Exhibit 1
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STOCK PURCHASE AND SALE AGREEMENT
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STOCK PURCHASE AND SALE AGREEMENT, dated as of November 6, 1997 (as
amended, supplemented or otherwise modified from time to time, this
"Agreement"), among Samstock, L.L.C., a Delaware limited liability company
("Samstock"), Transmedia Investors, L.L.C., a Delaware limited liability company
("TNI," and together with Samstock, "Purchaser"), and Transmedia Network Inc., a
Delaware corporation (the "Company"). All capitalized terms used and not
otherwise defined herein have the meanings ascribed to them in Article X hereof.
WHEREAS, the Company desires to issue and sell to Purchaser, and
Purchaser desires to purchase from the Company, (i) 2,500,000 newly issued
shares (such 2,500,000 newly issued shares, collectively the "Shares") of Common
Stock in the aggregate, representing approximately 16.84% of the Fully Diluted
Common Stock and 19.7% of the outstanding Common Stock, and (ii) a warrant (the
"Warrant") in the form of Exhibit A hereto to purchase an additional 1,200,000
shares of Common Stock in the aggregate (such additional 1,200,000 shares of
Common Stock in the aggregate issuable from time to time upon exercise of the
Warrant, collectively the "Warrant Shares"), representing approximately 8.08% of
the Fully Diluted Common Stock, all upon the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, representations and
warranties and the mutual covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND WARRANT
1.1 Purchase and Sale. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, at the Closing, the Company shall
issue and sell to Purchaser (in such proportions as between Samstock and TNI as
Purchaser shall determine and advise the Company in writing no less than three
(3) business days prior to the Closing), and Purchaser shall so purchase from
the Company the Shares and the Warrant, in each case free and clear of all
Liens.
1.2 Consideration. Upon the terms and subject to the satisfaction of
the conditions contained in this Agreement, at the Closing, Purchaser shall pay
to the Company $10,625,000.00 in the aggregate (the "Purchase Price") for the
Shares and the Warrant.
ARTICLE II
THE CLOSING
2.1 Time and Place. Upon the terms and subject to the satisfaction of
the conditions
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contained in this Agreement, the closing of the issuance and sale of the Shares
and the Warrant contemplated by this Agreement (the "Closing") shall take place
at the offices of Xxxxxxxxx & Xxxxxxxxxxx, P.C., Xxx Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx at 10:00 a.m. (local time) on the third business day following
the date on which all of the conditions hereunder have been satisfied or waived,
or at such other place or time as Purchaser and the Company may agree. The date
and time at which the Closing actually occurs is hereinafter referred to as the
"Closing Date."
2.2 Deliveries by the Company. At the Closing, the Company shall
deliver the following to Purchaser:
(a) stock certificates representing the Shares, in the names of
Samstock and/or TNI, dated as of the Closing Date, in such proportions as
between Samstock and TNI and such denominations (totaling 2,500,000 shares) as
Purchaser shall request;
(b) the Warrant, dated as of the Closing Date; and
(c) all other documents, instruments and writings required to be
delivered by the Company at or prior to the Closing Date pursuant to this
Agreement.
2.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver
the following to the Company:
(a) the Purchase Price by interbank transfer of federal funds to one or
more accounts designated in a writing delivered by the Company to Purchaser no
less than two (2) business days prior to the Closing Date or by such other means
as may be agreed upon in writing by the Company and Purchaser; and
(b) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to Purchaser on the date
of this Agreement and again on the Closing Date, which representations,
warranties and covenants shall survive the Closing, as follows:
3.1 Organization and Qualification. Each of the Company and each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to carry on its business as it is now
being conducted. Each of the Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction (including any foreign country) where the character of its
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such failures to be so
qualified or licensed or in good standing which would not, individually or in
the aggregate, have a Material Adverse Effect.
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3.2 Certificate of Incorporation and Bylaws. The Company has heretofore
furnished to Purchaser a complete and correct copy of the certificates of
incorporation of the Company and each Subsidiary and the bylaws of the Company
and each Subsidiary as currently in effect (collectively, the "Organizational
Documents"). Such Organizational Documents are in full force and effect, and no
other organizational documents are applicable to or binding upon the Company or
any Subsidiary (including, without limitation, any joint venture, investment or
other agreement). Neither the Company nor any Subsidiary is in violation of any
of the provision of its Organizational Documents.
3.3 Capitalization; Subsidiaries.
(a) The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock. As of the date
hereof, (i) 10,189,956 shares of Common Stock were issued and outstanding, all
of which shares were validly issued, fully paid and nonassessable, (ii) no
shares of Preferred Stock were issued or outstanding, and (iii) no shares of
Common Stock or Preferred Stock were held in the treasury of the Company.
(b) The Shares shall represent approximately 16.84% of the Fully
Diluted Common Stock and 19.7% of the outstanding shares of Common Stock as of
the Closing Date. The Warrant Shares shall represent approximately 8.08% of the
Fully Diluted Common Stock as of the Closing Date.
(c) Except as set forth above in Section 3.3(a) and as set forth in
Schedule 3.3(c) hereto, there are no outstanding Equity Securities of the
Company. Schedule 3.3(c) includes a true and correct table summarizing all
outstanding stock options, warrants and other rights to acquire Equity
Securities of the Company or any Subsidiary, including the identity and title of
the holder, the number of shares covered, the vesting schedule therefor, the
exercise price therefor, and the termination date therefor.
(d) Each of the outstanding shares of capital stock of each Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by the Company free and clear of all Liens, and there are no
outstanding Equity Securities of any Subsidiary other than such shares. Except
as set forth on Schedule 3.3(d) hereto, the Company does not own, directly or
indirectly, any capital stock or other equity interest in any Person other than
the Subsidiaries.
3.4 The Shares and the Warrant.
(a) Upon payment of the Purchase Price at the Closing, Purchaser will
acquire good and marketable title to the Shares, free and clear of all Liens.
Upon payment of the Purchase Price, the Shares shall be validly issued, fully
paid and nonassessable.
(b) Upon payment of the Purchase Price at the Closing, Purchaser will
acquire good and marketable title to the Warrant, free and clear of all Liens.
Upon exercise of the Warrant, in whole or, from time to time, in part, and upon
payment of the exercise price therefor, in accordance with the terms of the
Warrant, Purchaser will acquire good and marketable title to the Warrant Shares,
free and clear of all Liens, and such Warrant Shares shall be validly issued,
fully paid and nonassessable.
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3.5 Power and Authority. The Company has all necessary corporate power
and authority to execute and deliver this Agreement, the Investment Agreement,
the Agreement Among Stockholders, the Warrant and all other documents,
instruments and other writings to be executed and/or delivered by or on behalf
of the Company to Purchaser or any of its representatives in connection with the
transactions contemplated hereby or thereby (collectively, the "Company
Transaction Documents"), to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of each of the Company Transaction Documents by the
Company, and the consummation by the Company of the transactions contemplated
hereby and thereby, have been duly and validly authorized by the Board of
Directors of the Company (the "Board"), and no other corporate proceedings on
the part of the Company are necessary to authorize the execution, delivery and
performance of the Company Transaction Documents or the consummation of the
transactions contemplated hereby and thereby, other than Stockholder Approval.
The Board has approved each of the Company Transaction Documents and the
transactions contemplated hereby and thereby so as to render inapplicable to
such transactions, including, without limitation, the issuance to Purchaser of
the Shares, the Warrant and Warrant Shares, the restrictions contained in
Article Seventh of the Certificate of Incorporation of the Company, and the
restrictions contained in Section 203 of the Delaware General Corporation Law.
Each of the Company Transaction Documents has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof and thereof by Purchaser, each constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
3.6 No Conflict; Required Filings and Consents. The execution, delivery
and performance of the Company Transaction Documents by the Company do not and
will not: (a) conflict with or violate the Organizational Documents of the
Company or any Subsidiary; (b) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any
Subsidiary or by which its or any of their respective properties are bound or
affected; (c) require any consent, approval, authorization or permit of, action
by, filing with or notification to, any Governmental Entity (other than any
filing required under Section 13(a) or (d), 14, 15(d) or 16(a) of the Exchange
Act); or (d) result in any breach or violation of or constitute a default (or an
event which with notice or lapse of time or both could become a default) or
result in the loss by the Company or any Subsidiary of a material benefit under,
or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of the Company or any Subsidiary pursuant to, any Contract (other than
any Employment, Consulting or Severance Agreement), Permit or other instrument
or obligation to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any of their respective properties are bound or
affected; other than (i) in the case of clauses (b) and (d) for such conflicts,
violations, breaches, defaults, rights, losses and Liens as, and (ii) in the
case of clause (c), such consents, approvals, authorizations, permits, actions,
filings and notifications, the absence of which, would not have a Material
Adverse Effect.
3.7 Employment, Consulting and Severance Agreements and Related
Matters. Except as set forth in Schedule 3.7 hereto:
(a) There are no Employment, Consulting or Severance Agreements to
which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective assets may be bound, and no present or
former employee, officer, director, consultant, independent contractor or other
agent of the Company or any Subsidiary is a party to
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or the beneficiary of any such Employment, Consulting or Severance Agreements.
(b) The execution and delivery of this Agreement or the other Company
Transactions Documents and the consummation of the transactions contemplated
hereby and thereby: (i) do not and will not result in any breach or violation of
or constitute a default (or an event which with notice or lapse of time or both
could become a default) or result in the loss by the Company or any Subsidiary
of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of any Employment, Consulting or
Severance Agreement; or (ii) do not and will not give rise to any obligation on
the part of the Company or any Subsidiary to pay or provide any Severance
Payment; and
(c) Each of the Company's salespeople identified on Schedule 3.7(c)
hereto has executed and delivered to the Company a confidentiality and
noncompetition agreement in the form(s) previously provided to Purchaser by the
Company.
3.8 Compliance; No Violation. Each of the Company and each Subsidiary
is in compliance with, and is not in default or violation of, (i) its respective
Organizational Documents, and (ii) all Contracts, Permits and other instruments
or obligations to which any of them are a party or by which any of them or any
of their respective properties may be bound or affected, except, in the case of
clause (ii), for any such failures of compliance, defaults and violations which
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Since January 1, 1993, neither the Company nor any
Subsidiary has received notice of any revocation or modification of any federal,
state, local or foreign Permit material to the Company and its subsidiaries
taken as a whole.
3.9 SEC Documents; Undisclosed Liabilities.
(a) Since January 1, 1993, the Company has filed all required reports,
schedules, forms, proxy, registration and other statements and other documents
with the SEC (collectively, the "SEC Documents"). As of the date of this
Agreement, the last SEC Document filed by the Company was the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. As of their
respective filing dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents. As of their respective filing dates, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent such statements have been modified or
superseded by a later SEC Document filed and publicly available prior to the
Closing Date, the circumstances or bases for which modifications or
supersessions have not and will not individually or in the aggregate result in
any material liability or obligation on behalf of the Company under the
Securities Act, the Exchange Act, the rules promulgated under the Securities Act
or the Exchange Act, or any federal, state or local anti-fraud, blue-sky,
securities or similar laws. The consolidated financial statements of the Company
included in the SEC Documents (as amended or supplemented by any later filed SEC
Document filed and publicly available prior to October 1, 1997), comply as to
form in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may
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be indicated in notes thereto) and fairly present the consolidated financial
position of the Company and the Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the SEC Documents, neither the Company nor
any Subsidiary has any obligation or liability of any nature whatsoever (direct
or indirect, matured or unmatured, absolute, accrued, contingent or otherwise)
either (i) required by generally accepted accounting principles to be set forth
on a consolidated balance sheet of the Company and the Subsidiaries or in the
notes thereto or (ii) which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect whether or not required by
generally accepted accounting principles to be provided or reserved against on a
balance sheet prepared in accordance with generally accepted accounting
principles; other than liabilities and obligations reflected or reserved against
in the consolidated financial statements of the Company and its consolidated
subsidiaries included in the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1997, or incurred since the date of the balance sheet
included in such financial statements in the ordinary course of business which
are not individually or collectively material to the Company and the
Subsidiaries taken as a whole.
(b) At the date the Proxy Statement is first mailed to the Company's
stockholders or at the time of the Stockholders' Meeting, the Proxy Statement
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement shall comply in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder except that the Company makes no representation, warranty or covenant
with respect to any written information supplied by Purchaser specifically for
inclusion in the Proxy Statement.
(c) Each of the Interim Financial Statements delivered to Purchaser in
accordance with Section 6.10 hereto fairly present the consolidated financial
position of the Company and the Subsidiaries as of the date thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments), in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto).
3.10 Rights to Receive. None of the Rights to Receive which are
reflected on the latest balance sheet included in the SEC Documents or the
Interim Financial Statements or which arose subsequent to the date of the latest
balance sheet included in the SEC Documents or the Interim Financial Statements
is or was subject to any counterclaim or set off. All of such Rights to Receive
arose out of bona fide, arms length transactions. Adequate provision has been
timely made in the latest balance sheet included in the SEC Documents and the
Interim Financial Statements with respect to doubtful Rights to Receive. Except
as set forth in the Company's quarterly report on Form 10-Q for the quarter
ended June 30, 1997, since September 30, 1996: (a) there has not been a material
change in the aggregate amount of the Rights to Receive or the writing down of
Rights to Receive; and (b) there has been no Early Amortization Event (as
defined in the Security Agreement).
3.11 Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents, since September 30, 1996, the Company and the Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, and there has not occurred any event, condition,
circumstance, change or development (whether or not in the ordinary course of
business) that, individually or in the aggregate, has had or could reasonably
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be expected to have a Material Adverse Effect. Without limiting the generality
of the foregoing, except as set forth on Schedule 3.11 hereto or as disclosed in
any SEC Documents filed with the SEC and publicly available prior to November 1,
1997, since September 30, 1996, there has not been (i) any change by the Company
in its accounting methods, principles or practices, (ii) any revaluation by the
Company of any of its or any Subsidiary's material assets, including but not
limited to, writing down the value of any Rights to Receive other than in the
ordinary course of business consistent with past practice, (iii) any entry
outside the ordinary course of business by the Company or any Subsidiary into
any commitments or transactions material, individually or in the aggregate, to
the Company and the Subsidiaries taken as a whole, (iv) any declaration, setting
aside or payment of any dividends or distributions in respect of the shares of
Common Stock or, any redemption, purchase or other acquisition of any of its
securities, other than semi-annual cash dividends of $.02 per share on
outstanding Common Stock consistent with past practices, (v) any grant or
issuance of any Equity Securities of the Company or any Subsidiary; or (vi) any
increase in, establishment of or amendment of any Employment, Consulting or
Severance Agreement, bonus, insurance, deferred compensation, pension,
retirement, profit sharing, stock option (including without limitation the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan or
agreement or arrangement, or any other increase in the compensation payable or
to become payable to any present or former directors, officers or employees of
the Company or any Subsidiary, except for increases in compensation in the
ordinary course of business consistent with past practice.
3.12 Absence of Litigation; Compliance. Except as set forth on Schedule
3.12 hereto or as disclosed in any SEC Documents filed with the SEC and publicly
available prior to November 1, 1997, there are no suits, claims, actions,
proceedings or investigations pending or, to the Company's knowledge, overtly
threatened against the Company or any Subsidiary, or any properties or rights of
the Company or any Subsidiary, before any arbitrator or Governmental Entity,
that (i) if determined adversely to the Company or any Subsidiary could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (ii) seek to delay or prevent the consummation of the
transactions contemplated by this Agreement or any other Transaction Document.
Neither the Company nor any Subsidiary nor any of their respective properties is
or are subject to any order, writ, judgment, injunction, decree, determination
or award having, or which in the future could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or could prevent or
delay the consummation of the transactions contemplated by this Agreement or any
other Transaction Document. Neither the Company nor any Subsidiary is in
violation of, nor has the Company or any Subsidiary violated, any applicable
provisions of any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligations to which the
Company or any Subsidiary is a party or by which the Company, any Subsidiary or
any of their respective properties are bound or affected except for any such
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as disclosed in the SEC
Documents filed with the SEC and publicly available prior to November 1, 1997,
the Company and its Subsidiaries are in compliance with all applicable statutes,
laws, ordinances, rules, orders and regulations of any Governmental Entity
(including, without limitation, with respect to employment and employment
practices, immigration laws relevant to employment, and terms and conditions of
employment and wages and hours) except for any failures to comply which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the SEC Documents filed with the SEC and
publicly available prior to November 1, 1997, no investigation by any
Governmental Entity with respect to
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the Company or any Subsidiary is pending or threatened.
3.13 Employee Benefit Plans.
(a) The Company has made available or delivered to Purchaser copies (or
if the same do not exist in written form, descriptions) of each material formal,
informal, oral or written bonus, deferred compensation, incentive compensation,
stock purchase, stock option, restricted stock purchase or other issuance,
severance or termination pay, hospitalization or other medical, life or other
insurance (or similar self-insurance), supplemental unemployment benefits,
profit-sharing, employee stock ownership, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement whether for the benefit of present or former officers,
employees, agents, directors or independent contractors of the Company or any
Subsidiary or any ERISA Affiliate, sponsored, maintained or contributed to or
required to be contributed to by the Company or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning of Section
4001(b) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 414 (b) or (c) of the Code (collectively, the "Plans").
Each of the Plans that is an "employee benefit plan," as that term is defined in
section 3(3) of ERISA and subject thereto is collectively referred to herein as
"ERISA Plans."
(b) No material liability under Title IV of ERISA has been incurred by
the Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring a material liability under such Title, other than
liability for premiums due the Pension Benefit Guaranty Corporation ("PBGC")
(which premiums have been paid when due). To the extent this representation
applies to sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only
with respect to each ERISA Plan but also with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of ERISA to which
the Company or any ERISA Affiliate made, or was required to make, contributions
during the five-year period ending on the Initial Closing Date. Neither the
Company nor any ERISA Affiliate is required to contribute to a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Title IV of ERISA) that has not
been fully paid.
(c) The PBGC has not instituted proceedings to terminate any ERISA Plan
and no condition exists that presents a material risk that such proceedings will
be instituted.
(d) Neither the Company nor any ERISA Affiliate, nor any ERISA Plan,
nor any trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or any ERISA
Affiliate, any ERISA Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with any ERISA Plan or any such trust could
reasonably be subject to either a material civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a material tax imposed pursuant to section
4975 or 4976 of the Code.
(e) No ERISA Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in section 302 of ERISA and section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each ERISA Plan, which could reasonably be expected to result in
a material liability to the Company; and all
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contributions required to be made with respect thereto (whether pursuant to the
terms of any ERISA Plan or otherwise) have been timely made.
(f) Each Plan has been operated and administered in accordance with its
terms and applicable law in all material respects, including, but not limited
to, ERISA and the Code. No Plan is subject to any material dispute or proceeding
other than relating to a routine claim for benefits.
(g) There are no material pending or (to the knowledge of the Company)
threatened claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
(h) To the knowledge of the Company, no fact exists that could
reasonably be expected to result in the disqualification of any Plan that is
intended to be qualified under Section 401(a) of the Code.
3.14 Tax Matters. Each of the Company and the Subsidiaries has filed
all Tax Returns, or requests for extensions to file Tax Returns, which the
Company and the Subsidiaries were required to have filed on or before the date
hereof. All Tax Returns filed by the Company or the Subsidiaries are complete
and accurate, except where the failure so to be complete and accurate would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and the Subsidiaries have paid (or the Company has
paid on behalf of the Subsidiaries) or has made adequate provision for the
payment of all Taxes shown as due on such Tax Returns and reflected in the most
recent financial statements contained in the SEC Documents or the Interim
Financial Statements for all taxable periods and portions thereof accrued
through the date of such financial statements. No deficiencies for any Taxes
have been proposed, asserted or assessed against the Company or any Subsidiary
that are not adequately reserved for, pursuant to such Tax Returns or pursuant
to any assessment received with respect thereto. Except as set forth in Schedule
3.14, there is no pending audit or examination of any Tax Return of the Company
or any Subsidiary by any Governmental Entity, nor has the Company or any
Subsidiary received written notice of any such audit or examination and there
are no unexpired waivers or agreements for the extension of time for the
assessment of taxes on the Company or any Subsidiary or extension of any statute
of limitations with respect to any Taxes, and there are no pending, nor has the
Company or any Subsidiary received any written notice of any threatened,
actions, proceedings or investigations by any Governmental Entity with respect
to Taxes.
3.15 Environmental Matters. None of the Company or any Subsidiary
(including, without limitation, their respective assets) is in violation of any
Environmental Laws or Environmental Permits, which violation, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
The Company and each Subsidiary possesses and is in compliance with all
Environmental Permits which are required for the operation of their respective
businesses, except where the failure to possess or comply with such
Environmental Permits could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. During the last three years, none of
the Company or any Subsidiary has received any notice, citation, inquiry or
complaint of any alleged violation of any Environmental Law or Environmental
Permit. For the purposes of this Agreement: (i) "Environmental Laws" means all
federal, state and local statutes, regulations, ordinances, rules, regulations
and policies, all court orders and decrees and arbitration awards, and the
common law, which pertain to environmental
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matters or contamination of any type whatsoever; and (ii) "Environmental
Permits" means licenses, permits, registrations, governmental approvals,
agreements and consents which are required under or are issued pursuant to
Environmental Laws.
3.16 Labor Matters. Other than any such exceptions to any of the
following representations, individually or in the aggregate, as could not
reasonably be expected to have a Material Adverse Effect: (a) the Company and
each Subsidiary is not engaged in any unfair labor practice; (b) there is no
unfair labor practice charge or complaint against the Company or any Subsidiary
pending before the National Mediation Board, the National Labor Relations Board,
or any comparable state or local agency, (c) there is no (x) labor strike,
material dispute, slow down or stoppage actually pending or, to the knowledge of
the Company, threatened against or involving the Company or any Subsidiary, or
(y) material labor grievance or pending arbitration involving the Company or any
Subsidiary; (d) neither the Company nor any Subsidiary has experienced any work
stoppage or other material labor difficulty during the three-year period prior
to the date of this Agreement; (e) there are no collective bargaining
agreements, union contracts or similar types of agreements by which the Company
or any Subsidiary is bound or covered; (f) there are no union representation
petitions pending before the National Labor Relations Board, and no union within
the past three years has sought or demanded recognition by the Company or any
Subsidiary; and (g) there is no union organizing activity, to the knowledge of
the Company, currently in progress involving the Company or any Subsidiary.
3.17 Real Property. None of the Company or any Subsidiary owns, or has
any option to purchase, any real property.
3.18 Material Contracts; Defaults. Schedule 3.18 hereto sets forth a
correct and complete list of all material Contracts (other than Employment,
Consulting or Severance Agreements) to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or any of their respective
assets may be bound (the "Material Contracts"), including, without limitation,
any such Contracts (a) involving the expenditure (or the transfer of assets or
services) by any party thereto in an aggregate amount or with an aggregate value
in excess of $100,000 in any year, (b) which do not by their terms expire and
are not subject to termination (without penalty to the Company or any
Subsidiary) within six (6) months from the date of execution and delivery
thereof, and (c) to which any director or officer of the Company or any
Subsidiary or any holder of more than 5% of the outstanding Common Stock or any
of their respective Affiliates is a party. The Company has made available or
delivered to Purchaser correct and complete copies of all Material Contracts.
Neither the Company nor any Subsidiary is, or has received any notice or has any
knowledge that any other party is, in default in any respect under any Material
Contract, except for those defaults which would not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default by the Company or any Subsidiary
or, to the Company's knowledge, by any other party. To the Company's knowledge,
no party to any Material Contract has threatened to terminate such Material
Contract (or modify such Material Contract in a manner detrimental to the
Company or any Subsidiary).
3.19 Intellectual Property. The Company and each of its Subsidiaries
owns, or is licensed to use (in each case, free and clear of any Liens) all
patents, trademarks, trade names, copyrights, technology, know-how, trade
secrets, processes and computer software (including, without limitation, all
documentation and source and object codes with respect to such software) used
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in or necessary for the conduct of its business as currently conducted which are
material to the business, operations, assets, prospects, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole. To
the Company's knowledge, the use of such patents, trademarks, trade names,
copyrights, technology, know-how, trade secrets, processes and computer software
(including, without limitation, all documentation and source and object codes
with respect to such software) by the Company and its Subsidiaries does not
infringe or otherwise violate the rights of any person. To the Company's
knowledge, no person is infringing any right of the Company or any Subsidiary
with respect to any such patents, trademarks, trade names, copyrights,
technology, know-how, processes or computer software (including, without
limitation, all documentation and source and object codes with respect to such
software).
3.20 Insurance. The Company has heretofore furnished to Purchaser
copies of all policies or binders of fire, liability, product liability,
worker's compensation, vehicular and other insurance bonds that insure the
operations of the Company and the Subsidiaries. Such policies include all
policies that are required in connection with the operation of the businesses of
the Company and the Subsidiaries, as presently conducted, by applicable laws or
regulations or by the terms of any Contract to which the Company or any
Subsidiary is a party or by which any of their respective assets is bound. The
policies concerning such insurance are in full force and effect and no notice or
cancellation or termination has been received by the Company or any Subsidiary
with respect to any such policy. There are no outstanding unsettled claims under
any such policy or binder that individually, or in the aggregate, exceed the
coverage of any such policy or binder. There is no failure by the Company or any
Subsidiary to pay premiums when due, and there is no material inaccuracy in any
application for such policies or binders. Neither the Company nor any Subsidiary
has received any notice of cancellation or nonrenewal of any such policy or
binder. Neither the Company nor any Subsidiary has received any notice from any
carrier of such insurance that any insurance premiums will be materially
increased in the future or that any such insurance coverage will not be
available in the future on substantially the same terms as now in effect.
3.21 Permits. The Company and the Subsidiaries have all Permits
required by law or governmental regulations from all applicable Governmental
Entities that are necessary to operate such businesses as presently conducted
and all such Permits are in full force and effect, except where the failure to
have any such Permits in full force and effect could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary is in default under, or in violation of or
noncompliance with, any of such Permits, except for any such default, violation
of or noncompliance which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Upon consummation of
the transactions contemplated by this Agreement, each such Permit will remain in
full force and effect and will not create a right of any other person to
terminate or revoke, modify or condition such Permit based on such consummation.
3.22 Related Party Transactions. Except as disclosed in any SEC
Documents filed with the SEC and publicly available prior to November 1, 1997,
no director or officer of the Company or any Subsidiary or holder of more than
5% of the outstanding Common Stock or any of their respective Affiliates or any
Affiliate of the Company or any Subsidiary (i) has borrowed any monies from or
has outstanding any indebtedness or other similar obligations to the Company or
any Subsidiary in excess, individually or in the aggregate of $100,000; (ii)
owns more than a 5% equity interest in, or is a director, officer, employee,
partner, Affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management,
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operations or profits of, any person which is a competitor, supplier, customer,
distributor, lessor, tenant, creditor, merchant or debtor of the Company or any
Subsidiaries; or (iii) is otherwise a party to any contract, arrangement or
understanding with the Company or any Subsidiary with an aggregate value or
amount in excess of $100,000, in all cases other than travel and other expenses
and reimbursements, company car charges and other similar transactions which are
customary in amount and in the ordinary course of business.
3.23 Vote Required. The affirmative vote of the holders of no more than
a majority of the outstanding shares of Common Stock is the only vote of the
holders of any class or series of capital stock or other Equity Securities of
the Company necessary to approve this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby.
3.24 Takeover Status. No "fair price", "moratorium", "control share
acquisition" or other similar anti-takeover statute or regulation enacted under
state or federal laws or applicable stock exchange rules or regulations,
including, without limitation, Section 203 of the Delaware General Corporation
Law, applicable to the Company or any Subsidiary is applicable to the
transactions contemplated hereby or by any other Transaction Document, taken
individually or in the aggregate.
3.25 Compliance with Securities Laws. The Company has not taken, and
will not take, any action which would subject the issuance and sale of the
Shares, the Warrant and/or the Warrant Shares pursuant to this Agreement to the
provisions of Section 5 of the Securities Act, or violate the registration or
qualification provisions of any securities or blue sky laws of any applicable
jurisdiction, and, based in part on the representations of Purchaser in Section
4.5, the sale of the Shares and the Warrant pursuant to this Agreement and the
issuance of the Warrant Shares from time to time upon exercise of the Warrant
complies with all applicable requirements of applicable federal and state
securities and blue sky laws.
3.26 Brokers. Other than fees and expenses payable to Compass Partners
International, L.L.C. by the Company not to exceed $600,000 in the aggregate, no
broker, finder, or investment banker or other Person is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by the Company Transaction Documents based upon
arrangements made by or on behalf of the Company.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby jointly and severally represents, warrants and
covenants to the Company on the date of this Agreement and again on the Closing
Date, which representations and warranties shall survive the Closing, as
follows:
4.1 Organization. Each of Samstock and TNI is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized.
4.2 Authority Relative to This Agreement. Each of Samstock and TNI has
the limited liability company power and authority to execute and deliver this
Agreement, the Investment Agreement, the Agreement Among Stockholders and all
other documents, instruments and other writings to be executed and/or delivered
by or on behalf of Samstock and/or TNI to the Company or any of its
representatives in connection with the transactions contemplated hereby or
thereby (collectively, "Purchaser Transaction Documents"), to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of each
of the Purchaser Transaction Documents by Samstock and/or TNI and the
consummation by Samstock and/or TNI of the transactions contemplated hereby and
thereby have been duly authorized by the respective managing members of Samstock
and TNI, and no other limited liability company proceedings on the part of
Samstock or TNI are necessary to authorize the execution, delivery and
performance of the Purchaser Transaction Documents or the transactions
contemplated hereby or thereby. Each of the Purchaser Transaction Documents has
been duly executed and delivered by Samstock and/or TNI, as the case may be,
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Samstock and/or TNI, as the
case may be, enforceable against Samstock and/or TNI, as the case may be, in
accordance with its terms.
4.3 No Conflict; Required Filings and Consents. The execution, delivery
and performance of the Purchaser Transaction Documents by Samstock or TNI, as
the case may be, does not and will not: (i) conflict with or violate the
organizational documents of Samstock or TNI, as the case may be; (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Samstock or TNI, as the case may be, or by which any of its properties are
bound or affected; (iii) require any consent, approval, authorization or permit
of, action by, filing with or notification to, any Governmental Entity (other
than any filing required under Section 13(a) or (d), 14, 15(d) or 16(a) of the
Exchange Act); or (iv) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the property or assets of Samstock or TNI, as
the case may be, pursuant to, any Contract, Permit or other instrument or
obligation to which Samstock or TNI, as the case may be, is a party or by which
Samstock or TNI, as the case may be, or any of its properties are bound or
affected, except, in the case of clauses (ii), (iii) and (iv), for any such
conflicts, violations, breaches, defaults or other occurrences which could not,
individually or in the aggregate, reasonably be expected to impair or delay the
ability of Samstock or TNI, as the case may be, to perform its obligations under
this Agreement.
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4.4 Brokers. No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by the Purchaser Transaction Documents based
upon arrangements made by or on behalf of Samstock or TNI.
4.5 Investment Intent. Samstock and/or TNI is purchasing the Shares and
the Warrant and will purchase the Warrant Shares for their own account for
investment, and not with a view to, or for resale in connection with, any public
distribution of the Shares, the Warrant or any Warrant Shares.
4.6 Proxy Statement. The information supplied or to be supplied by
Samstock and TNI in writing specifically for inclusion in the Proxy Statement
will not, at the date the Proxy Statement is first mailed to the Company's
stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.7 Availability of Funds. Samstock and/or TNI has on hand and will
have on the Closing Date sufficient funds to pay the Purchase Price in
accordance with the terms of this Agreement and all fees and expenses incurred
in connection with the transactions contemplated hereby for which Samstock
and/or TNI is responsible.
4.8 Samstock and TNI not an "Interested Stockholder". Except to the
extent that they may be deemed such by virtue of this Agreement, and the
Agreement Among Stockholders, neither Samstock nor TNI nor any of their
affiliates is an "interested stockholder" of the Company within the meaning of
Section 203 of the Delaware General Corporation Law or Article 7 of the
Company's Certificate of Incorporation.
ARTICLE V
CONDUCT OF BUSINESS OF THE COMPANY PENDING CLOSING
5.1 Conduct of Business of the Company Pending Closing. During the
period from the date hereof to the earlier of the termination of this Agreement
pursuant to Section 8.1 hereof and the Closing, except as set forth on Schedule
5.1 hereto or unless Purchaser shall otherwise agree in writing in advance, the
businesses of the Company and the Subsidiaries shall be conducted only in, and
the Company and the Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice and in
compliance with applicable laws; and the Company and its Subsidiaries each shall
use commercially reasonable efforts to preserve substantially intact the
business organization of the Company and the Subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company and
the Subsidiaries and to preserve the present relationships of the Company and
the Subsidiaries with customers, suppliers, merchants and other Persons with
which the Company or any Subsidiary has significant business relations. By way
of amplification and not limitation, except as set forth on Schedule 5.1 hereto
or unless Purchaser shall otherwise agree in writing in advance, neither the
Company nor any Subsidiary shall, between the date of this Agreement and the
Closing, directly or indirectly do, or propose or commit to do, any of the
following (other than any transfer, pledge, assignment, hypothecation, mortgage
or encumbrance of Rights to Receive pursuant to and in accordance with the terms
of the
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Securitization Documents, which actions shall not require Purchaser's
consent):
(a) amend its Organizational Documents;
(b) issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any Equity Securities of the Company or any
Subsidiary, or (B) any assets of the Company or any Subsidiary with an
individual value in excess of $100,000 or an aggregate value as to all
such assets of $500,000;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, other than semi-annual cash
dividends of $.02 per share on outstanding Common Stock consistent with
past practices;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or (except for the purchase of Rights
to Receive in the ordinary course of business) any assets, except for
such transactions which involve aggregate consideration of less than
$100,000; (ii) sell, transfer, lease, mortgage, pledge, encumber or
otherwise dispose of or subject to any Lien any of its assets
(including capital stock of the Subsidiaries), except for such
transactions which involve aggregate consideration of less than
$100,000; (iii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans, advances or capital contributions to, or investments
in, any other Person except for such transactions which involve
aggregate consideration of less than $500,000; (iv) enter into, amend
or terminate any Contract other than in the ordinary course of business
consistent with past practice; (v) enter into any commitments or
transactions material, individually or in the aggregate, to the Company
and the Subsidiaries taken as a whole; (vi) authorize any capital
expenditure in excess of $100,000, individually, or $500,000 in the
aggregate; or (vii) enter into or amend any Contract obligating it to
take any of the actions set forth in this Section 5.1(e);
(f) (i) except to the extent required under existing
Employment, Consulting or Severance Agreements as in effect on the date
of this Agreement and described in Schedule 3.7 hereto: (A) increase
the compensation or fringe benefits of any of its present or former
directors, officers, employees, consultants or independent contractors
except for increases in salary or wages of employees of the Company or
the Subsidiaries who are not officers of the Company in all cases to
the extent in the ordinary course of business in accordance with past
practice, (B) grant any severance, termination or similar payments or
benefits, (C) enter into, or amend, any Employment, Consulting or
Severance Agreements, or (D) establish, adopt, enter into or amend or
terminate any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any present or former directors, officers, employees,
consultants, independent contractors or other agents of the Company or
any Subsidiary;
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and (ii) a participant or beneficiary of, or otherwise covered by, the
Company's Senior Executive Severance Plan, any successor thereto or any
similar plan.
(g) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting practices or principles used by it;
(h) settle or compromise any pending or threatened suits,
actions or claims in a manner obligating the Company or any Subsidiary
thereof to pay, or waiving amounts claimed by the Company or any
Subsidiary, in an aggregate amount (with respect to all such
obligations and waivers) in excess of $100,000;
(i) authorize, recommend, propose, announce or adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization (other than the transactions
contemplated by the Transaction Documents) or other reorganization;
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements
of the Company or incurred in the ordinary course of business and
consistent with past practice;
(k) enter into any Contract providing for the acceleration of
payment or performance or other consequences as a result of any of the
transactions contemplated by any Transaction Document;
(l) enter into any new lines of business or otherwise make
material changes to the operation of its business;
(m) effectuate a "plant closing" or "mass layoff", as those
terms are defined in the Worker Adjustment and Retraining Notification
Act of 1988, as amended, affecting in whole or in part any site of
employment, facility, operating unit or employee of the Company or any
Subsidiary; or
(n) take, or offer or propose to take, or agree to any of the
actions described in this Article V.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Exclusivity.
(a) In consideration of the expenditure of time, effort and expense to
be undertaken by Purchaser in connection with the preparation of this Agreement
and the other Transaction Documents, and the investigations and review of the
business of the Company and the Subsidiaries, the Company agrees that, prior to
the Termination Date, neither it, any of the
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Subsidiaries, any of their respective Affiliates, nor any of the respective
directors, officers, employees, agents or representatives of any of the
foregoing will, directly or indirectly: (i) continue, solicit, initiate,
facilitate or encourage any inquiries or the making of any proposal with respect
to (A) the sale or issuance by the Company or any Subsidiary of any Common
Stock, Preferred Stock or other Equity Securities of the Company or any
Subsidiary to any Person other than Purchaser or (B) any merger, consolidation,
sale of all or substantially all of the assets of the Company and the
Subsidiaries taken as a whole, or other business combination involving the
Company or any Subsidiary and any other Person other than Purchaser (any of the
transactions described in the foregoing subparagraphs (A) and (B) being
hereinafter referred to as a "Competing Transaction"); (ii) negotiate, explore
or otherwise engage in discussions with any Person other than Purchaser either
with respect to any Competing Transaction or with respect to any matter which
may reasonably be expected to lead to a proposal for a Competing Transaction;
(iii) enter into any agreement, arrangement or understanding either with respect
to a Competing Transaction or with respect to any matter which may reasonably be
expected to lead to a proposal for a Competing Transaction; or (iv) provide any
information to any Person which may reasonably be expected to solicit, initiate,
facilitate or encourage any of the matters referred to in the foregoing
subparagraphs (i) through (iii); provided, however, that, subject to Section
6.1(b), nothing in this Section 6.1(a) shall prohibit the Company and its
directors, officers, employees, agents and representatives from: (x) engaging in
any of the conduct or activities otherwise prohibited by this Section 6.1(a)
with respect to a Competing Transaction with a Disclosed Competing Party; or (y)
in response to an unsolicited proposal or inquiry regarding a Competing
Transaction made by a Person other than Purchaser, a Disclosed Competing Party
or an Undisclosed Competing Party (any such Person, a "New Competing Party"),
(aa) furnishing such New Competing Party information pursuant to an appropriate
confidentiality agreement concerning the Company and the Subsidiaries, (bb)
engaging in discussions or negotiations with such New Competing Party concerning
a Competing Transaction and (cc) entering into any agreement, arrangement or
understanding with such New Competing Party with respect to a Competing
Transaction with such New Competing Party.
(b) The Company agrees that, as of the date hereof, it, the
Subsidiaries, their respective Affiliates, and the respective directors,
officers, employees, agents and representatives of the foregoing, shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any party (other than any Disclosed Competing
Party) with respect to any Competing Transaction. The Company agrees to promptly
advise Purchaser in writing of the existence of (i) any inquiries or proposals
(or desire to make a proposal) received by (or indicated to), any information
requested from, or any negotiations or discussions sought to be initiated or
continued with, the Company, the Subsidiaries, their respective Affiliates, or
any of the respective directors, officers, employees, agents or representatives
of the foregoing, in each case from any party (including, without limitation,
any Disclosed Competing Party, Undisclosed Competing Party or any New Competing
Party) with respect to a Competing Transaction, and (ii) the terms thereof,
including the identity of such party (and any other real party in interest,
including the direct and indirect owners of such party).
(c) The Company agrees, without limitation of its obligations, that any
violation of this Section 6.1 by any director, officer, employee, investment
banker, financial advisor, attorney or other advisor, consultant, agent or
representative of the Company, the Subsidiaries and their respective Affiliates,
whether or not such Person is purporting to act on behalf of the Company, shall
be deemed to be a breach of this Section 6.1 by the Company.
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(d) Nothing in this Agreement shall prevent the Company and the board
of directors of the Company from complying with Rule 14e-2 under the Exchange
Act, or issuing a communication meeting the requirements of Rule 14d-9(e) under
the Exchange Act, with respect to any tender offer or otherwise prohibit the
Company from making any public disclosures required by law or the requirements
of the New York Stock Exchange (provided, whenever practicable, the Company
first consults with Purchaser concerning the timing and content of such
disclosure), provided, however, that the Company may not, except as permitted by
Section 6.4(e), withdraw or modify its position with respect to the Proxy
Proposals or approve or recommend a Competing Transaction.
6.2 Access to Information. Purchaser is entitled to continue its due
diligence investigation of the Company and the Subsidiaries, including without
limitation, any business, legal, financial or environmental due diligence as
Purchaser deems appropriate. The Company will permit Purchaser and its
authorized representatives, accountants, attorneys, advisors and consultants
full access to the Company's and the Subsidiaries' property and all records and
other data with respect to the Company, the Subsidiaries, and their respective
properties, assets, operations, sales and marketing activities, and products and
services, as is reasonably requested, and will provide such assistance as is
reasonably requested. Purchaser is entitled to contact and communicate with
employees, participating merchants (i.e., restaurants, other vendors and credit
card companies), legal advisors and accountants of the Company and the
Subsidiaries.
6.3 Filings. As promptly as practicable after the date of this
Agreement, the Company and Purchaser shall make or cause to be made all filings
and submissions under laws and regulations applicable to the Company and
Purchaser, if any, as may be required for the consummation of the transactions
contemplated by this Agreement. Purchaser and the Company shall coordinate and
cooperate in exchanging such information and providing such reasonable
assistance as may be requested by any of them in connection with the filings and
submissions contemplated by this Section 6.3.
6.4 Stockholders' Meeting. The Company acting through the Board, shall,
in accordance with applicable law, as soon as practicable:
(a) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "Stockholders' Meeting") for the purpose of
considering and taking action upon each of the Proxy Proposals;
(b) include in the proxy statement (the "Proxy Statement") to be
distributed to the Company's stockholders in connection with the Proxy
Proposals, including any amendments or supplements thereto (which Proxy
Statement shall be in form and content reasonably satisfactory to Purchaser),
the recommendation of the Board that the stockholders of the Company vote in
favor of the approval of each of the Proxy Proposals;
(c) use its best efforts (i) to obtain and furnish the information
required to be included by it in the Proxy Statement and respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any preliminary
version thereof and cause the Proxy Statement to be mailed to its stockholders
at the earliest practicable time, and (ii) to obtain the necessary approvals by
its stockholders of the Proxy Proposals; and
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(d) cause the Proxy Statement (i) not to contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) to comply as
to form in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations thereunder.
(e) Notwithstanding the foregoing, the board of directors of the
Company may approve or recommend (and, in connection therewith withdraw or
modify its approval or recommendation of the Proxy Proposals) a Competing
Transaction provided the Company has not breached any provision of Section 6.1.
6.5 Board of Directors. The Company hereby agrees to take all action
within its power to cause (i) four members of the Board acceptable to Purchaser
to resign effective no later than the Closing Date, (ii) two of the resigning
members of the Board to be replaced no later than the Closing Date by persons
designated by Purchaser who are reasonably acceptable to the Company (it being
agreed by the Company that Xxx Xxxx, F. Xxxxxx Xxxxx, Xxx Xxxxxxxx and Xxxxxx X.
Xxxxxx are acceptable to the Company), and (iii) two of the resigning members of
the Board to be replaced no later than the Closing Date by persons designated by
the remaining Independent Directors and acceptable to Purchaser.
6.6 CEO Search. The Company (represented by the Company's current chief
executive officer and the chairman of the Board's Compensation Committee) and
Purchaser (represented by an individual designated by Purchaser in its sole
discretion) shall jointly, diligently and in good faith conduct a search to find
a replacement for the Company's current chief executive officer, which search
shall commence promptly following the execution of this Agreement.
6.7 Agreement to Cooperate; Further Assurances. Subject to the terms
and conditions of this Agreement, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement and the other Transaction Documents, including providing
information and using reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals, and effecting all necessary registrations and
filings. In case at any time after the Closing Date any further action is
necessary or desirable to transfer any Shares, the Warrant or the Warrant Shares
to Purchaser or otherwise to carry out the purposes of this Agreement and the
other Transaction Documents, the Company and Purchaser shall execute such
further documents and shall take such further action as shall be necessary or
desirable to effect such transfer and to otherwise carry out the purposes of
this Agreement and the other Transaction Documents, in each case to the extent
not inconsistent with applicable law.
6.8 Public Announcements. Any public announcement made by or on behalf
of either Purchaser or the Company prior to the termination of this Agreement
pursuant to Article VIII hereof concerning this Agreement, the transactions
described herein or in any other Transaction Document or any other aspect of the
dealings heretofore had or hereafter to be had between the Company and Purchaser
and their respective Affiliates must first be approved in writing by the other
(any such approval not to be unreasonably withheld), subject to the Company's
obligations under applicable law or New York Stock Exchange rules and listing
requirements as a public company (but the Company shall use its best efforts to
consult with Purchaser as to all such public announcements).
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6.9 Notification of Certain Matters. The Company shall promptly provide
Purchaser (or its counsel) with copies of all filings made by the Company with
the SEC or any other Governmental Entity in connection with this Agreement, the
other Transaction Documents and the transactions contemplated hereby and
thereby.
6.10 Interim Financial Statements and Other Interim Deliveries.
(a) The Company shall deliver, or cause to be delivered, to Purchaser
no later than the tenth day of each calendar month following the date of this
Agreement and until the Closing Date or the termination of this Agreement
pursuant to Article VIII, an unaudited consolidated balance sheet, statement of
income and retained earnings and statement of cash flows of the Company and the
Subsidiaries as of the end of the immediately preceding calendar month and for
the one calendar month period then ended (such financial statements,
collectively the "Interim Financial Statements").
(b) The Company shall deliver, or cause to be delivered, to Purchaser
no later than the thirteenth day of each calendar month following the date of
this Agreement and until the Closing Date or the termination of this Agreement
pursuant to Article VIII, a true and correct Right-to-Receive-Backed-Notes
Settlement Statement prepared in compliance with Section 12(g) of the Security
Agreement.
(c) The Company shall deliver, or cause to be delivered, to Purchaser
no later than the tenth day of each calendar month following the date of this
Agreement, and until the Closing Date or the termination of this Agreement
pursuant to Article VIII, a true and correct statement containing the following
information:
(i) the number of "Transmedia Card" members as of the
beginning of the immediately preceding calendar month, the number of
new members acquired during the calendar month, the number of members
whose membership has terminated during the calendar month and the
number of members as of the end of the calendar month, broken down by
"fee" and "no-fee" members;
(ii) the number of participating Merchants as of the beginning
of the immediately preceding calendar month, the number of new
participating Merchants acquired during the calendar month, the number
of Merchants whose participation has terminated during the calendar
month and the number of participating Merchants as of the end of the
calendar month; and
(iii) the number of Transmedia Card "tickets" (i.e.,
individual transactions on the Transmedia Card) generated during the
immediately preceding month.
6.11 Representations and Warranties. The Company shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to the Company, of
(a) any representation or warranty made by such party contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect prior to the Closing or
(b) the failure by such party prior to Closing to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by such party under this Agreement; provided, however, that no such
notification shall affect the representations,
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warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
6.12 Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Company shall
contain the provisions with respect to indemnification set forth in the
Certificate of Incorporation and By-Laws of the Company on the date hereof,
which provisions shall not be amended, repealed or otherwise modified in any
manner that would adversely affect the rights to indemnification thereunder of
any current or future directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law or under the Company's Certificate of Incorporation or By-Laws as in effect
on the Closing Date and regardless of whether the Closing occurs, indemnify and
hold harmless each present and former director, officer or employee of the
Company or any of its Subsidiaries (collectively, the "Indemnified Parties")
against any out of pocket costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative incurred
by such person by reason of the fact that such person is or was an Indemnified
Party, (x) arising out of or pertaining to the transactions contemplated by this
Agreement and the other Transaction Documents or (y) otherwise with respect to
any acts or omissions occurring on or prior to the Closing Date, to the same
extent as provided in the Company's Certificate of Incorporation or By-Laws as
in effect on the Closing Date or any applicable contract or agreement as in
effect on the date hereof and identified in Schedule 3.18 hereto as containing
an agreement concerning indemnification of any Indemnified Parties. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Closing Date), (i) any counsel retained by the Indemnified
Parties for any period after the Closing Date shall be reasonably satisfactory
to the Company, (ii) after the Closing Date, the Company shall pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received, provided the Indemnified Parties first deliver to the Company a
written undertaking to repay such amounts if it is ultimately determined that
such person is not entitled to be indemnified by the Company under this Section
6.12, and (iii) the Company will cooperate in the defense of any such matter;
provided, however, that the Company shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). The Indemnified Parties as a group may retain (in addition to local
counsel) only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties.
(c) For a period of six years after the Closing Date, the Company shall
maintain in effect directors' and officers' liability insurance covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy on terms comparable to those now applicable to
directors and officers of the Company.
(d) The obligations of the Company under this Section 6.12 shall
survive the Closing, are intended to benefit the Company and the Indemnified
Parties, shall be binding on all successors assigns of the Company and shall be
enforceable by the Indemnified Parties.
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ARTICLE VII
CONDITIONS AND SCHEDULE UPDATES
7.1 Conditions to Obligation of Each Party. The respective obligations
of each party to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree by any court of competent
jurisdiction which prevents the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents or
imposes material conditions with respect thereto shall have been issued
and remain in effect (each party agreeing to use its reasonable efforts
to have any such injunction, order or decree lifted);
(b) No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any Governmental Entity which
would prevent the consummation of the transactions contemplated by this
Agreement or the other Transaction Documents or impose material
conditions with respect thereto; and
(c) All orders, consents and approvals of Governmental
Entities legally required for the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents shall
have been obtained and be in effect at the Closing Date.
7.2 Condition to Obligations of the Company. The obligation of the
Company to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional condition:
(a) Purchaser shall have performed in all material respects
all obligations by it required to be performed at or prior to the
Closing Date, and the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material
respects (if not qualified by materiality) and true and correct (if so
qualified) on and as of the date of this Agreement and at and as of the
Closing Date as if made at and as of the Closing Date, except to the
extent that any such representation or warranty expressly relates to
another date (in which case, as of such date) and the Company shall
have received a certificate signed on behalf of Purchaser by an
executive officer thereof, to such effect;
(b) The Company shall have received an opinion letter from
Xxxxxxxxx & Xxxxxxxxxxx, P.C., counsel to Purchaser, containing the
opinions in the form attached hereto as Exhibit B with such provisions
concerning scope of firm's inquiry, law covered by opinion, reliance by
the firm, reliance by third parties, assumptions, definition of firm's
"knowledge", qualifications, limitations and similar matters as shall
be reasonably acceptable to the Company;
(c) No action or proceeding shall be pending against the
Company or Purchaser before any court of competent jurisdiction to
prohibit, restrain, enjoin or restrict the consummation of the
transactions contemplated by this Agreement or the other
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Transaction Documents.
(d) All consents, approvals, authorizations and permits of,
actions by, filing with or notifications to, Governmental Entities and
third parties required in connection with the transactions contemplated
by this Agreement and the other Transaction Documents shall have been
obtained, taken or made; and
(e) Each of the Proxy Proposals shall have received
Stockholder Approval.
7.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Company shall have performed in all material respects
all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and the representations and warranties of
the Company contained in this Agreement shall be true and correct in
all material respects (if not qualified by materiality) and true and
correct (if so qualified) on and as of the date of this Agreement and
at and as of the Closing Date (as modified by the matters or
circumstances reflected in the Updated Schedules, if any, provided by
the Company to Purchaser in accordance with Section 7.4 hereof) as if
made at and as of the Closing Date, except to the extent that any such
representation or warranty expressly relates to another date (in which
case, as of such date) and Purchaser shall have received a certificate
from the Company signed by an executive officer), to such effect;
(b) No action or proceeding shall be pending against the
Company or Purchaser before any court of competent jurisdiction which
action or proceeding has been brought by a Governmental Entity and
which is reasonably likely to have a Material Adverse Effect or to
prohibit, restrain, enjoin or restrict the consummation of the
transactions contemplated by this Agreement or the other Transaction
Documents;
(c) All consents, approvals, authorizations and permits of,
actions by, filings with or notifications to, Governmental Entities and
third parties required in connection with the transactions contemplated
by this Agreement and the other Transaction Documents shall have been
obtained, taken or made;
(d) Purchaser shall have received an opinion of Xxxxxx, Xxxxx
& Bockius LLP, counsel to the Company, containing the opinions in the
form attached hereto as Exhibit C with such provisions concerning scope
of firm's inquiry, law covered by opinion, reliance by the firm,
assumptions, definition of firm's "knowledge", qualifications,
limitations and similar matters as shall be reasonably acceptable to
the Company.
(e) The Company and each current Company stockholder who is to
be made a party thereto shall have executed and delivered to Purchaser
the Investment Agreement, and such Investment Agreement shall be in
full force and effect;
(f) The Company and Xxxxxx Xxxxxx shall have executed and
delivered to Purchaser the Agreement Among Stockholders, and such
Agreement Among Stockholders shall be in full force and effect;
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(g) The Company and Xxxxx Xxxxx Associates, Ltd. ("FFA") shall
have entered into the Consulting Agreement substantially in the form of
the draft most recently reviewed by the Company and Purchaser;
(h) Each of the Proxy Proposals shall have received
Stockholder Approval, and the Charter Amendment shall have been filed
with the Delaware Secretary of State and be shall be effective;
(i) The Board shall be constituted of the individuals
designated in accordance with Section 6.5;
(j) The Company shall have engaged an executive search firm of
national reputation and reasonably acceptable to Purchaser to assist in
the CEO Search;
(k) The matters or circumstances reflected in the Updated
Schedules, if any, provided by the Company to Purchaser in accordance
with Section 7.4 hereof, in the reasonable judgment of Purchaser, could
not reasonably be expected to result in a Material Adverse Effect; and
(l) Each of the persons identified in Schedule 3.7(a) hereto
shall have executed and delivered to the Company and Purchaser a valid,
binding and enforceable agreement and acknowledgment, in form and
content reasonably satisfactory to Purchaser, of the matters referred
to in Section 3.7(b)(ii).
7.4 Schedule Updates. At any time prior to two (2) business days prior
to the Closing, the Company shall be entitled to update any schedule referred to
in Article III of this Agreement or add new schedules not referred to in or
contemplated by Article III by written notice to Purchaser if necessary in order
to make the corresponding representations and warranties true and correct as of
the Closing Date; provided that such updated or new Schedules may only reflect
changes in circumstances or matters arising subsequent to the date of the
execution of this Agreement that are not the result of any action undertaken, or
failure to act, by the Company or the Subsidiaries in breach of any provision of
this Agreement (any such updated or new schedules, "Updated Schedules"); it
being understood that the Company shall not be entitled to reflect in any
Updated Schedules any circumstances, matters or facts which were in existence as
of or prior to the date of this Agreement, whether or not the Company knew or
should have known of such circumstances, matters or facts as of the date of this
Agreement). If, in accordance with the immediately preceding sentence, new
schedules are added, the applicable section or subsection of Article III
corresponding to such new schedule shall be read to include the words "except as
set forth in Schedule [insert applicable section or subsection number]" or words
of similar meaning to appropriately connote the modifications created by such
new schedule. The delivery of any Updated Schedules pursuant to this Section 7.4
shall not cure any breach of any representation, warranty or covenant made in
this Agreement as of the date of this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
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8.1 Termination. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time prior to the Closing
Date:
(a) By mutual written consent of Purchaser and the Company;
(b) By Purchaser, upon notice to the Company, if (i) the
Company shall not have mailed the Proxy Statement to the Company's
stockholders by February 28, 1998, or (ii) the Closing shall not have
occurred on or before the sixtieth (60th) day following the mailing of
the Proxy Statement, unless the absence of such occurrence shall be due
to the failure of Purchaser to perform in all material respects each of
its obligations under this Agreement required to be performed by it at
or prior to the Closing.
(c) By Purchaser (i) if there has been a material breach by
the Company of any representation, warranty, covenant or agreement set
forth in this Agreement (other than the covenant set forth in Section
6.1 hereof), which breach has not been cured within ten (10) business
days following receipt by the breaching party of notice of such breach;
(ii) if there has been a breach by the Company of any covenant set
forth in Section 6.1 hereof (including due to the act or omission of
any director, officer, employee, investment banker, financial advisor,
attorney or other advisor, consultant, agent or representative of the
Company, the Subsidiaries and their respective Affiliates); or (iii) if
the Board fails to recommend, or revokes or otherwise modifies its
recommendation of, the Proxy Proposals or resolves to do so;
(d) By the Company, upon notice to Purchaser, if the Closing
shall not have occurred on or before the sixtieth (60th) day following
the mailing of the Proxy Statement, unless the absence of such
occurrence shall be due to the failure of the Company to perform in all
material respects each of its obligations under this Agreement required
to be performed by it at or prior to the Closing.
(e) By Purchaser or the Company, upon notice to the other, if
the Company's stockholders fail to adopt each of the Proxy Proposals at
the Stockholders' Meeting.
(f) By the Company, upon notice to Purchaser given
contemporaneously with the Company entering into a definitive agreement
concerning a Competing Transaction, provided there has not been a
breach by the Company of any covenant set forth in Section 6.1 hereof
(including due to the act or omission of any director, officer,
employee, investment banker, financial advisor, attorney or other
advisor, consultant, agent or representative of the Company, the
Subsidiaries and their respective Affiliates).
(g) By Purchaser, if the Company enters into a definitive
agreement concerning a Competing Transaction;
(h) By Purchaser or the Company, if (i) the Board of Directors
of the Company shall withdraw, modify or change its approval or
recommendation of the Proxy Proposals in a manner adverse to Purchaser
or shall have resolved to do so; or (ii) the Board of Directors of the
Company shall have recommended to the stockholders of the Company a
Competing Transaction;
(i) By the Company, if there has been a material breach by Purchaser of
any
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representation, warranty, covenant or agreement set forth in this
Agreement which breach has not been cured within ten (10) business days
following receipt by the breaching party of notice of such breach; or
(j) By Purchaser, if the Company delivers to Purchaser any
Updated Schedules in accordance with Section 7.4 hereof and the matters
or circumstances reflected in such Updated Schedules, if any, in the
reasonable judgment of Purchaser, could reasonably be expected to
result in a Material Adverse Effect.
8.2 Termination Fee and Expenses Payable to Purchaser. Notwithstanding
any provision to the contrary contained in this Agreement, in the event that
Purchaser terminates this Agreement pursuant to Section 8.1(b), 8.1(c), 8.1(e),
8.1(f), 8.1(g) or 8.1(h) hereof, or if the Company terminates this Agreement
other than pursuant to Section 8.1(d) hereof (provided Purchaser is not entitled
to terminate this Agreement pursuant to Section 8.1(b), 8.1(c), 8.1(e), 8.1(f),
8.1(g) or 8.1(h) hereof) or Section 8.1(i) hereof, then the Company shall
immediately pay to Purchaser (a) an amount equal to the Termination Fee, plus
(b) all out-of-pocket costs and expenses (including attorneys' fees and
expenses), not to exceed $250,000 in the aggregate, reasonably incurred by
Purchaser and their Affiliates in connection with this Agreement and the other
Purchaser Transaction Documents, with the Termination Fee to be paid
concurrently with such termination of this Agreement, and the expense amount
under clause (b) above to be paid within five (5) business days after receipt by
the Company of reasonably detailed evidence of the same. Upon receipt of such
payments, Purchaser shall not be entitled to and shall be deemed to have waived
the right to seek Damages or remedies from the Company for breach of, or
otherwise in connection with, this Agreement. Notwithstanding anything to the
contrary in this Section 8.2, the Company shall not be obligated to pay the
Termination Fee or any out-of-pocket costs and expenses of Purchaser in the
event that this Agreement is terminated pursuant to (i) Section 8.1(j) or (ii)
Section 8.1(b) or (d) because any of the conditions to Closing specified in
Section 7.1, Section 7.2(c) or (d), or Section 7.3(b), (c) or (k) have not been
satisfied or waived (except, with respect to Section 7.2(d) and Section 7.3(c),
where the failure to obtain the consents, approvals, authorizations and permits
of, actions by, filings with or notifications to, Governmental Entities and
third parties referred to in said Section 7.2(d) and Section 7.3(c) shall be due
to the failure by the Company to perform in all material respects each of its
obligations under this Agreement required to be performed by the Company prior
to the Closing).
8.3 Other Remedies. Notwithstanding any provision to the contrary
contained in this Agreement, if this Agreement is terminated pursuant to Article
VIII or otherwise by the Company, on the one hand, or Purchaser, on the other
hand, and the non-terminating party is not entitled to receive the payments
described in Section 8.2, then the non-terminating party shall be entitled to
pursue any available legal rights to recover Damages.
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ARTICLE IX
INDEMNIFICATION
9.1 General. From and after the Closing, the parties shall indemnify
each other as provided in this Article IX. No specifically enumerated
indemnification obligation with respect to a particular subject matter as set
forth below shall limit or affect the applicability of a more general
indemnification obligation as set forth below with respect to the same subject
matter. For the purposes of this Article IX, each party shall be deemed to have
remade all of its representations, warranties and covenants contained in this
Agreement at the Closing with the same effect as if originally made at the
Closing. No Person which may be subject to an indemnification obligation under
this Article IX shall be entitled to require that any action be brought against
any other Person before action is brought against it hereunder by a Person
seeking indemnification by such Person.
9.2 The Company's Indemnification Obligations. The Company shall
indemnify, save and keep harmless Purchaser and its officers, directors,
employees, agents, representatives, Affiliates, successors and permitted assigns
against and from all Damages sustained or incurred by any of them resulting from
or arising out of or by virtue of any inaccuracy in, breach of or other failure
to comply with any representation, warranty or covenant made by the Company in
this Agreement or any other Company Transaction Document. A claim for
indemnification under this Section 9.2 must be asserted by notice delivered to
the Company within ninety (90) days after the Company delivers to Purchaser the
Company's annual report on Form 10-K as filed with the SEC for the year ended
September 30, 1998 (such ninetieth (90th) day, hereinafter the "Survival Date").
Notwithstanding anything to the contrary in this Agreement, no investigation or
lack of investigation by Purchaser, nor any disclosure in any Schedule hereto or
knowledge of Purchaser as to any indemnifiable matters referred to in this
Section 9.2, shall in any way limit the Company's indemnification obligations
hereunder.
9.3 Purchaser's Indemnification Obligations. Purchaser shall indemnify,
save and keep harmless the Company and its officers, directors, employees,
agents, representatives, Affiliates, successors and permitted assigns against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of any inaccuracy in or breach of any representation
and warranty made by Purchaser to the Company in this Agreement or in any other
Purchaser Transaction Document. A claim for indemnification under this Section
9.3 must be asserted by notice delivered to the party from whom indemnification
is sought no later than the Survival Date.
9.4 Disputes; Mediation.
(a) If the recipient of a notice of a claim for
indemnification under either Section 9.2 or 9.3 desires to dispute such
claim, it shall, within fourteen (14) days after notice of the claim of
loss against it or a notice of dispute is given, give a counter notice,
setting forth the basis for disputing such claim, to Purchaser or the
Company, as the case may be. If no such counter notice is given within
such fourteen (14) day period, or if Purchaser or the Company, as the
case may be, acknowledge liability for indemnification, then such loss
shall be promptly satisfied.
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(b) If the dispute is not promptly resolved, then, within
fourteen (14) days after delivery of the counter notice, or at such
later time as may be mutually agreed upon by the parties, the parties
shall meet in person to discuss and negotiate in good faith a
resolution to the dispute. The meeting shall be conducted in Chicago,
Illinois or such other place as may be mutually agreed upon by the
parties.
(c) If the dispute is not resolved within thirty (30) days
after the first meeting of the parties referred to in Section 9.4 (b),
the parties shall initiate a voluntary, nonbinding mediation conducted
by a mutually agreed upon mediator. If the parties are unable to agree
upon a mediator, they shall request the clerk of the Circuit Court of
Xxxx County, Illinois to appoint a mediator for them. Each of the
parties shall bear their own costs and expenses (including attorneys'
fees) and their proportionate share of any other costs, fees or
expenses associated with this mediation and endeavor in good faith to
resolve their differences. The mediation shall be conducted in Chicago,
Illinois or such other place as may be mutually agreed upon by the
parties.
ARTICLE X
DEFINITIONS
"Affiliate" shall mean, with respect to any person, any other person
that directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such first person. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management or policies, whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
"Agreement Among Stockholders" means that certain Agreement Among
Stockholders, dated as of even date herewith, among Samstock, TNI, the Company
and Xxxxxx Xxxxxx.
"Charter Amendment" means an amendment to the Company's Certificate of
Incorporation, in form and content acceptable to Purchaser, eliminating the
"staggered" Board provisions such that all Board seats shall have
contemporaneous terms.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, $.02 par value per share, of the
Company.
"Competing Equity Deal" means a Competing Transaction consisting of the
sale and issuance by the Company of any capital stock and/or other Equity
Securities to any other Person other than Purchaser, or any merger,
consolidation or other business combination involving the Company or any
Subsidiary and any other Person other than Purchaser.
"Competing Price Differential" means the excess, if any, of (i) the sum
of the aggregate cash and the fair market value of securities and other property
that would be received by the Company and/or its stockholders in the Competing
Equity Deal per share of capital stock and/or other Equity Securities that would
be acquired by the acquiring Person in the Competing Equity Deal,
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over (ii) $4.00.
"Contract" means any contract, agreement, commitment, indenture, lease,
note, bond, mortgage, license, plan, arrangement or understanding, whether
written or oral.
"Damages" means all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any of the foregoing.
"Disclosed Competing Party" means any Person (and any other real party
in interest, including the direct and indirect owners of such Person) identified
by the Company to Purchaser in writing prior to the execution of this Agreement
with respect to whom the Company or its representatives has received any
inquiries or proposals (or desire to make a proposal) or any request for any
information with respect to a Competing Transaction where the terms, if any,
proposed or discussed with respect to any such Competing Transaction are
disclosed to Purchaser in writing together with the identity of said Person.
"Employment, Consulting or Severance Agreements" means all oral and
written (i) agreements for the employment for any period of time whatsoever, or
in regard to the employment, or restricting the employment, of any employee of
the Company or any Subsidiary, (ii) consulting, independent contractor or
similar agreements, and (iii) policies, agreements, arrangements or
understandings relating to the payment or provision of severance, termination or
similar pay or benefits to any present or former employees, officers, directors,
consultants, independent contractors or other agents of the Company or any
Subsidiary (including, without limitation, the Company's Senior Executive
Severance Policy, any successor thereto or any similar plan).
"Equity Securities" means, with respect to the Company or any
Subsidiary, as the case may be, (i) any class or series of common stock,
preferred stock or other capital stock, whether voting or non-voting, including,
without limitation, with respect to the Company, Common Stock and Preferred
Stock, (ii) any other equity securities issued by the Company or such
Subsidiary, as the case may be, whether now or hereafter authorized for issuance
by the Company's or such Subsidiary's, as the case may be, Certificate of
Incorporation, (iii) any debt, hybrid or other securities issued by the Company
or such Subsidiary, as the case may be, which are convertible into, exercisable
for or exchangeable for any other Equity Securities, whether now or hereafter
authorized for issuance by the Company's or such Subsidiary's, as the case may
be, Certificate of Incorporation, (iv) any equity equivalents (including,
without limitation, stock appreciation rights, phantom stock or similar rights),
interests in the ownership or earnings of the Company or such Subsidiary, as the
case may be, or other similar rights, (v) any written or oral rights, options,
warrants, subscriptions, calls, preemptive rights, rescission rights or other
rights to subscribe for, purchase or otherwise acquire any of the foregoing,
(vi) any written or oral obligation of the Company or such Subsidiary, as the
case may be, to issue, deliver or sell, any of the foregoing, (vii) any written
or oral obligations of the Company or such Subsidiary, as the case may be, to
repurchase, redeem or otherwise acquire any Equity Securities, and (viii) any
bonds, debentures, notes or other indebtedness of the Company or such
Subsidiary, as the case may be, having the right to vote (or convertible into,
or exchangeable for securities having
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the right to vote) on any matters on which the stockholders of the Company or
such Subsidiary, as the case may be, may vote.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fully Diluted Common Stock" means the total number of shares of Common
Stock outstanding after taking into account the following: (i) all shares of
Common Stock outstanding (exclusive of the Shares); (ii) all Shares and Warrant
Shares (assuming full exercise of the Warrant and issuance of all Warrant
Shares); (iii) all shares of Common Stock issuable upon conversion, exchange or
other exercise of the Company's Equity Securities outstanding; and (iv)
adjustments needed to account or adjust for stock splits, stock dividends,
recapitalizations, recombinations and similar events.
"Governmental Entity" means any court, administrative agency or
commission or other governmental authority or instrumentality, whether domestic
(federal, state or local) or foreign.
"IRS" means the Internal Revenue Service.
"Independent Directors" means directors of the Company who (i) are not
current or former employees or officers of the Company, (ii) are not holders of
more than 5% of the outstanding Common Stock, and (iii) have no financial
interest in and are not otherwise associated with Purchaser, the Company, any
Subsidiary or any holder of more than 5% of the outstanding Common Stock or any
of their respective Affiliates, excluding however any equity interest of not
more than 2% of any publicly-held entity other than the Company. 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 the associated person might be interested.
"Investment Agreement" means that certain Investment Agreement, dated
as of even date herewith, among Purchaser, the Company and the certain current
stockholders of the Company.
"Lien" means any preemptive or similar rights of any third party,
purchase options, calls, proxies, voting trusts, voting agreements, judgments,
pledges, charges, assessments, levies, escrows, rights of first refusal or first
offer, transfer restrictions, mortgages, indentures, claims, liens, equities,
mortgages, deeds of trust, deeds to secure debt, security interests and other
encumbrances of every kind and nature whatsoever, whether arising by agreement,
operation of law or otherwise, other than any created by Purchaser or the
Purchaser Transaction Documents.
"Material Adverse Effect" means a material adverse effect (or any
development which could reasonably be expected to have a material adverse
effect) on the business, operations, assets, financial or other condition,
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole, or that could reasonably be expected to impair or delay the ability of
the Company to perform its obligations under this Agreement.
"Merchant" means restaurants, hotels, resorts and other participating
merchants who sell Rights to Receive to the Company.
"Parachute Payment" means any Severance Payment constituting a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code and the
regulations issued thereunder.
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"Permit" means any permit, certificate, consent, approval,
authorization, order, license, variance, franchise or other similar indicia of
authority issued or granted by any Governmental Entity.
"Person" or "person" means any individual, corporation, partnership,
limited liability partnership, limited liability company, joint venture,
association, joint stock company, trust, unincorporated organization or
Governmental Entity, or any agency or political subdivision thereof, or any
other entity.
"Preferred Stock" means the preferred stock, $.10 par value per share,
of the Company.
"Proxy Proposals" means the following proposals to be included in the
Proxy Statement for Stockholder Approval: (i) the issuance and sale of the
Shares and the Warrant and the other transactions contemplated by this Agreement
and the other Transaction Documents; (ii) the election to the Board of the
individuals designated in accordance with Section 6.5 hereof; and (iii) the
Charter Amendment.
"Purchaser Group" means (i) any controlled Affiliate of Samstock or
TNI, (ii) any member of Samstock or TNI, and (iii) any Affiliate of any member
of Samstock or TNI under control of, or common control with, such member.
"Rights to Receive" means credits purchased by the Company from
Merchants for food, beverage, lodging and other goods and services.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Documents" means the following:
(i) Purchase Agreement dated as of December 1, 1996, among the
Company, Transmedia Restaurant Company, Inc., a Delaware corporation,
Transmedia Service Company, Inc., a Delaware corporation and TNI
Funding I, Inc., a Delaware special purpose corporation ("TNI");
(ii) Purchase and Servicing Agreement dated as of December 1,
1996, among TNI Funding Company I, L.L.C., a Delaware limited liability
company ("TNI Funding"), TNI, the Company, Xxxxx Xxxxx Associates,
Ltd., a New Jersey corporation and the Chase Manhattan Bank, a New York
banking corporation ("Trustee");
(iii) Security Agreement dated as of December 1, 1996, among
TNI Funding, Trustee, TNI and the Company, (the "Security Agreement");
and
(iv) Indenture dated as of December 1, 1996, between TNI
Funding and Trustee.
"SEC" means the Securities and Exchange Commission.
"Severance Payment" means any termination, severance or similar payment
or benefit, including without limitation any such payment or benefit as would
constitute a Parachute Payment, to which any present or former employee,
officer, director, consultant, independent
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contractor or other agent of the Company or any Subsidiary might be entitled
pursuant to any Employment, Consulting or Severance Agreement or otherwise,
which entitlement results from the Company's execution and delivery of this
Agreement or the other Company Transaction Documents or the consummation of the
transactions contemplated hereby or thereby, whether taken alone or taken
together with any other action or failure to act by Purchaser, the Company or
any Subsidiary or any of their respective officers, directors, employees, agents
or other representatives, other than any action or failure to act by Purchaser
that would constitute a material breach of Article III of the Investment
Agreement.
"Stockholder Approval" means the requisite approval of the Company's
stockholders under the Company's Organizational Documents and the Delaware
General Corporation Law for the Proxy Proposals.
"Subsidiary" means each of (i) Transmedia Restaurant Company Inc., a
Delaware corporation, (ii) TMN International Incorporated, a Delaware
corporation, and (iii) Transmedia Service Company Inc., a Delaware corporation.
"Taxes" means all federal, state, local and foreign taxes, duties,
fees, levies, governmental charges or other assessments of any kind (whether
imposed directly or through withholding), including any interest, additions to
tax or penalties applicable thereto.
"Tax Return" means all federal, state, local and foreign tax returns,
declarations, statements, reports, schedules, forms and information returns and
any amendment to any of the foregoing.
"Termination Fee" means (i) $1,000,000 if there is a Competing
Transaction which is not a Competing Equity Deal, or (ii) if there is a
Competing Transaction which is a Competing Equity Deal, the greater of (A)
$1,000,000, or (B) fifty percent (50%) of the product of the Competing Price
Differential multiplied by the number 2,500,000.
"Transaction Document" means any Company Transaction Document and any
Purchaser Transaction Document.
"Undisclosed Competing Party" means any Person (and any other real
party in interest, including the direct and indirect owners of such Person) not
identified by the Company to Purchaser in writing prior to the execution of this
Agreement with respect to whom the Company or its representatives has received
any inquiries or proposals (or desire to make a proposal) or any request for any
information with respect to a Competing Transaction at any time during the nine
(9) month period immediately prior to the execution of this Agreement.
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ARTICLE XI
MISCELLANEOUS
11.1 Restrictive Legend. Purchaser agrees to the placing on the
certificates representing the Shares or the Warrant Shares of a legend, in
substantially the following form:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws and may not be sold, transferred, assigned,
offered, pledged or otherwise disposed of unless (i) there is an
effective registration statement under such Act and such laws covering
such securities or (ii) such sale, transfer, assignment, offer, pledge
or other disposition is exempt from the registration and prospectus
delivery requirements of such Act and such laws. The securities
evidenced by this certificate are subject to the restrictions on
transfer contained in the Investment Agreement dated as of November 6,
1997, and the Agreement Among Stockholders dated as of November 6,
1997, in each case, to which the Company is a party, as amended,
supplemented or otherwise modified from time to time, and may not be
transferred except in compliance therewith."
11.2 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 Purchaser, Samstock or TNI:
x/x Xxxxxxxx, X.X.X.
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
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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
11.3 Expenses. Except as otherwise provided in this Agreement, the
Company shall bear all fees and expenses (i) incurred by the Company or any
Subsidiary in connection with, relating to or arising out of the execution,
delivery and performance of this Agreement and the other Company Transaction
Documents and the consummation of the transaction contemplated hereby and
thereby, including attorneys', accountants' and other professional fees and
expenses, or (ii) payable to Compass Partners International, L.L.C. Purchaser
shall bear all fees and expenses incurred by Purchaser in connection with,
relating to or arising out of the execution, delivery and performance of this
Agreement and the other Purchaser Transaction Documents and the consummation of
the transaction contemplated hereby and thereby, including attorneys',
accountants' and other professional fees and expenses.
11.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible
11.5 Entire Agreement; Amendment; Waiver; Assignment; Nature of
Obligations. This Agreement, together with the other Transaction Documents,
constitutes the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersedes all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and thereof. No amendment, supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision of this
Agreement, whether or not similar, nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided. This Agreement shall not be assigned
by operation of law or otherwise; provided, however, that, notwithstanding the
foregoing, Samstock and/or TNI may assign its or their rights and obligations
hereunder to any member of the Purchaser Group; provided, further, however, that
no such
-42-
assignment shall relieve the assigning party of any of its liabilities or
obligations under this Agreement. Any attempted assignment which does not comply
with the provisions of this Section 11.5 shall be null and void ab initio. All
of the obligations of Samstock and/or TNI under this Agreement shall be joint
and several.
11.6 Parties in Interest. Subject to the provisions regarding
assignment in Section 11.5 above, this Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
11.7 Publicity. Neither the Company nor Purchaser will make or issue,
or cause to be made or issued, any announcement or written statements concerning
the Transaction Documents or the transactions contemplated thereby for
dissemination to the general public without the prior written consent of the
Company or Purchaser, as appropriate, which consent shall not be unreasonably
withheld. This provision will not apply to any announcement or written statement
required to be made by law or the regulations of the SEC or the New York Stock
Exchange, except that the party required to make such announcement will,
whenever practicable, consult with the other parties hereto concerning the
timing and content of such announcement before such announcement is made.
11.8 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.
11.9 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.10 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular,
and all words in any gender (including neutral gender) shall extend to and
include all genders.
11.11 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
11.12 Jurisdiction and Service of Process. THE COMPANY AND PURCHASER
HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE STATE OF DELAWARE AND IRREVOCABLY AGREE THAT, SUBJECT TO THE OTHER
PROVISIONS OF THIS AGREEMENT, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT WHICH MAY BE LITIGATED SHALL BE LITIGATED IN SUCH
COURTS. EACH OF THE COMPANY AND PURCHASER ACCEPTS FOR SUCH PARTY AND IN
CONNECTION WITH SUCH PARTY'S PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF
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THE COMPANY AND PURCHASER AGREES TO ACCEPT SERVICE OF ALL PROCESS BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, IN ANY SUCH PROCEEDINGS IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH SUCH PARTY TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. IF ANY AGENT APPOINTED BY THE COMPANY, OR
PURCHASER REFUSES TO ACCEPT SERVICE, SUCH PARTY HEREBY AGREES THAT SERVICE UPON
SUCH PARTY BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE COMPANY OR PURCHASER TO BRING PROCEEDINGS AGAINST THE
COMPANY OR PURCHASER IN THE COURTS OF ANY OTHER JURISDICTION.
11.13 Trial. EACH OF THE COMPANY AND PURCHASER HEREBY WAIVES SUCH
PARTY'S RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO
RELATING TO THE SUBJECT MATTER HEREOF. EACH OF THE COMPANY AND PURCHASER ALSO
WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS
WAIVER, BE REQUIRED OF ANY PARTY TO THIS AGREEMENT WITH RESPECT TO ANY ACTION
COMMENCED BY ONE OF THEM AGAINST THE OTHER OF THEM. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE COMPANY AND PURCHASER
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH OF THE COMPANY AND PURCHASER FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH SUCH PARTY'S LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES SUCH PARTY'S JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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IN WITNESS WHEREOF, Purchaser and the Company have executed this Stock
Purchase and Sale Agreement as of the date first above written.
PURCHASER:
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
-45-
EXHIBIT A
TRANSMEDIA NETWORK INC.
WARRANT TO PURCHASE 1,200,000 SHARES OF COMMON STOCK
Void after _____ , 2003
THIS CERTIFIES THAT, for value received, [Samstock, L.L.C., a Delaware
limited liability company] [Transmedia Investors, L.L.C., a Delaware limited
liability company] (the "Holder"), is entitled to subscribe for and purchase
from Transmedia Network Inc., a Delaware corporation (the "Company"), an
aggregate of 1,200,000 shares (as adjusted pursuant to Section 3 hereof) of
fully paid and nonassessable Common Stock (the "Shares") of the Company, at the
price per share set forth below (the "Exercise Price") (as adjusted pursuant to
Section 3 hereof), and subject to the provisions and upon the terms and
conditions hereinafter set forth.
Shares Exercise Price Per Share
------ ------------------------
400,000 $6.00
400,000 $7.00
400,000 $8.00
1. Exercise; Payment.
(a) Time of Exercise; Expiration. This Warrant is immediately
exercisable. This Warrant shall expire at, and shall no longer be exercisable
after, 5:00 p.m., Chicago local time, on , 2003.
(b) Method of Exercise.
(i) Cash Exercise. The purchase rights represented by
this Warrant may be exercised by the Holder, at any time, in whole, or from time
to time, in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit 1 duly executed) at the principal office of the
Company, and by the payment to the Company, by certified, cashier's or other
check acceptable to the Company, of an amount equal to the aggregate Exercise
Price of the Shares being purchased.
(ii) Net Issue Exercise. In lieu of exercising this
Warrant, the Holder may elect to receive Shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the Holder a number of shares of the
Company's Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares to be issued to the Holder.
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Y = the number of Shares purchasable under this Warrant.
A = the fair market value of one share of the Company's
Common Stock.
B = the Exercise Price (as adjusted to the date of such
calculation).
(iii) Fair Market Value. For purposes of this
Section 1, the fair market value of the Company's Common Stock shall mean:
A. The average closing price of the Company's Common
Stock on the New York Stock Exchange or in the event the
Company's Common Stock is not then traded on the New York
Stock Exchange the average closing price quoted on any
exchange on which the Common Stock is listed, as published in
the Mid-Western Edition of the Wall Street Journal for the ten
consecutive trading days prior to the date of determination of
fair market value.
B. If the Company's Common Stock is not then traded
on the New York Stock Exchange or on another exchange, the per
share fair market value of the Common Stock shall be the fair
market value price per share as determined in good faith by
the Company's Board of Directors.
(c) Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of Common Stock
so purchased shall be delivered to the Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant of
identical terms and provisions as those hereof, representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be exercised,
the Company shall at all times have authorized and reserved for issuance
sufficient shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
3. Adjustment of Exercise Price and Number of Shares. The number and
kind of Shares purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification. In case of any reclassification or
change of outstanding securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
the Company shall, as condition precedent to such transaction, execute a new
Warrant providing that the Holder shall have the right to exercise such new
Warrant and upon such exercise to receive, in lieu of each share of stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification or change by a holder of one share of stock.
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Such new Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
3. The provisions of this Section 3(a) shall similarly apply to successive
reclassifications or changes.
(b) Subdivision or Combination of Warrant Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its stock, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to stock
payable in, or make any other distribution with respect to stock (except any
distribution specifically provided for in the foregoing Section 3(a) and 3(b))
of stock, then the Exercise Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution,
to that price determined by multiplying the Exercise Price in effect immediately
prior to such date of determination by a fraction (i) the numerator of which
shall be the total number of shares of stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which shall be the
total number of shares of stock outstanding immediately after such dividend or
distribution.
(d) Adjustment of Number of Warrant Shares. Upon each
adjustment in the Exercise Price, the number of shares of stock purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained
by multiplying the number of Shares purchasable immediately prior to such
adjustment in the Exercise Price by a fraction, the numerator of which shall be
the Exercise Price immediately prior to such adjustment and the denominator of
which shall be the Exercise Price immediately thereafter.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice by first class mail to the holder of
this Warrant setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the number of Shares which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
5. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of such fractional
shares the Company shall make a cash payment therefor based upon the Exercise
Price then in effect.
6. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants will represent such
portion of such rights as is designated by the Holder at the time of such
surrender. All Warrants representing portions of the rights hereunder are
referred to herein as the "Warrant."
7. Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Holder is deemed to be reasonably satisfactory) of
the ownership and the loss, theft, destruction or mutilation of this Warrant,
and in the case of any such loss, theft or
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destruction, upon the receipt of indemnity reasonably satisfactory to the
Company, or, in the case of any such mutilation upon surrender of such Warrant,
the Company will (at its expense, except for the cost of any lost security
indemnity bond required which shall be paid for by the Holder) execute and
deliver in lieu of such Warrant a new Warrant of like kind representing the same
rights represented by such lost, stolen, destroyed or mutilated Warrant and
dated the date of such lost, stolen, destroyed or mutilated Warrant.
8. Restrictive Legend. The Shares issuable upon exercise of this
Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws and may not be sold, transferred, assigned,
offered, pledged or otherwise disposed of unless (i) there is an
effective registration statement under such Act and such laws covering
such securities or (ii) such sale, transfer, assignment, offer, pledge
or other disposition is exempt from the registration and prospectus
delivery requirements of such Act and such laws. The securities
evidenced by this certificate are subject to the restrictions on
transfer contained in the Investment Agreement dated as of November 6,
1997, and the Agreement Among Stockholders dated as of November 6,
1997, in each case, to which the Company is a party, as amended,
supplemented or otherwise modified from time to time, and may not be
transferred except in compliance therewith."
9. Restrictions on Transfer. Neither this Warrant, nor any interest
herein, may be transferred to any party without the Company's prior written
consent; provided, however, that this Warrant may be transferred to any member
of the Xxxx Group (as defined in that certain Investment Agreement, dated as of
November 6, 1997, among the Company, Samstock, L.L.C., and Transmedia Investors,
L.L.C.) at any time, in whole, or from time to time, in part, without the
Company's consent, upon delivery to the Company of the Notice of Transfer in the
form of Exhibit 2 hereto.
10. Rights of Shareholders. No holder of this Warrant shall be
entitled, as a Warrant holder, to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
11. Notices, Etc. All notices and other communications between the
Company and the
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Holder shall be mailed by first class registered or certified mail, postage
prepaid, (i) if to the Company, at the Company's executive offices, and (ii) if
to the Holder, at such address as may have been furnished to the Company in
writing by the Holder.
12. Governing Law, Headings. This Warrant is being delivered in the
State of Delaware and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.
Issued this ____ day of _____ 1998.
TRANSMEDIA NETWORK INC.
By:
Its:
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EXHIBIT 1
---------
NOTICE OF EXERCISE
TO: TRANSMEDIA NETWORK INC.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of TRANSMEDIA NETWORK INC. pursuant to the terms of the attached
Warrant.
2. Method of Exercise (Please xxxx the applicable blank):
___ The undersigned elects to exercise the attached
Warrant by means of a cash payment, and tenders
herewith payment in full for the purchase price of
the shares being purchased.
___ The undersigned elects to exercise the attached
Warrant by means of the net exercise provisions of
Section 1(b)(ii) of the Warrant.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
(Signature)
Title:
(Date)
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EXHIBIT 2
---------
NOTICE OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the right represented by the attached
Warrant to purchase _______* shares of Common Stock of TRANSMEDIA NETWORK INC.,
to which the attached Warrant relates, and appoints ________________
Attorney-in-Fact to transfer such right on the books of TRANSMEDIA NETWORK INC.,
with full power of substitution in the premises.
Dated:
By:
(Address)
-------------------
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
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EXHIBIT B
---------
OPINION OF COUNSEL FOR PURCHASER
--------------------------------
(1) Each of Samstock and TNI is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
(2) Each of Samstock and TNI has the limited liability company power
and authority to execute and deliver the Purchase Agreement, the Investment
Agreement, the Agreement Among Stockholders and all other documents, instruments
and other writings to be executed and/or delivered by or on behalf of Samstock
and/or TNI to the Company or any of its representatives in connection with the
transactions contemplated by thereby (collectively, "Purchaser Transaction
Documents"), to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
each of the Purchaser Transaction Documents by Samstock and/or TNI and the
consummation by Samstock and/or TNI of the transactions contemplated thereby
have been duly authorized by the respective managing members of Samstock and
TNI, and no other limited liability company proceedings on the part of Samstock
or TNI are necessary to authorize the execution, delivery and performance of the
Purchaser Transaction Documents or the transactions contemplated thereby. Each
of the Purchaser Transaction Documents has been duly executed and delivered by
Samstock and/or TNI, as the case may be, and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Samstock and/or TNI, as the case may be, enforceable against
Samstock and/or TNI, as the case may be, in accordance with its terms, except as
such enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(ii) general principles of equity (whether applied in a proceeding at law or in
equity).
(3) The execution, delivery and performance of the Purchaser
Transaction Documents by Samstock or TNI, as the case may be, does not and will
not: (i) conflict with or violate the organizational documents of Samstock or
TNI, as the case may be; (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Samstock or TNI, as the case
may be, or by which any of its properties are bound or affected; (iii) require
any consent, approval, authorization or permit of, action by, filing with or
notification to, any Governmental Entity (other than any filing required under
Section 13(a) or (d), 14, 15(d) or 16(a) of the Exchange Act); or (iv) to our
knowledge after due inquiry, result in any breach or violation of or constitute
a default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the property or assets of Samstock or TNI, as
the case may be, pursuant to, any Contract, Permit or other instrument or
obligation to which Samstock or TNI, as the case may be, is a party or by which
Samstock or TNI, as the case may be, or any of its properties are bound or
affected, except, in the case of clauses (ii), (iii) and (iv), for any such
conflicts, violations, breaches, defaults or other occurrences which could not
individually or in the aggregate, reasonably be expected to materially impair
the ability of
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Samstock or TNI, as the case may be, to perform its obligations under the
Purchase Agreement.
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EXHIBIT C
---------
OPINION OF COMPANY COUNSEL
(1) Each of the Company and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to carry on its business as it is now being conducted. Each of the
Company and each Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
(including any foreign country) set forth on Schedule I attached hereto.
(2) The certificates of incorporation of the Company and each
Subsidiary and the bylaws of the Company and each Subsidiary as currently in
effect (collectively, the "Organizational Documents") are in full force and
effect, and, to our knowledge after due inquiry, no other organizational
documents are applicable to or binding upon the Company or any Subsidiary.
(3) Upon payment of the Purchase Price, the Shares shall be validly
issued, fully paid and nonassessable. Upon exercise of the Warrant, in whole or,
from time to time, in part, and payment of the exercise price therefor, all in
accordance with the terms of the Warrant, all Warrant Shares issuable upon such
exercise shall be validly issued, fully paid and nonassessable.
(4) The Company has all necessary corporate power and authority to
execute and deliver the Purchase Agreement, the Investment Agreement, the
Agreement Among Stockholders, the Warrant and all other documents, instruments
and other writings to be executed and/or delivered by or on behalf of the
Company to Purchaser or any of its representatives in connection with the
transactions contemplated hereby or thereby (collectively, the "Company
Transaction Documents"), to perform its obligations thereunder and to consummate
the transactions contemplated thereby. The execution, delivery and performance
of each of the Company Transaction Documents by the Company, and the
consummation by the Company of the transactions contemplated thereby, have been
duly and validly authorized by the Board of Directors of the Company (the
"Board"), and no other corporate proceedings on the part of the Company are
necessary to authorize the execution, delivery and performance of the Company
Transaction Documents or the consummation of the transactions contemplated
thereby, other than Stockholder Approval. The Board has approved each of the
Company Transaction Documents and the transactions contemplated hereby and
thereby so as to render inapplicable to such transactions, including, without
limitation, the issuance to Purchaser of the Shares, the Warrant and Warrant
Shares, the restrictions contained in Article Seventh of the Certificate of
Incorporation of the Company, and the restrictions contained in Section 203 of
the Delaware General Corporation Law. Each of the Company Transaction Documents
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery hereof and thereof by Purchaser,
each constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(ii) general principles of equity (whether applied in a proceeding at law or in
equity).
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(5) The execution, delivery and performance of the Company Transaction
Documents by the Company do not and will not: (a) conflict with or violate the
Organizational Documents of the Company or any Subsidiary; (b) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company or any Subsidiary or by which its or any of their respective properties
are bound or affected; (c) require any consent, approval, authorization or
permit of, action by, filing with or notification to, any Governmental Entity;
or (d) to our knowledge after due inquiry, result in any breach or violation of
or constitute a default (or an event which with notice or lapse of time or both
could become a default) or result in the loss by the Company or any Subsidiary
of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets of the Company or any Subsidiary pursuant to,
any Contract or Permit identified on any schedule to the Purchase Agreement.
(6) The affirmative vote of the holders of no more than a majority of
the outstanding shares of Common Stock is the only vote of the holders of any
class or series of capital stock or other Equity Securities of the Company
necessary to approve the Proxy Proposals.
(7) No "fair price", "moratorium", "control share acquisition" or other
similar anti-takeover statute or regulation enacted under state or federal laws
or applicable stock exchange rules or regulations, including, without
limitation, Section 203 of the Delaware General Corporation Law, applicable to
the Company or any Subsidiary is applicable to the transactions contemplated by
the Purchase Agreement or any other Company Transaction Document, taken
individually or in the aggregate.
(8) Upon the filing of the Charter Amendment with the Delaware
Secretary of State, the Company's Certificate of Incorporation shall be in full
force and effect as amended as contemplated by the Charter Amendment, and no
further action by or on behalf of the Company shall be required therefor.
-------------
NOTE: Company counsel opinion will be limited to Federal law, the law of New
York State and Delaware General Corporation Law.
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