EXHIBIT 10.3
INVESTMENT AGREEMENT
Investment Agreement dated as of November 6, 1997 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), among
Transmedia Network Inc., a Delaware corporation (the "Company"), Samstock,
L.L.C., a Delaware limited liability company ("Samstock"), and Transmedia
Investors, L.L.C., a Delaware limited liability company ("TNI" and together with
Samstock, the "Investors").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Stock Purchase and Sale Agreement,
dated as of even date herewith, among the Company and the Investors (the
"Purchase Agreement"), the Company has agreed to issue and sell to Investors,
and Investors have agreed to purchase from the Company, an aggregate of (i)
2,500,000 newly issued shares (collectively, the "Shares") of the Company's
Common Stock, par value $.02 per share ("Common Stock"), and (ii) a warrant (the
"Warrant") to purchase an additional 1,200,000 shares (collectively, the
"Warrant Shares") of Common Stock, in each case in such proportions as are set
forth in a notice delivered to the Company pursuant to the terms of the Purchase
Agreement.
WHEREAS, the Company, the Investors and Xxxxxx Xxxxxx, an individual
residing in the State of Florida ("Chasen"), have entered into an Agreement
Among Stockholders, as of the date hereof (the "Agreement Among Stockholders").
WHEREAS, the Company and the Investors are entering into this
Agreement to establish certain arrangements with respect to the relationships
between them.
WHEREAS, the Company believes that these arrangements will be in the
best interests of the Company and all of its stockholders.
NOW, THEREFORE, intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 The terms "beneficial ownership," "person" and "group" shall have
the respective meanings ascribed to such terms pursuant to Regulation 13D-G
adopted by the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof. The term "affiliate" shall have the meaning ascribed to such
term pursuant to Rule 12b-2 under the Exchange Act, as in effect on the date
hereof.
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1.2 The "Combined Voting Power" at any measurement date shall mean the
total number of votes which could have been cast in an election of directors of
the Company had a meeting of the stockholders of the Company been duly held
based upon a record date as of the measurement date if all Company Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.3 "Company Voting Securities" shall mean, collectively, Common
Stock, any preferred stock of the Company that is entitled to vote generally for
the election of directors, any other class or series of Company securities that
is entitled to vote generally for the election of directors and any other
securities, warrants, options or rights of any nature (whether or not issued by
the Company) that are convertible into, exchangeable for, or exercisable for the
purchase of, or otherwise give the holder thereof any rights in respect of,
Common Stock, Company preferred stock that is entitled to vote generally for the
election of directors, or any other class or series of Company securities that
is entitled to vote generally for the election of directors.
1.4 "Disinterested Director" means Independent Directors who are
"disinterested directors" as that term is used in Section 144 of the Delaware
General Corporate Law.
1.5 "Effective Date" means the Closing Date as defined in the
Purchase Agreement.
1.6 "Independent Director" means directors of the Company who (i) are
not current or former employees or officers of the Company, (ii) are not serving
as designees of Samstock pursuant to Section 4.2 hereof, (iii) are not 5% or
greater stockholders of the Company, and (iv) have no financial interest in and
are not otherwise associated with any of the Investors, the Company, any
subsidiary of the Company or any of their respective affiliates, excluding,
however, any equity interest of not more than 2% of any publicly-held entity.
The term "associated" means having a business, financial or familial
relationship that might reasonably be expected to affect the individual's
judgment with respect to matters in which a member of the Xxxx Group might be
interested.
1.7 The "Maximum Permitted Voting Power" at any measurement date shall
mean the Voting Power as of such measurement date of all Company Voting
Securities, regardless of the holder thereof, (i) represented by the Shares or
the Warrant Shares, (ii) outstanding as of the date hereof and subject to the
Agreement Among Stockholders or (iii) issued by the Company after the date
hereof and subject to the Agreement Among Stockholders upon issuance; provided,
however, that, in the event that the Company issues any Company Voting
Securities after the date hereof, the Maximum Permitted Voting Power shall be
adjusted so that the percentage of the Combined Voting Power represented by the
Maximum Permitted Voting Power shall not be reduced.
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1.8 "Xxxx Affiliate" means Samstock, TNI and any of their respective
affiliates under control of or common control with Samstock or TNI (exclusive of
Chasen and his respective affiliates).
1.9 "Xxxx Group" means (i) Samstock, (ii) TNI, (iii) any member of
Samstock or TNI, (iv) any affiliate of any member of Samstock or TNI under
control of, or common control with, such member, and (v) any corporations,
partnerships, limited liability companies or other legal entities that are the
affiliates of any of the foregoing, collectively; provided, however, that
publicly held entities that might fall within this definition (a "Public Xxxx
Affiliate") shall not be treated as affiliates of any member of the Xxxx Group
hereunder unless any member of the Xxxx Group or any of its affiliates took any
action, directly or indirectly, to suggest, encourage or assist such entity in
taking the relevant action to be attributed to the Xxxx Group hereunder. For
purposes of the preceding sentence and the similar clause appearing in the
second sentence of Section 3.1, the failure of any member of the Xxxx Group or
any of its affiliates, upon learning of a Public Xxxx Affiliate's action, to
request that such Public Xxxx Affiliate refrain from taking such action because
of the provisions of this Agreement will be deemed to constitute "encouraging or
assisting" in such action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Investors jointly and severally represent and warrant to the
Company and Chasen as follows:
(a) Each of Samstock and TNI is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware.
Each of Samstock and TNI has the limited liability company power and authority
to enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
each of Samstock and TNI and constitutes the legal, valid and binding agreement
of each of Samstock and TNI, enforceable against each of them in accordance with
the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance by Samstock or TNI of its obligations hereunder will conflict with,
or result in a breach of, or constitute a default under, any law, rule,
regulation, judgment, order or decree of any court, arbitrator or governmental
agency or instrumentality, or of any agreement or instrument to which Samstock,
TNI or their respective properties are bound or by which they are affected or of
any charter documents of Samstock or TNI.
(d) As of the date hereof, no shares of Common Stock are currently
beneficially owned by Samstock or TNI.
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2.2 The Company represents and warrants to Investors as follows:
(a) The Company is a validly existing corporation under the laws of
the jurisdiction of its organization and has the corporate power and authority
to enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of its obligations hereunder will conflict with, or result in a
breach of, or constitute a default under, any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality, or of any agreement or instrument to which the Company is bound
or by which it is affected or of any charter documents of the Company.
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ARTICLE III
STANDSTILL AGREEMENT
3.1 Acquisition of Company Voting Securities. Except as the same may be
approved by a majority of the Disinterested Directors in a specific resolution
to that effect adopted prior to the taking of such action, from and after the
Effective Date and prior to the fifth anniversary of the Effective Date, no
member of the Xxxx Group shall, directly or indirectly, acquire, offer to
acquire, agree to acquire, become the beneficial owner of or obtain any rights
in respect of any Company Voting Securities, by purchase or otherwise, or take
any action in furtherance thereof, if the effect of such acquisition, agreement
or other action would be (either immediately or upon consummation of any such
acquisition, agreement or other action, or expiration of any period of time
provided in any such acquisition, agreement or other action) to increase the
aggregate beneficial ownership of Company Voting Securities by the Xxxx Group to
such number of Company Voting Securities that represents or possesses greater
than the Maximum Permitted Voting Power. Notwithstanding the foregoing maximum
limitations, (A) no member of the Xxxx Group shall be obligated to dispose of
any Company Voting Securities beneficially owned in violation of such maximum
limitations if, and solely to the extent that, its beneficial ownership is or
will be increased solely as a result of (1) a repurchase of any Company Voting
Securities by the Company or any of its subsidiaries if such repurchase was
approved by a majority of the Disinterested Directors or (2) the purchase by any
Public Xxxx Affiliate not otherwise constituting a part of the Xxxx Group in
accordance with Section 1.9 hereof unless any member of the Xxxx Group took any
action, directly or indirectly, to suggest, encourage or assist in such purchase
and (B) the foregoing shall not prohibit any purchase of Company Voting
Securities directly from the Company pursuant to the exercise of the Warrant and
any rights, oversubscription rights or standby purchase obligations in
connection with rights offerings by the Company or exercise of any stock options
granted by the Company. For purposes of calculating the maximum limitations, all
Company Voting Securities that are the subject of an agreement, arrangement or
understanding pursuant to which the Xxxx Group or any member thereof has the
right to obtain beneficial ownership of such securities in the future (including
the Warrant Shares to the extent the Warrant has not been exercised or has not
expired) shall also be deemed to be outstanding and beneficially owned by the
Xxxx Group or the applicable member thereof.
3.2 Proxy Solicitations, etc. Prior to the fifth anniversary of the
Effective Date, no member of the Xxxx Group shall solicit proxies, assist any
other person in any way, directly or indirectly, in the solicitation of proxies,
become a "participant" in a "solicitation" or assist any "participant" in a
"solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Exchange Act) in opposition to the recommendation of a majority of the
Disinterested Directors, submit any proposal for the vote of stockholders of the
Company, in each case (a) without the prior approval of the majority of the
Disinterested Directors or (b) other than with respect to Company Voting
Securities (i) held by any member of the Xxxx Group or (ii) subject to the
Agreement Among Stockholders.
3.3 No Voting Trusts, Pooling Agreements, or Formation of "Groups".
Except as the same may be approved by a majority of the Disinterested Directors
in a specific resolution to that effect adopted prior to the taking of such
action, prior to the fifth anniversary of the
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Effective Date, no member of the Xxxx Group shall (a) form, join or in any other
way participate in a partnership, pooling agreement, syndicate, voting trust or
other "group" with respect to Company Voting Securities other than (i) the Xxxx
Group or (ii) with any Company stockholders who are parties to the Agreement
Among Stockholders as of the date hereof or hereafter become parties to the
Agreement Among Stockholders in accordance with the terms thereof as a result of
a sale, assignment or other transfer of Company Voting Securities that are
subject to the Agreement Among Stockholders ("Other Covered Stockholders"); or
(b) enter into any agreement or arrangement or otherwise act in concert with any
other person other than a member of the Xxxx Group (provided such member of the
Xxxx Group is itself bound by the terms of this Agreement), or a holder of any
interest in any entity included within the Xxxx Group, for the purpose of
acquiring, holding, voting or disposing of Company Voting Securities, other than
with any Other Covered Stockholders.
3.4 No Solicitation of Bidders. Prior to the fifth anniversary of the
Effective Date, no member of the Xxxx Group shall directly or indirectly assist,
encourage or induce any person to bid for or acquire outstanding Company Voting
Securities (other than any Company Voting Securities held by the Xxxx Group) in
any transaction or series of related transactions, unless the consummation of
such transaction or series of related transactions requires approval of a
majority of the Board of Directors. Prior to disclosing any confidential
non-public information concerning the Company to such person, such person shall
have executed and delivered to the Xxxx Group a confidentiality and standstill
agreement on substantially the same terms as those set forth in the letter
agreement dated July 16, 1997, entered into between the Company and an affiliate
of the Investors in connection with the transactions contemplated by the
Purchase Agreement, with such duration as shall be appropriate under the
circumstances in the reasonable judgment of the Xxxx Group. Promptly upon the
Xxxx Group entering into any written agreement or arrangement with such person
concerning a transaction covered by this Section 3.4 (including such
aforementioned confidentiality and standstill agreement), the Xxxx Group shall
notify the Board and provide the Board with copies of the same; provided,
however, that the mere sale of Company Voting Securities by any member of the
Xxxx Group shall not constitute assisting, encouraging or inducing within the
meaning of this Section 3.4(b).
3.5 Non-Circumvention. Except as the same may be approved by a majority of
the Disinterested Directors in a specific resolution to that effect adopted
prior to the taking of such action, prior to the fifth anniversary of the
Effective Date, no member of the Xxxx Group shall take any action, alone or in
concert with any other person to circumvent the limitations of the provisions of
Article III of this Agreement. Without limiting the generality of the foregoing,
without such approval no member of the Xxxx Group shall (i) present to the
Company or to any third party any proposal that can reasonably be expected to
result in any increase beyond the Maximum Permitted Voting Power of Company
Voting Securities beneficially owned in the aggregate by the Xxxx Group, (ii)
publicly suggest or announce its willingness or desire to engage in a
transaction or group of transactions that would result in any increase beyond
the Maximum Permitted Voting Power of Company Voting Securities beneficially
owned in the
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aggregate by the Xxxx Group, or (iii) initiate, request, induce or attempt to
induce or give encouragement to any other person to initiate any proposal that
can reasonably be expected to result in any increase beyond the Maximum
Permitted Voting Power of Company Voting Securities beneficially owned in the
aggregate by the Xxxx Group.
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ARTICLE IV
VOTING OF COMPANY SECURITIES AND RELATED MATTERS
4.1 Each member of the Xxxx Group that is a holder of record of Company
Voting Securities shall be present, and each member of the Xxxx Group that is a
beneficial owner of Company Voting Securities shall cause the holder of record
to be present, in person or by proxy, at all meetings of stockholders of the
Company so that all Company Voting Securities owned of record or beneficially by
the Xxxx Group may be counted for the purpose of determining the presence of a
quorum at such meetings.
4.2 So long as Samstock is entitled to designate one or two directors in
accordance with the provisions of Section 4.4 hereof, except to the extent
otherwise provided herein, the Company shall take all necessary or appropriate
action to assist in the nomination and election as directors of (i) that number
of individuals specified in Section 4.4 below designated by Samstock to be
elected as directors of the Company, provided such designees are reasonably
acceptable to the Independent Directors at the time of their designation, and
(ii) two Independent Directors. All persons to be so designated as Independent
Directors shall be individuals selected by a majority of the Independent
Directors then in office and shall be mutually acceptable to Samstock on the one
hand and a majority of the Independent Directors on the other hand. The Company
hereby agrees and acknowledges that Xxx Xxxx, F. Xxxxxx Xxxxx, Xxx Xxxxxxxx and
Xxxxxx X. Xxxxxx are reasonably acceptable to the Independent Directors as
directors of the Company. The Company hereby agrees and acknowledges that Xxxxxx
Xxxxxxxxx is reasonably acceptable as an Independent Director. The Company
further agrees that one position on the Board of Directors of the Company is
intended to be filled by the chief executive officer to be selected by the Board
of Directors of the Company, and that in no event shall the chief executive
officer of the Company count as a designee of Samstock. Samstock shall cause its
designees on the Board of Directors of the Company to take all necessary or
appropriate action to assist in the nomination and election as directors of all
such nominees as may be selected to serve as Independent Directors in the manner
described above. The Xxxx Group and the directors designated by Samstock shall
not vote (as stockholders or directors) in favor of, and shall not take any
other action in furtherance of or seeking to cause, a reduction of the number of
directors of the Company below seven directors or the removal of any Independent
Directors.
4.3 For purposes of this Agreement, directors "designated by Samstock"
shall include directors designated by Samstock as anticipated by this Article
IV, and any other directors of the Company (other than the Company's chief
executive officer) affiliated or associated with any member of the Xxxx Group.
4.4 Samstock shall be entitled to designate the following number of
directors pursuant to Section 4.2 hereof:
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(a) so long as the members of the Xxxx Group that have
executed this Agreement as parties (the "Xxxx Contracting Parties")
beneficially own collectively at least 15% of the Combined Voting Power
of all Company Voting Securities (including, for these purposes, the
Warrant Shares issuable upon exercise of the Warrant until such time as
the Warrant expires), Samstock shall have the right to designate two
directors of the Company, provided such designees are reasonably
acceptable to the Independent Directors at the time of their
designation (it being hereby acknowledged and agreed by the Company
that each of Xxx Xxxx, F. Xxxxxx Xxxxx, Xxx Xxxxxxxx and Xxxxxx X.
Xxxxxx will be acceptable to the Company at the time of designation);
and
(b) so long as the Xxxx Contracting Parties beneficially own
less than 15%, but at least 5% of the Combined Voting Power of all
Company Voting Securities (as so calculated), Samstock shall have the
right to designate one director of the Company, provided such designee
is reasonably acceptable to the Independent Directors at the time of
his or her designation (it being hereby acknowledged and agreed by the
Company that each of Xxx Xxxx, F. Xxxxxx Xxxxx, Xxx Xxxxxxxx and Xxxxxx
X. Xxxxxx will be acceptable to the Company at the time of
designation);
provided, however, that at any time when the Xxxx Contracting Parties shall
no longer beneficially own at least 15% of the Combined Voting Power of all
Company Voting Securities (as so calculated), Samstock shall cause one of its
two designees to resign forthwith such that only one designee remains on the
Board of Directors of the Company; and provided, further, that at any time when
the Xxxx Contracting Parties shall no longer beneficially own at least 5% of the
Combined Voting Power of all Company Voting Securities (as so calculated),
Samstock shall not have the right to designate any directors of the Company,
Samstock's rights under this Article IV shall terminate, Samstock shall cause
its designees to resign forthwith such that no designee of Samstock remains on
the Board of Directors of the Company and all of the covenants under Article IV
of this Agreement shall lapse and no longer be of any force or effect. In
addition, all of the covenants under Article III of this Agreement shall lapse
and no longer be of any force or effect if for any reason any of the director
designees who are designated by Samstock pursuant to the rights granted by
Section 4.2, and are reasonably acceptable to the Independent Directors at the
time of their designation in accordance with Sections 4.2 and 4.4, shall not be
nominated for election as a director of the Company with the unanimous
recommendation of all of the directors of the Company (other than those
directors designated by Samstock pursuant to Section 4.2) at the next election
of directors of the Company following Samstock's designation. At any time when
Samstock shall have the right to designate one or two directors, as the case may
be, pursuant to this Article IV, the Company shall not increase the number of
directors to more than seven directors without the prior written consent of
Samstock.
4.5 Except as expressly set forth above, the Investors shall vote all
Company Voting Securities owned of record by the Investors and shall cause all
Company Voting Securities owned beneficially by the Investors to be voted with
respect to the election or removal of directors of Company, (a) either (i) in
accordance with the recommendations of a majority of the Disinterested
Directors, or (ii) in the same proportions (including abstentions) as the
holders of record of Company Voting Securities other than those beneficially
owned by the Xxxx Group that
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are entitled to vote on the election of directors (or such other matter) vote
their Company Voting Securities, provided, however, that notwithstanding the
foregoing subparagraph (a), the Investors may at all times vote their Company
Voting Securities for the election or retention of the one or two directors, as
the case may be, designated by Samstock in accordance with Section 4.2.
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ARTICLE V
REGISTRATION RIGHTS
5.1 Definitions. For purposes of this Article V:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act").
(b) The term "Registrable Securities" means shares of Common Stock held,
from time to time, by any member of the Xxxx Group or any Other Covered
Stockholders.
(c) The term "Holder" means any (i) Xxxx Contracting Party or (ii) Other
Covered Stockholder who is a party hereto or who executes and delivers to the
Company a joinder agreement, agreeing to be legally bound by this Article V, in
each case who owns of record Registrable Securities.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(e) The term "Shelf Registration Statement" means a registration statement
intended to effect a shelf registration in connection with a Rule 415 Offering.
5.2 Shelf Registrations.
(a) Shares and Warrant Shares. As soon as practicable after the Effective
Date, but in any event no later than ninety (90) days after the Effective Date,
the Company shall prepare and file with the SEC a Shelf Registration Statement
(which shall include pledgees of any selling stockholder under the caption "plan
of distribution" contained in such Shelf Registration Statement) with respect to
all Shares and Warrant Shares and use its reasonable efforts to cause such Shelf
Registration Statement to become effective and keep such registration statement
effective until such time as all Shares and Warrant Shares have been sold or
disposed of thereunder or sold, transferred or otherwise disposed of (other than
pursuant to a pledge of such Registrable Securities) to a person that is not a
Holder or, with respect to any Warrant Shares for which the Warrant has not been
exercised prior to its expiration, until such time as the Warrant has expired.
Notwithstanding the foregoing, if the Company shall furnish to Samstock a
certificate signed by the Chief Executive, Chief Operating, or Chief Financial
Officer of the Company stating that, in the good faith judgment of a majority of
the Disinterested Directors, it would be materially detrimental to the Company
for such registration statement to be filed, the Company shall have the right to
defer such filing for a period of not more than 120 days after receipt of the
Samstock's request; provided, however, that the Company may not utilize this
right more than once in any 12-month period.
(b) Additional Shares. If the Company shall at any time receive a
written request from Samstock (or its designee) on behalf of any Xxxx Affiliates
who are the Holders of Registrable Securities that the Company file a Shelf
Registration Statement with respect to any Registrable
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Securities, then, within sixty (60) days after the receipt of such request, the
Company shall prepare and file with the SEC a Shelf Registration Statement
(which shall include pledgees of any selling stockholder in the "plan of
distribution") with respect to all Registrable Securities which the Holders
request to be registered and use its reasonable efforts to cause such Shelf
Registration Statement to become effective and keep such Shelf Registration
Statement effective until such time as all Registrable Securities covered
thereby have been sold or disposed of thereunder or sold, transferred or
otherwise disposed of (other than pursuant to a pledge of such Registrable
Securities) to a person that is not a Holder. The rights to cause the Company to
file a Shelf Registration Statement under this Section 5.2(b) shall be in
addition to the rights to cause the Company to file a Shelf Registration
Statement under Section 5.2(a). Notwithstanding the foregoing, if the Company
shall furnish to Samstock a certificate signed by the Chief Executive, Chief
Operating, or Chief Financial Officer of the Company stating that, in the good
faith judgment of a majority of the Disinterested Directors, it would be
materially detrimental to the Company for such registration statement to be
filed, the Company shall have the right to defer such filing for a period of not
more than 120 days after receipt of the Samstock's request; provided, however,
that the Company may not utilize this right more than twice in any 12-month
period.
(c) Schedule 13D Statement. Samstock and TNI covenant and agree that they
will, and that they shall cause each Xxxx Affiliate which shall at any time hold
Shares and/or Warrant Shares subject to Section 5.2(a) hereof to, include in any
Schedule 13D filed by or on behalf of such Holder a statement to the effect that
such Shelf Registration Statement was put in effect for the sole purpose of
facilitating such Holder's ability to margin its stock and does not represent
any present intention on behalf of the Holder to dispose of any Shares or
Warrant Shares covered thereby.
5.3 Additional Obligations of the Company. Whenever the Company has filed a
Shelf Registration Statement under this Article V, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to such
Shelf Registration Statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered thereby.
(b) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities covered by such Shelf
Registration Statement owned by them.
(c) Use its best efforts to register and qualify the securities covered by
such Shelf Registration Statement under such other securities or Blue Sky laws
of such states or other
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jurisdictions as shall be reasonably requested by the Holders, provided that the
Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions where it is
not so subject.
(d) Notify each Holder of Registrable Securities covered by such Shelf
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section 5.2, each Holder acknowledges that the Company shall have the right to
suspend the use of the prospectus forming a part of a Shelf Registration
Statement if such offering would interfere with a pending corporate transaction
or for other reasons until such time as an amendment to the Shelf Registration
Statement has been filed by the Company and declared effective by the SEC, or
until such time as the Company has filed an appropriate report with the SEC
pursuant to the Exchange Act. Each Holder hereby covenants that it will (a) keep
any such notice strictly confidential, and (b) not sell any shares of Common
Stock pursuant to such prospectus during the period commencing at the time at
which the Company gives the Holder notice of the suspension of the use of such
prospectus and ending at the time the Company gives the Holder notice that it
may thereafter effect sales pursuant to such prospectus. The Company shall only
be able to suspend the use of such prospectus for periods aggregating no more
than 90 days in respect of any registration.
5.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities and as may be required from time to time to keep such registration
current.
5.5 Expenses of Shelf Registration. All expenses incurred by or on behalf
of the Company in connection with registrations, filings or qualifications
pursuant to Section 5.2, including, without limitation, all registration, filing
and qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for the Company, shall be borne by the Company. In no
event shall the Company be obligated to bear any underwriting discounts or
commissions or brokerage fees or commissions relating to Registrable Securities
or the fees and expenses of counsel to the selling Holders.
5.6 Indemnification. In the event any Registrable Securities are included
in a Shelf Registration Statement under this Article V:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and the affiliates of such Holder, and their respective
directors, officers, general and limited partners, agents and representatives
(and the directors, officers, affiliates and controlling persons thereof), and
each other person, if any, who controls such Holder within the meaning of
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the Act, against any losses, claims, damages, or liabilities (joint or several)
to which they may become subject under the Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus (but only if such
statement is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, affiliate or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 5.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person. Each indemnified party shall furnish such
information regarding itself or the claim in question as an indemnifying party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this Section 5.6(b) in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.6(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, which consent shall
not
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be unreasonably withheld; provided, that, in no event shall any indemnity under
this Section 5.6(b) exceed the gross proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this Section 5.6
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 5.6, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties. The
failure to deliver written notice to the indemnifying party within a reasonable
time after the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 5.6 to the extent of such
prejudice, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 5.6. The indemnified party shall have
the right, but not the obligation, to participate in the defense of any action
referred to above through counsel of its own choosing and shall have the right,
but not the obligation, to assert any and all separate defenses, cross claims or
counterclaims which it may have, and the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of such
counsel has been specifically authorized in advance by the indemnifying party,
(ii) there is a conflict of interest that prevents counsel for the indemnifying
party from adequately representing the interests of the indemnified party or
there are defenses available to the indemnified party that are different from,
or additional to, the defenses that are available to the indemnifying party,
(iii) the indemnifying party does not employ counsel that is reasonably
satisfactory to the indemnified party within a reasonable period of time, or
(iv) the indemnifying party fails to assume the defense or does not reasonably
contest such action in good faith, in which case, if the indemnified party
notifies the indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party and the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party; provided, however,
that, the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm (in addition to one firm acting as
local counsel) for all indemnified parties.
(d) The obligations of the Company and the holders under this Section 5.6
shall survive the completion of any offering of Registrable Securities in a
Shelf Registration Statement under this Article V.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
5.7 Reports Under the Exchange Act. With a view to making available to
the holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a
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Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) use its best efforts to make and keep public information available,
as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required under the Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written statement by
the Company as to its compliance with the reporting requirements of Rule 144, or
as to whether it qualifies as a registrant whose securities may be resold
pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information (and the Company shall take such action) as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
5.8 No Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Article V may only be
assigned by a Holder to a transferee or assignee of any Registrable Securities
if (i) such transferee or assignee is a Xxxx Contracting Party and (ii)
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act.
5.9 Waiver Procedures. The observance by the Company of any provision of
this Article V may be waived (either generally or in a particular instance and
either retroactively or prospectively) with the written consent of the Holders
of a majority of the Registrable Securities, and any waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities.
5.10 "Market Stand-off" Agreement. Any Holder of Registrable Securities, if
requested by an underwriter of any registered public offering of Company
securities being sold in a firm commitment underwriting, agrees not to sell or
otherwise transfer or dispose of any Common Stock (or other Company Voting
Securities) held by such Holder other than shares of Registrable Securities
included in the registration during the seven days prior to, and during a period
of up to 180 days following, the effective date of the registration statement.
Such agreement shall be in writing in a form reasonably satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the securities subject to the foregoing restriction until the
end of the required stand-off period.
ARTICLE VI
CONFIDENTIALITY
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6.1 Confidential Material.
(a) Definitions. For purposes of this Section 6.1:
(i) The term "Confidential Material" means all
information, whether oral, written or otherwise (including any
information furnished prior to the execution of this Agreement),
furnished by the Company to any member of the Xxxx Group or any of the
Representatives (as defined below), and all notes, reports, analyses,
compilations, studies and other materials prepared by the Xxxx Group or
any of the Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing or based upon,
in whole or in part, any such information, and the fact that such
information has been delivered to the Xxxx Group or any of its
Representatives. The term "Confidential Material" does not include
information which is or becomes generally available to the public other
than as a result of a disclosure by any member of the Xxxx Group or any
of the Representatives or becomes available to any member of the Xxxx
Group or any of the Representatives on a non-confidential basis from
any source that is not known by such member of the Xxxx Group or such
Representative to be bound by an obligation of confidentiality to the
Company.
(ii)
The term "Representatives" shall mean any and all employees, agents,
financial advisors, partners, affiliates or other representatives of
any member of the Xxxx Group.
(b) Each member of the Xxxx Group and each of the Representatives will
preserve the confidentiality of the Confidential Material and will not disclose
any of the Confidential Material in any manner whatsoever; provided, however,
that (i) the Xxxx Group may make any disclosure of such information to which the
Company gives its prior consent, (ii) any of such information may be disclosed
to the Representatives who need to know such information, and who are informed
of the confidential nature of the Confidential Material and of the terms of this
Section 6.1 and who agree to keep such information confidential, (iii) any
member of the Xxxx Group may make any disclosure of such information in
connection with any activity which such member of the Xxxx Group reasonably
believes to be in the best interests of the Company and not prohibited by this
Agreement, provided the recipient of such information is informed of the
confidential nature of the Confidential Material and of the terms of this
Section 6.1 and agrees to keep such information confidential and (iv) any member
of the Xxxx Group may make any disclosure of such information to any other
member of the Xxxx Group. In any event, the Xxxx Group will be responsible for
any actions by the Representatives which are not in accordance with the
provisions hereof.
(c) If any member of the Xxxx Group or any of the Representatives are
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any informal or
formal investigation by any government or governmental agency or authority or
otherwise) to disclose any Confidential Material or such person's opinion,
judgment, view or recommendation concerning the Company as developed from the
Confidential Material, the Xxxx Group agrees (i) to promptly notify the Company
of the existence, terms and circumstances surrounding such a request, (ii) to
the extent possible, to
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consult with the Company on the advisability of taking legally available steps
to resist or narrow such request and (iii) if disclosure of such information is
required, to furnish only that portion of the Confidential Material which, in
the opinion of counsel to the relevant member of the Xxxx Group, the Xxxx Group
is legally compelled to disclose, and to cooperate with any action by the
Company to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Material.
(d) Each Investor hereby acknowledges that the United States securities
laws prohibit, in certain circumstances, any person who has received from an
issuer material, non-public information, including certain information that may
be part of the Confidential Material, while such information is non-public, from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
(e) This Section 6.1 shall survive until the earlier of the fifth
anniversary of this Agreement or two years following the date of termination of
this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1. CEO Search. The Company (represented by the Company's current chief
executive officer and the chairman of the Board's Compensation Committee) and
the Investors (represented by an individual designated by Samstock in its sole
discretion) shall jointly conduct a search to find a replacement for the
individual serving as the Company's chief executive officer as of the date of
this Agreement, which search shall commence promptly upon the execution of this
Agreement.
7.2. Term of Agreement; Certain Provisions Regarding Termination. Unless
this Agreement specifically provides for earlier or later termination with
respect to any particular right or obligation, this Agreement shall terminate
(a) contemporaneously with the termination of the Purchase Agreement in
accordance with Section 8.1 thereof, or (b) if the Xxxx Group shall, at any
time, sell or otherwise dispose of or otherwise cease to own Company Voting
Securities such that the Xxxx Group beneficially owns in the aggregate Company
Voting Securities representing less than 5% of the Combined Voting Power of all
Company Voting Securities (calculated in accordance with Section 3.1 and
including the Shares and, to the extent the Warrant has not been exercised or
has not expired, the Warrant Shares).
7.3 Legend and Stop Transfer Order. To assist in effectuating the
provisions of this Agreement, each of the Investors hereby consents to the
placement, in connection with the transactions contemplated by the Purchase
Agreement or otherwise within 10 business days after any Company Voting
Securities become subject to the provisions of this Agreement, of the
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legend specified in Section 11.1 of the Purchase Agreement on all certificates
representing ownership of Company Voting Securities owned of record or
beneficially by any member of the Xxxx Group, until such shares are sold,
transferred or disposed in a manner permitted hereby to a person who is not then
a member of the Xxxx Group. The Company agrees to remove promptly all legends
and stop transfer orders with respect to the transfer of Company Voting
Securities being made to a person who is not then a member of the Xxxx Group in
compliance with the provisions of this Agreement.
7.4 Remedies.
(a) Each of the Investors and the Company acknowledge and agree that (i)
the provisions of this Agreement are reasonable and necessary to protect the
proper and legitimate interests of the parties hereto, and (ii) the parties
would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by the other party (or its affiliates) without the
necessity of proving actual damages or of posting any bond, and to enforce
specifically the terms and provisions hereof and thereof in any court of the
United States or any state thereof having jurisdiction, which rights shall be
cumulative and in addition to any other remedy to which the parties may be
entitled hereunder or at law or equity.
(b) In addition to any other remedy the Company may have under this
Agreement or in law or equity, if any member of the Xxxx Group shall acquire or
transfer any Company Voting Securities in violation of this Agreement, such
Company Voting Securities which are in excess of the number permitted to be
owned or controlled by the Xxxx Group or which have been transferred by a member
of the Xxxx Group in violation of the provisions of this Agreement may not be
voted by the owner thereof or any proxy therefor.
7.5 Additional Xxxx Group Parties; Several Obligations. All of the
liabilities and obligations under this Agreement: (a) of members of the Xxxx
Group who are Xxxx Affiliates shall be joint and several; (b) as between members
of the Xxxx Group who are Xxxx Affiliates, on the one hand, and any other
persons or groups who are not Xxxx Affiliates, on the other hand, shall be
several and not joint. Notwithstanding anything to the contrary in this
Agreement, in no event shall any member of the Xxxx Group who is a Xxxx
Affiliate be responsible in any manner for any liability or obligation of any
person or group who is not a Xxxx Affiliate. Each member of the Xxxx Group that
shall become or have the right to become the beneficial owner, within the
meaning and scope of Section 3.1 hereof, of Company Voting Securities shall,
promptly upon becoming such owner or holder, execute and deliver to the Company
a joinder agreement, agreeing to be legally bound by this Agreement to the same
extent as if it had signed this Agreement as an original signatory as a member
of the Xxxx Group (each such member of the Xxxx Group, a "Xxxx Contracting
Party"); provided that failure to execute such an agreement shall not excuse
such member's non-compliance with any provision of this Agreement. No member of
the Xxxx Group shall transfer securities to another member of the Xxxx Group
unless the transferee shall agree to be bound by this Agreement in the manner
specified above in this Section 7.5.
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7.6 Notices. All notices, and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, facsimile, to
the appropriate address or facsimile number set forth below (or at such other
address or facsimile number for a party as shall be specified by like notice):
if to Investors:
Transmedia Investors, L.L.C.
Two X. Xxxxxxxxx Xxxxx - Xxxxx 000
Xxxxxxx, XX 00000
Attention: F. Xxxxxx Xxxxx
Fax: (000) 000-0000
with an additional copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Two X. Xxxxxxxxx Xxxxx - Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
if to the Company:
Transmedia Network Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
7.7 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no
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way be affected, impaired or invalidated. The parties hereto agree that they
will use their best efforts at all times to support and defend this Agreement.
7.8 Amendments. This Agreement may be amended only by an agreement in
writing signed by each of the parties hereto; provided, however, that any
amendment executed by the Company must prior thereto be approved by a majority
of the Disinterested Directors then in office.
7.9 Governing Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Delaware applicable to contracts
made in that State.
7.10 Descriptive Headings. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
7.11 Counterparts; Facsimile Signatures. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
bears the signatures of each of the parties hereto. This Agreement may be
executed in any number of counterparts, each of which shall be an original as
against the party whose signature appears thereon, or on whose behalf such
counterpart is executed, but all of which taken together shall be one and the
same agreement. A facsimile copy of a signature of a party to this Agreement or
any such counterpart shall be fully effective as if an original signature.
7.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
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IN WITNESS WHEREOF, each of the Investors and the Company have executed
this Investment Agreement as of the date first above written.
INVESTORS:
TRANSMEDIA INVESTORS, L.L.C.
by Samstock, L.L.C., its managing
member, by SZ Investments, L.L.C., its managing
member,
by Xxxx General Partnership, Inc.,
its managing member
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
By: Xxxxx X. Xxxxxxxxx, Vice President
SAMSTOCK, L.L.C.
by SZ Investments, L.L.C., its managing
member, by Xxxx General Partnership, Inc.,
its managing member
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
By: Xxxxx X. Xxxxxxxxx, Vice President
COMPANY:
TRANSMEDIA NETWORK INC.
/s/ Xxxxxx Xxxxxx
--------------------------------------------
By: Xxxxxx Xxxxxx, President and
Chief Executive Officer
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