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EXHIBIT 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.
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.
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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.
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
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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.
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 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
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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 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:
(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
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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 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 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
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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 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
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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 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,
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11
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 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
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12
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 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.
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13
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
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
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14
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 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,
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15
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 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,
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16
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.
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
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17
no 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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18
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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