SHARED DISPOSITIVE POWER
1,556,574
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,191,124(1)
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12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.7%
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14 TYPE OF REPORTING PERSON
00
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</TABLE>
2
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(1) Represents the number of shares which are beneficially owned by all
members of the group, in the aggregate, and which are subject to voting
arrangements set forth more fully in Items 3 and 4 below. This filing
shall not be construed as an admission that such reporting person is
the beneficial owner of all of such shares.
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<TABLE>
<S> <C>
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1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Halmostock Limited Partnership FEIN #83-0319692
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Wyoming
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7 SOLE VOTING POWER
0
NUMBER OF
SHARES ----------------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH REPORTING 9,191,124(1)
PERSON WITH ----------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
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10 SHARED DISPOSITIVE POWER
810,736
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,191,124(1)
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12 CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.7%
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14 TYPE OF REPORTING PERSON*
00
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</TABLE>
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(1) Represents the number of shares which are beneficially owned by all
members of the group, in the aggregate, and which are subject to voting
arrangements set forth more fully in Items 3 and 4 below. This filing
shall not be construed as an admission that such reporting person is
the beneficial owner of all of such shares.
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This Amendment No. 5 to Schedule 13D relates to the common stock, par
value $.02 per share ("Common Stock"), of Transmedia Network Inc. (the
"Issuer"). Items 2, 3, 4, 5, and 7 of the Schedule 13D are hereby amended to
read in their entirety as follows:
ITEM 2. Identity and Background
(a-c) This Statement is being filed by the following beneficial owners
of Common Stock: Samstock, L.L.C., a Delaware limited liability company
("Samstock"), and Halmostock Limited Partnership, a Wyoming limited partnership
("Halmostock"). (Samstock and Halmostock are referred to herein, individually,
as a "Stockholder" and, collectively, as the "Stockholders."). The sole member
of Samstock is SZ Investments, L.L.C., a Delaware limited liability company
("SZI"). The managing member of SZI is Zell General Partnership, Inc., an
Illinois corporation ("ZGP"). The general partner of Halmostock is Halmos
Investments-Western, Inc., a Wyoming corporation ("HIW"). Additional information
concerning SZI, ZGP and HIW is set forth in Appendix A hereto.
The principal business of Samstock, SZI and ZGP is general investments.
The business address of Samstock, SZI and ZGP is Two North Riverside Plaza,
Chicago, Illinois, 60606. The principal business of Halmostock is investment in
the securities of the Issuer and the principal business of HIW is general
investments. The business address of Halmostock and HIW is 21 W. Las Olas
Boulevard, Fort Lauderdale, Florida, 33301.
(d) and (e) Neither the Stockholders nor, to the best knowledge of the
Stockholders, any of SZI, ZGP or HIW, or any of the persons listed in Appendix A
hereto, have during the last five years (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was, or is, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration
Pursuant to a Stock Purchase and Sale Agreement dated as of November 6,
1997 among EGI-Transmedia Investors, L.L.C., a Delaware limited liability
company ("TMI"), Samstock and the Issuer (the "Stock Purchase Agreement"), TMI
and Samstock agreed to acquire in the aggregate (i) 2,500,000 newly issued
shares of Common Stock (the "Shares") and (ii) warrants to purchase an
additional 1,200,000 shares of Common Stock (the "Warrant Shares"), subject to
the satisfaction of certain conditions precedent. The Stock Purchase Agreement
was attached as Exhibit 1 to the original Schedule 13D and is incorporated
herein by reference.
The principal business of TMI was investment in the securities of the
Issuer. On September 23, 1999, TMI distributed all of the securities of the
Issuer held by it to TMI's members without additional consideration (the "TMI
Distribution"). TMI has had no investment in the securities of the Issuer since
the TMI Distribution.
Pursuant to an Assignment Agreement dated as of March 3, 1998 (the
"Initial Investment Closing Date") among the Stockholders and the Issuer (the
"Assignment Agreement"), effective contemporaneously with the closing under the
Stock Purchase Agreement, TMI and Samstock assigned to Halmostock the right to
acquire 352,941 of the Shares and 169,412 of the Warrant Shares. The Assignment
Agreement was attached as Exhibit 2 to Amendment Number 1 to Schedule 13D and is
incorporated herein by reference. In addition, Halmostock is the beneficial
owner of 92,000 shares of Common Stock, which 92,000 shares were contributed to
Halmostock by Steven J. Halmos prior to the Initial Investment Closing Date.
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On the Initial Investment Closing Date, TMI acquired 322,059 of the
Shares and 154,588 of the Warrant Shares and Samstock acquired 1,825,000 of the
Shares and 876,000 of the Warrant Shares, for a total aggregate consideration of
$9,125,000.75, the source of which was capital contributions to TMI and Samstock
by the members of TMI and Samstock, respectively. In addition, on the Initial
Investment Closing Date, Halmostock acquired 352,941 Shares and 169,412 Warrant
Shares for a total aggregate consideration of $1,499,999.25 paid to the Issuer,
the source of which was a loan of $1,534,999.25 from an affiliate of Halmostock,
which affiliate is a Wyoming limited partnership the general partner of which is
HIW. The loan was made pursuant to a note dated March 2, 1998, is payable on
demand, and bears interest at a rate of 8% per annum. The acquisition of the
Shares and Warrant Shares by TMI, Samstock and Halmostock described in this
paragraph are referred to herein collectively as the "Initial Investment."
Effective as of the Initial Investment Closing Date, immediately after
the closing of the Initial Investment, Samstock sold to Robert M. Steiner, as
trustee under the declaration of trust dated March 9, 1983, as amended,
establishing the Robert M. Steiner Revocable Trust ("Steiner Trust"), 40,364 of
the Shares and 19,375 of the Warrant Shares for a purchase price in cash in the
amount of $171,547.00, and Halmostock sold to the Steiner Trust 6,636 of the
Shares and 3,185 of the Warrant Shares, for a purchase price in cash of
$28,203.00.
In connection with the Initial Investment, TMI, Samstock, the Issuer,
Melvin Chasen and Iris Chasen (Melvin Chasen and Iris Chasen being referred to
herein, together, as the "Chasens") have also entered into an Amended and
Restated Agreement Among Stockholders dated as of March 3, 1998 (the "Amended
Agreement Among Stockholders"), which amends, restates and supersedes an
Agreement Among Stockholders dated as of November 6, 1997 among the same
parties. Pursuant to the Amended Agreement Among Stockholders, TMI and Samstock
acquired the sole power to vote or to direct the vote of all of the shares of
Common Stock and other voting securities of the Issuer held by the Chasens (the
"Chasen Shares"), whether now owned or hereafter acquired, subject to certain
limitations in the Investment Agreement described below. There are currently
745,839 Chasen Shares issued and outstanding known to the Reporting Persons,
representing 4.7% of the issued and outstanding Common Stock, calculated using
the amounts reported by the Issuer in its Form 10Q for the quarter ended June
30, 2000, plus the new issuance of the Second Tranche Shares and the Management
Shares (both defined below) on August 23, 2000.
The Amended Agreement Among Stockholders also provides that, subject to
certain limitations, TMI and Samstock have a right of first refusal on all sales
of the Chasen Shares, and the Chasen Shares are subject to "co-sale" and "drag
along" provisions if TMI and Samstock sell any shares they may own. On September
7, 1999, Samstock exercised its right of first refusal on a portion of the
Chasen Shares, thereby acquiring from the Chasens 135,000 of the Chasen Shares
for an aggregate purchase price of $472,500 in cash, the source of which was
Samstock's working capital.
The Amended Agreement Among Stockholders will terminate if Stockholders
and their affiliates (the "Stockholder Group") cease to own in the aggregate at
least 5% of the Issuer's Common Stock (or other securities of the Issuer
entitled to vote generally for the election of directors or securities
convertible into or exchangeable for Common Stock or such voting securities or
other options or rights to acquire Common Stock or such voting securities)
(collectively, the "Voting Securities"). The Amended Agreement Among
Stockholders was attached as Exhibit 3 to Amendment Number 1 to Schedule 13D and
is incorporated herein by reference.
Also in connection with the Initial Investment, the Stockholders and
the Issuer have entered into a Stockholders' Agreement dated as of March 3, 1998
(the "Stockholders Agreement"), pursuant to which TMI and Samstock acquired the
sole power to vote or to direct the vote of all of the shares of Common Stock
and other voting securities of the Issuer held by Halmostock (the "Halmostock
Shares"), whether now owned or hereafter acquired, subject to certain
limitations in the Investment Agreement described below. There are currently
438,305 Halmostock Shares issued and outstanding, representing 2.8% of the
issued and outstanding Common Stock, calculated using the amounts reported by
the Issuer in its Form 10Q for the quarter ended June 30, 2000, plus the new
issuance of the Second Tranche Shares and the Management Shares (both defined
below) on August 23, 2000. In addition, Halmostock owns 206,204 Preferred Shares
(as hereinafter defined) and warrants in respect of 166,227 Warrant Shares and
which, together with the 438,305 issued and outstanding Halmostock Shares,
represent 5.0% of the Common Stock, including the 166,227 Warrant Shares and the
206,204 Preferred Shares.
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<PAGE> 8
Like the Amended Agreement Among Stockholders, the Stockholders
Agreement also provides that, subject to certain limitations, TMI and Samstock
have a right of first refusal on all sales of the Halmostock Shares, and the
Halmostock Shares are subject to "co-sale" and "drag along" provisions if TMI
and Samstock sell any shares they may own. The Stockholders Agreement will
terminate if the Stockholder Group ceases to own in the aggregate at least 5% of
the Issuer's Voting Securities. The Stockholders Agreement was attached as
Exhibit 4 to Amendment Number 1 to Schedule 13D and is incorporated herein by
reference.
The summary contained in this Statement of certain provisions of each
of the Stock Purchase Agreement, the Assignment Agreement, the Amended Agreement
Among Stockholders and the Stockholders Agreement is not intended to be complete
and is qualified in its entirety by reference to the Stock Purchase Agreement,
the Assignment Agreement, the Amended Agreement Among Stockholders and the
Stockholders Agreement, each of which was attached as an exhibit to the original
Schedule 13D or Amendment Number 1 to Schedule 13D and is incorporated herein by
reference.
In June 1999, the Issuer entered into a $10 million loan agreement (the
"GAMI Loan Agreement") with GAMI Investments, Inc. ("GAMI"), an affiliate of
Samstock. The Issuer drew down the entire $10 million principal amount available
under the GAMI Loan Agreement on June 30, 1999 (the "GAMI Loan"). The GAMI Loan
Agreement obligated the Issuer to conduct a $10,000,000 rights offering (the
"Rights Offering") for shares of a newly created series of convertible preferred
stock (the "Series A Preferred Stock") described in the Issuer's definitive
proxy statement filed with the Securities Exchange Commission on September 17,
1999. The Issuer conducted the Rights Offering as required by the GAMI Loan
Agreement. The Rights Offering closed on November 9, 1999 (the "Rights Offering
Closing"). The GAMI Loan Agreement was attached as Exhibit 6 to Amendment Number
2 to Schedule 13D and is incorporated herein by reference. The summary contained
in this Statement of certain provisions of the GAMI Loan Agreement is not
intended to be complete and is qualified in its entirety by reference to the
GAMI Loan Agreement.
The TMI Distribution occurred on September 23, 1999. Samstock was one
of TMI's members and received in the TMI Distribution 100,883 of the Shares and
a warrant representing 48,424 of the Warrant Shares. The balance of the Shares
and the Warrant Shares previously held by TMI were distributed to other members
of TMI, and Samstock does not have sole or shared voting or dispositive power
over such Shares and Warrant Shares.
In connection with the Rights Offering, Samstock and the Issuer entered
into a Standby Purchase Agreement dated as of June 30, 1999 (the "Standby
Purchase Agreement"), whereby Samstock agreed to act as a standby purchaser to
ensure that $10 million in proceeds are raised in the Rights Offering. The
Issuer was required to use all proceeds of the Rights Offering to repay the
outstanding amount of the GAMI Loan. Under the Standby Purchase Agreement,
Samstock was obligated to exercise its basic subscription privilege in full and
to purchase, at the subscription price, all shares of Series A Preferred Stock
offered pursuant to the Rights Offering which were not subscribed for by other
stockholders (including pursuant to any oversubscription privilege). Pursuant to
the Standby Purchase Agreement, Samstock purchased 2,840,489 shares of Series A
Preferred Stock at the Rights Offering Closing for an aggregate purchase price
of $6,845,577.51 or $2.41 per share in cash, the source of which was capital
contributions to Samstock by the members of Samstock. At the Rights Offering
Closing, the Issuer used all of the proceeds therefrom to repay the outstanding
amount of the GAMI Loan which was $10,135,208.33 including accrued interest. In
addition, Halmostock has advised Samstock that Halmostock purchased 206,204
shares of Series A Preferred Stock in the Rights Offering for an aggregate
purchase price of $496,952.04 or $2.41 per share, the source of which was a loan
from an affiliate. The 2,840,489 shares of Series A Preferred Stock acquired by
Samstock and the 206,204 shares of Series A Preferred Stock acquired by
Halmostock are collectively referred to as the "Preferred Shares." The Standby
Purchase Agreement was attached as Exhibit 7 to Amendment No. 2 to Schedule 13D
and is incorporated herein by reference.
In consideration of Samstock's commitment under the Standby Purchase
Agreement and of the provision of the GAMI Loan by GAMI, the Issuer issued to
Samstock at the Rights Offering Closing a non-transferable five-year warrant
(the "Rights Offering Warrant") to purchase 1,000,000 shares of the Issuer's
common stock (the "Rights Offering Warrant
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Shares"). A copy of the Rights Offering Warrant was attached as Exhibit 10 to
Amendment No. 3 to Schedule 13D and is incorporated herein by reference. The
summary contained in this Statement of certain provisions of the Standby
Purchase Agreement and the Rights Offering Warrant is not intended to be
complete and is qualified in its entirety by reference to the Standby Purchase
Agreement and the Rights Offering Warrant attached as an exhibit to Amendment
No. 2 to Schedule 13D or hereto and incorporated herein by reference.
In connection with the Initial Investment, the Stockholders and the
Issuer entered into an Amended and Restated Investment Agreement dated as of
March 3, 1998 (the "First Amended Investment Agreement"), which amended,
restated and superseded an Investment Agreement dated as of November 6, 1997
among TMI, Samstock and the Issuer. The Steiner Trust joined the First Amended
Investment Agreement only for purposes of Section 5 thereof in connection with
its purchase of a portion of the Samstock Shares and Halmostock Shares described
above. In connection with the GAMI Loan and the Standby Purchase Agreement, the
Stockholders (other than Halmostock), the Issuer, and for purposes of Section 5
thereof only, the Steiner Trust, entered into a Second Amended and Restated
Investment Agreement dated as of June 30, 1999 (the "Second Amended Investment
Agreement"), which amends, restates and supersedes the First Amended Investment
Agreement, only with respect to the rights and obligations of each of the
parties to the First Amended Investment Agreement other than Halmostock. The
First Amended and Restated Investment Agreement continues in full force and
effect with respect to the rights and obligations of Halmostock thereunder vis a
vis each of the other Stockholders and the Issuer. The Second Amended Investment
Agreement contains agreements as to certain aspects of the relationship among
the Stockholders other than Halmostock and the Issuer. The Second Amended
Investment Agreement was attached to Amendment No. 2 to Schedule 13D as Exhibit
8 thereto and is incorporated herein by reference. The First Amended Investment
Agreement and the Second Amended Investment Agreement read together are
collectively referred to herein as the "Investment Agreement."
Pursuant to the Investment Agreement, the Stockholders agreed that the
members of the Stockholder Group will not take any of the following actions
(collectively, the "Standstill Provisions") prior to the fifth anniversary of
the Initial Investment Closing Date, without the approval of a majority of the
Issuer's disinterested directors, subject to specified limited exceptions: (a)
increase their ownership of Voting Securities beyond the combined voting power
of all Voting Securities represented by the Shares, the Warrant Shares, the
Preferred Shares or the Rights Offering Warrant Shares or subject to the Amended
Agreement Among Stockholders or Stockholders Agreement; provided, however, that
the foregoing limitation shall not prohibit the purchase of Voting Securities
directly from the Issuer pursuant to exercise of the warrants and any rights,
oversubscription rights or standby purchase obligations in connection with
rights offerings by the Issuer or exercise of any stock options granted by the
Issuer; (b) solicit proxies, assist any other person in the solicitation of
proxies, become a "participant" in a "solicitation" or assist any such
"participant" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Securities Exchange Act of 1934, as amended) in opposition to the
recommendation of a majority of disinterested directors, or submit any proposal
for the vote of Issuer's stockholders; (c) form, join or participate in any
other way in a partnership, pooling agreement, syndicate, voting trust or other
"group", or enter into any agreement or arrangement or otherwise act in concert
with any other person, for the purpose of acquiring, holding, voting or
disposing of Voting Securities of the Issuer; provided, however, that the
members of the Stockholder Group may engage in any of such activities among
themselves and with any stockholder of the Issuer who is a party to the Amended
Agreement Among Stockholders or the Stockholders Agreement; (d) engage in
certain specified takeover actions or take any other actions, alone or in
concert with any other person, to seek control of the Issuer; or (e) take any
action to seek to circumvent any of the foregoing limitations.
Pursuant to the Investment Agreement, at all times prior to the fifth
anniversary of the date of the Initial Investment Closing Date, Samstock is
entitled to designate two representatives, reasonably acceptable to the
independent directors of the Issuer, to serve on the Board of Directors of the
Issuer (the "Board") as long as the Stockholders together beneficially own at
least 15% of the combined voting power of the Issuer's Voting Securities
(including, for these purposes, the Warrant Shares and the Rights Offering
Warrant Shares issuable upon exercise of the warrants until such time as the
warrants expire) and, in the event that the Stockholders together beneficially
own less than 15%, but at least 5%, of the
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combined voting power of the Issuer's Voting Securities, Samstock shall be
entitled to designate one representative, reasonably acceptable to the
independent directors of the Issuer, to serve on the Issuer's Board. The Issuer
agreed that it will not increase the size of the Board beyond seven members as
long as Samstock is entitled to designate one or two Board representatives,
except in furtherance of the exercise by Samstock of its rights under the
Investment Agreement, and further agreed that, notwithstanding the agreements
contained in the Amended Agreement Among Stockholders, the chief executive
officer of the Issuer shall not count as a designee of Samstock.
Pursuant to the Investment Agreement, in addition to any other rights
to designate directors of the Issuer thereunder, because Samstock, pursuant to
the Standby Purchase Agreement, purchased more than 25% of the total number of
shares of Series A Preferred Stock issued by the Issuer in the Rights Offering
(exclusive of those shares of Series A Preferred Stock purchased by Samstock
pursuant to its basic subscription privilege or its obligation to purchase
shares of Series A Preferred Stock not purchased by TMI or TMI's members
pursuant to its or their basic subscription privileges), Samstock has the right
to designate one additional director of the Issuer, which individual may be
designated in Samstock's sole discretion without obtaining the acceptance or
approval of the Issuer's disinterested directors or any other person or entity,
to serve for a period of three years or, if earlier, until the time when the
Stockholders together beneficially own less than 15% of the combined voting
power of the Issuer's Voting Securities. Samstock has not yet designated its
additional Board member.
Pursuant to the Investment Agreement, the Stockholders agreed that,
except to the extent otherwise provided in the Investment Agreement, the
Stockholders would vote their Voting Securities with respect to the election or
removal of directors of the Issuer either (a) in accordance with the
recommendations of a majority of the disinterested directors of the Issuer or
(b) in the same proportions (including abstentions) as the holders of record of
the Issuer's Voting Securities, other than those beneficially owned by the
Stockholders, vote their securities; provided that the Stockholders may vote in
favor of the election or retention of the one or two directors designated by
Samstock as described in the preceding paragraph.
Pursuant to the Investment Agreement and subject to certain exceptions,
the Issuer granted to the Stockholders and certain other parties certain shelf
registration rights in connection with certain permitted sales of shares of
Common Stock. In particular, pursuant to such registration rights, the Issuer
has prepared and filed with the SEC a shelf registration statement (including
pledgees of any selling stockholder) with respect to all Shares and Warrant
Shares and caused such shelf registration statement to become effective and has
agreed to use its reasonable efforts keep such registration statement effective
until such time as all Shares and Warrant Shares have been sold or otherwise
disposed of. The purpose of such shelf registration is to facilitate the ability
of each of TMI, Samstock and their affiliates to margin its stock and does not
represent any present intention on behalf of any Stockholder to dispose of any
Shares or Warrant Shares covered thereby.
Pursuant to the Investment Agreement and subject to certain exceptions,
the Issuer granted to Samstock and certain other parties certain shelf
registration rights in connection with certain permitted sales of shares of
Series A Preferred Stock and Common Stock. In particular, the Issuer agreed to
prepare and file with the SEC a shelf registration statement (which shall
include pledgees of any selling stockholder) with respect to the Series A
Preferred Stock, Common Stock issuable upon conversion of the Series A Preferred
Stock and the Rights Offering Warrant Shares as soon as practicable after the
Rights Offering Closing, and to use its reasonable efforts to cause such shelf
registration statement to become effective and keep such registration statement
effective until such time as all Series A Preferred Stock, Common Stock issuable
upon conversion of the Series A Preferred Stock or the Rights Offering Warrant
Shares have been sold or otherwise disposed of. The purpose of any such shelf
registration put in effect pursuant to the Investment Agreement is to facilitate
the ability of Samstock and its affiliates to margin its stock and does not
represent any present intention on behalf of any Stockholder to dispose of any
Series A Preferred Stock, Common Stock issuable upon conversion of the Series A
Preferred Stock or the Rights Offering Warrant Shares to be covered thereby.
The summary contained in this Statement of certain provisions of the
Investment Agreement is not intended to be complete and is qualified in its
entirety by reference to the First Amended Investment Agreement and the Second
Amended
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Investment Agreement attached as exhibits to Amendment Number 1 to Schedule 13D
or Amendment Number 2 to Schedule 13D and incorporated herein by reference.
Samstock entered into a Co-Sale and Voting Agreement (the "New
Investors Co-Sale Agreement") dated as of April 28, 2000, with the Issuer,
Minotaur Partners II, L.P., an Illinois limited partnership ("MP II"),
ValueVision International Inc., a Minnesota corporation ("ValueVision"), Dominic
Mangone ("Mangone"), and Raymond Bank ("Bank" and, together with MP II,
ValueVision and Mangone, the "New Investors"). The New Investors Co-Sale
Agreement was entered into in connection with the acquisition on May 1, 2000 by
the New Investors of (i) 904,303 newly issued shares of Common Stock (the "First
Tranche Shares") and (ii) warrants to purchase 1,808,606 shares of Common Stock
(the "First Tranche Warrants"). The New Investors have also agreed to acquire
(i) 629,944 newly issued shares of Common Stock (the "Second Tranche Shares")
and (ii) warrants to purchase an additional 1,259,888 shares of Common Stock
(the "Second Tranche Warrants"), subject to certain conditions.
Pursuant to a Stock Purchase and Sale Agreement dated as of April 28,
2000 (the "Management Stock Purchase Agreement") among the Issuer, certain
investors including Issuer management listed on the signature page of the
Management Stock Purchase Agreement (the "Management Investors"), and Samstock,
the Management Investors and Samstock agreed to purchase, at the time of the
closing of the purchase of the Second Tranche Shares and Second Tranche
Warrants,(i) 657,536 newly issued shares of Common Stock (the "Management
Shares") at a price of $4.5625 per share and (ii) warrants (the "Management
Warrant Shares") to purchase an additional 1,315,072 shares of Common Stock.
The Management Stock Purchase Agreement is attached hereto as Exhibit 11 and is
incorporated herein by reference. The form of warrant to purchase the
Management Warrant Shares is attached as Exhibit A to the Management Stock
Purchase Agreement that is attached hereto as Exhibit 11 and is incorporated
herein by reference. Samstock's source of funds for the aggregate $1,850,000
purchase price for the Management Shares and the Management Warrant Shares will
be working capital. Samstock also entered into a Co-Sale and Voting Agreement
(the "Management Investors Co-Sale Agreement") dated as of April 28, 2000 with
the Issuer and the Management Investors. The closing of the purchase of the
Second Tranche Shares, Second Tranche Warrants, the Management Shares and the
Management Warrant Shares occurred on August 23, 2000, at which time Samstock
acquired 405,479 Management Shares and 810,958 Management Warrant Shares, of
which 405,479 are exercisable at $5.93125 per share and 405,479 are exercisable
at $7.30 per share.
The New Investors Co-Sale Agreement provides that, subject to the prior
rights of the Stockholders pursuant to the Amended Agreement Among Stockholders
and the Stockholders Agreement, the New Investors have a right of first refusal
on all sales to a third party of the stock held by Samstock where the amount of
shares is equal to or exceeds more than ten percent (10%) of the shares held by
Samstock. Furthermore, the New Investors' shares are subject to "drag along"
provisions if Samstock sells all of its shares provided, however, that prior to
the first anniversary of the New Investors Co-Sale Agreement, Samstock cannot
require the New Investors to sell their shares pursuant to this provision if the
contemplated transaction would result in an internal rate of return for the New
Investors on their initial investment of less than 25%. Further, so long as
Samstock is entitled to designate one or two directors of the Issuer pursuant to
the Investment Agreement, each New Investor shall vote in favor of the election
of Samstock's designee or designees to the Company's Board of Directors. In
addition, so long as MP II is entitled to designate one director in accordance
with the investment agreement dated as of April 28, 2000 among the Issuer and
the New Investors, Samstock shall vote in favor of the election of MP II's
designee to the Issuer's Board of Directors.. In the New Investors Co-Sale
Agreement, Samstock also agrees to vote in favor of the proposal to be included
in the Issuer's proxy statement to authorize the issuance and sale of the Second
Tranche Shares and Second Tranche Warrants. The New Investors Co-Sale Agreement
will terminate if the New Investors cease to own in the aggregate at least 5% of
the Issuer's Voting Securities. The New Investors Co-Sale Agreement is attached
hereto as Exhibit 12 and is incorporated herein by reference.
The Management Investors Co-Sale Agreement provides that, subject to
the prior rights of the Stockholders pursuant to the Amended Agreement Among
Stockholders and the Stockholders Agreement and of the New Investors pursuant
to the New Investors Co-Sale Agreement, the Management Investors have a right of
first refusal on all sales to a third party of the stock held by Samstock where
the amount of shares is equal to or exceeds more than ten percent (10%) of the
shares held by Samstock. Furthermore, the Management Investors' shares are
subject to "drag along" provisions if Samstock sells all of its shares provided,
however, that prior to the first anniversary of the Management Investors Co-Sale
Agreement, Samstock cannot require the Management Investors to sell their shares
pursuant to this provision if the contemplated transaction would result
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<PAGE> 12
in an internal rate of return for the Management Investors on their initial
investment of less than 25%. In the Management Investors Co-Sale Agreement,
Samstock also agrees to vote in favor of the proposal to be included in the
Issuer's proxy statement to authorize the issuance and sale of the Second
Tranche Shares and Second Tranche Warrants. The Management Investors Co-Sale
Agreement will terminate if the Management Investors cease to own in the
aggregate at least 5% of the Issuer's Voting Securities. The Management
Investors Co-Sale Agreement is attached hereto as Exhibit 13 and is incorporated
herein by reference.
The summary contained in this Statement of certain provisions of the
Management Stock Purchase Agreement, the New Investors Co-Sale Agreement and the
Management Investors Co-Sale Agreement is not intended to be complete and is
qualified in its entirety by reference to the Management Stock Purchase
Agreement, the New Investors Co-Sale Agreement and the Management Investors
Co-Sale Agreement each attached as an Exhibit hereto and incorporated herein by
reference.
ITEM 4. Purpose of the Transaction
The Stockholders' acquisition of the Shares, the Warrant Shares and the
Preferred Shares, Samstock's acquisition of 135,000 of the Chasen Shares,
Samstock's acquisition of the Rights Offering Warrant, and Samtock's acquisition
of the Management Shares and the Management Warrant Shares, and Samstock's
acquisition of the sole power to vote or to direct the vote of the Chasen Shares
and the Halmostock Shares, were effected for the purpose of investing in the
Issuer.
The purchase price upon exercise of the warrants in respect of the
Warrant Shares is equal to a specified price (the "Exercise Price") multiplied
by the number of shares of Common Stock that TMI, Samstock, or Halmostock, as
the case may be, is then purchasing upon exercise of the warrants. The Exercise
Price is $6.00 per share for one third of the Warrant Shares purchased, $7.00
per share for another third of the Warrant Shares, and $8.00 per share for the
final third of the Warrant Shares. The warrants may be exercised at any time and
will expire on the fifth anniversary of the date of the Initial Investment
Closing Date.
The purchase price upon exercise of the Rights Offering Warrant in
respect of the Rights Offering Warrant Shares is equal to $2.4813 per share
(which exercise price is equal to the average of the closing prices of the
common stock for the 20 trading days preceding the Rights Offering Closing). The
Rights Offering Warrant may be exercised at any time and will expire on the
fifth anniversary of the date of the Rights Offering Closing.
The purchase price upon exercise of the warrants in respect of the
Management Warrant Shares is equal to a specified price (the "Management Warrant
Exercise Price") multiplied by the number of shares of Common Stock that
Samstock is then purchasing upon the exercise of the warrants. The Management
Warrant Exercise Price is $5.93125 per share for one-half of the Management
Warrant Shares purchased and $7.30 per share for the other one-half of the
Management Warrant Shares purchased. The warrants may be exercised at any time
and will expire on the fifth anniversary of their issuance date.
Each Stockholder intends to continue to review its investment in Common
Stock and Series A Preferred Stock and, subject to the limitations of the
Investment Agreement, the New Investors Co-Sale Agreement and the Management
Investors Co-Sale Agreement described above, from time to time depending upon
certain factors, including without limitation the financial performance of the
Issuer, the availability and price of shares of Common Stock and Series A
Preferred Stock and other general market and investment conditions, may
determine to acquire through open market purchases or otherwise additional
shares of Common Stock or Series A Preferred Stock, or may determine to sell
through the open market or otherwise.
Except as stated above, none of the Stockholders has any plans or
proposals of the types referred to in clauses (a) through (j) of Item 4 of
Schedule 13D, as promulgated by the Securities and Exchange Commission.
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<PAGE> 13
ITEM 5. Interest in Securities of the Issuer
(a) and (b) To the best knowledge of the Stockholders, there are
15,824,472 shares of Common Stock outstanding as of August 23, 2000, calculated
using the amounts reported by the Issuer on its Form 10Q for the quarter ended
June 30, 2000, plus the Second Tranche Shares and the Management Shares. As of
August 23, 2000, the aggregate 3,507,095 shares of Common Stock beneficially
owned by the Stockholders represent approximately 22.2% of the Common Stock
issued and outstanding, and, together with the 2,898,952 Preferred Shares, the
1,025,119 Warrant Shares, the 949,000 Rights Offering Warrant Shares and the
810,958 Management Warrant Shares, represent 42.7% of the Common Stock,
including the Warrant Shares, the Preferred Shares, the Rights Offering Warrant
Shares, and the Management Warrants on a fully converted and exercised basis.
Such securities are held as follows:
<TABLE>
<CAPTION>
ISSUED AND PREFERRED RIGHTS OFFERING MANAGEMENT
HOLDER OUTSTANDING SHARES SHARES WARRANT SHARES WARRANT SHARES WARRANT SHARES
--------------------- -------------------- ---------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Samstock............. 2,322,952 2,692,748 858,892 949,000 810,958
Halmostock........... 438,305 206,204 166,227 0 0
Chasens (1).......... 745,838 0 0 0 0
-------------------- ---------------- --------------- --------------- --------------
Total................ 3,507,095 2,898,952 1,025,119 949,000 810,958
==================== ================ =============== =============== ==============
</TABLE>
(1) As described in Item 3 above and as set forth more fully in this Item
5, Samstock has shared voting power and shared dispositive power in
respect of the Chasen Shares.
Because Samstock is a party with the New Investors in the Co-Sale
Agreement the Stockholders may, pursuant to Rule 13d-3, be deemed to be in a
"group" with the New Investors, and therefore to jointly beneficially own
3,583,563 shares of the Issuer held by the New Investors. The existence of any
such group is not acknowledged by the Stockholders.
Pursuant to the Amended Agreement Among Stockholders, and subject to
the limitations of the Investment Agreement, Samstock has the shared power to
vote or to direct the vote of the 745,839 Chasen Shares beneficially owned by
it. Pursuant to the Stockholders Agreement, and subject to the limitations of
the Investment Agreement, Samstock has the shared power to vote or to direct the
vote of the 810,736 Halmostock Shares beneficially owned by it. In addition,
each of the Stockholders has agreed to vote its shares of Common Stock and
Series A Preferred Stock in accordance with certain provisions of the Investment
Agreement.
Each Stockholder has the power to dispose of or to direct the
disposition of such Stockholder's shares of Common Stock and/or Series A
Preferred Stock, subject to the following limitations, which are described more
fully in Item 3 above. Pursuant to the "drag along" provisions of the Amended
Agreement Among Stockholders, Samstock has the shared power, together with the
Chasens, to dispose of or to direct the disposition of the Chasen Shares.
Similarly, pursuant to the "drag along" provisions of the Stockholders
Agreement, Samstock has the shared power, together with Halmostock, to dispose
of or to direct the disposition of the Halmostock Shares.
For purposes of this Statement the Stockholders are being treated as a
group which, in the aggregate, beneficially owns all of the shares of Common
Stock and Series A Preferred Stock listed above. This filing shall not be
construed as an
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<PAGE> 14
admission that any reporting person is the beneficial owner of all of such
shares of Common Stock or Series A Preferred Stock.
At the date hereof, neither the Stockholders, nor to the best knowledge
of the Stockholders, any of SZI, ZGP, HIW or any of the persons listed in
Appendix A hereto owns any shares of Common Stock or Series A Preferred Stock
other than shares of Common Stock and Series A Preferred Stock beneficially
owned by the Stockholders, as described herein, of which one or more of such
other persons may be deemed to have beneficial ownership pursuant to Rule 13d-3
of the Exchange Act.
(c) During the last sixty days the only transactions by the
Stockholders with respect to shares of the Issuer are as follows: On August 4,
2000, Samstock transferred 103,046 shares of Common Stock, 144,710 shares of
Series A Preferred Stock, 46,157 Warrant Shares and 51,000 Rights Offering
Warrant Shares to a third party in connection with that person's retirement from
Samstock. On August 23, 2000, Samstock acquired the Management Shares and the
Management Warrant Shares, as described in Item 4 above.
(d) No person other than a Stockholder has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of
the Common Stock beneficially owned by such Stockholders, except for the
Chasens, in the case of the Chasen Shares.
(e) Not applicable.
ITEM 7. Material to be Filed as Exhibits
Exhibit 1 - Stock Purchase Agreement*
Exhibit 2 - Assignment Agreement*
Exhibit 3 - Amended Agreement Among Stockholders*
Exhibit 4 - Stockholders Agreement*
Exhibit 5 - First Amended Investment Agreement*
Exhibit 6 - GAMI Loan Agreement*
Exhibit 7 - Standby Purchase Agreement*
Exhibit 8 - Second Amended Investment Agreement*
Exhibit 9 - Power of Attorney dated February 26, 1998*
Exhibit 10 - Rights Offering Warrant*
Exhibit 11 2000 Stock Purchase Agreement*
Exhibit 12 New Investors Co-Sale Agreement*
Exhibit 13 Management Investors Co-Sale Agreement*
Exhibit 14 Press Release dated May 2, 2000*
* Previously filed.
APPENDIX A SCHEDULE 13D/A CUSIP NUMBER 893767103
SZ Investments, L.L.C., A Delaware Limited Liability Company: SZI's managing
member is Zell General Partnership, Inc., and its non-managing members are
Alphabet Partners and ZFT Partnership.
Zell General Partnership, Inc., An Illinois Corporation: ZGP's sole shareholder
is the Samuel Zell Revocable Trust and its sole director is Samuel Zell.
Samuel Zell: Mr. Zell is Chairman of the Board of Directors of Equity Group
Investments, L.L.C. ("EGI"). EGI is a privately owned investment management
firm. Mr. Zell is a citizen of the United States of America.
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<PAGE> 15
Alphabet Partners, An Illinois General Partnership: Alphabet Partners is
composed of three trusts created for the benefit of Mr. Zell and his family.
Chai Trust Company, L.L.C., an Illinois limited liability company, is the sole
trustee of the three trusts.
ZFT Partnership, An Illinois General Partnership: ZFT Partnership is composed of
four trusts created for the benefit of Mr. Zell and his family. Chai Trust
Company, L.L.C., an Illinois limited liability company, is the sole trustee of
the four trusts.
Halmos Investments-Western, Inc.: HIW's sole shareholder and sole director is
Steven J. Halmos. Mr. Halmos is a citizen of the United States of America.
15
<PAGE> 16
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
DATED: September 19, 2000
SAMSTOCK, L.L.C.
By: /s/ DONALD J. LIEBENTRITT
-------------------------------------
Name: Donald J. Liebentritt
Title: Vice President
HALMOSTOCK LIMITED PARTNERSHIP
by Halmos Investments-Western, Inc.,
its general partner
By: /s/ *
-------------------------------------
Name: Steven J. Halmos, President
* By: /s/ DONALD J. LIEBENTRITT
-----------------------------------
Donald J. Liebentritt
Attorney-in-fact
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<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1 Stock Purchase and Sale Agreement dated as of November 6, 1997*
2 Assignment Agreement dated as of March 3, 1998*
3 Amended and Restated Agreement Among Stockholders dated as of March 3,
1998*
4 Stockholders' Agreement dated as of March 3, 1998*
5 First Amended Investment Agreement dated as of March 3, 1998*
6 GAMI Loan Agreement dated as of June 30, 1999*
7 Standby Purchase Agreement dated as of June 30, 1999*
8 Second Amended Investment Agreement dated as of June 30, 1999*
9 Power of Attorney dated February 26, 1998*
10 Stock Purchase and Sale Agreement dated as of April 28, 2000*
11 Co-Sale and Voting Agreement dated as of April 28, 2000 (New
Investors)*
12 Co-Sale and Voting Agreement dated as of April 28, 2000 (Management
Investors)*
13 Press Release dated May 2, 2000*
</TABLE>
* Previously filed.
17
