STANDBY PURCHASE AGREEMENT
This Standby Purchase Agreement (as the same may be amended
or modified from time to time, the "Agreement"), made and entered into as of
June 30, 1999 by and between Transmedia Network Inc., a Delaware corporation
(the "Company"), and Samstock, L.L.C., a Delaware limited liability company
("Samstock"; and in its capacity as standby purchaser, the "Standby
Purchaser").
WITNESSETH:
WHEREAS, under the terms of that certain Credit Agreement
dated as of June 30, 1999 by and between the Company and GAMI Investments,
Inc., a Delaware corporation and an affiliate of the Standby Purchaser
("Lender") (the "Loan Agreement"), Lender has loaned to the Company the
aggregate principal amount of $10 million (the "Loan");
WHEREAS, in accordance with the terms of the Loan Agreement,
the Company is implementing a rights offering (the "Rights Offering") pursuant
to which it is anticipated that the Company will distribute to stockholders of
record of the Company ("Stockholders") on a record date to be determined,
rights (each, a "Right" and collectively, the "Rights") to subscribe for
shares of Series A senior convertible redeemable preferred stock of the
Company (the "Series A Preferred Shares"), at a subscription price per share
to be determined (which shall represent approximately 70% of the market price
of the Common Stock as of the pricing date calculated as described in the
registration statement covering the Rights Offering) (the "Subscription
Price"), not to exceed $10 million in the aggregate;
WHEREAS, in order to help assure the success of the Rights
Offering, and the receipt by the Company of sufficient proceeds therefrom to
repay all outstanding amounts under the Loan upon its maturity, Samstock is
willing to, and hereby does, agree to serve as Standby Purchaser for a
specified number of Series A Preferred Shares available for purchase upon the
expiration of unexercised Rights, and the Company has agreed with Samstock to
sell such securities to the Standby Purchaser, all as more particularly set
forth herein.
NOW, THEREFORE, in consideration of the mutual agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Standby
Purchaser do hereby agree as follows:
Section 1. Standby Purchase Commitment.
1.1 The Standby Purchaser agrees that it will exercise in
full the basic subscription privileges offered to it in connection with the
Rights Offering and, to the extent that
EGI-Transmedia Investors, L.L.C., a Delaware limited liability company, or its
successors or distributees ("TNI") elects or elect not to exercise its or
their basic subscription privileges in full, to purchase such additional
number of Series A Preferred Shares that TNI or its successors or distributees
would have been entitled to purchase if it or they had exercised its or their
basic subscription privileges in full. Subject to the terms and conditions set
forth in this Agreement, the Company agrees to issue and sell to the Standby
Purchaser, and the Standby Purchaser agrees to purchase from the Company, such
number of Series A Preferred Shares not (i) subscribed for by it or TNI (or
its successors or distributees) pursuant to their basic subscription
privileges or by it pursuant to the preceding sentence or (ii) subscribed for
by other Stockholders of the Company (the "Other Stockholders") in the Rights
Offering, including pursuant to any oversubscription privilege, as may be
necessary so that all of the Series A Preferred Shares offered for sale in the
Rights Offering will be sold in the Rights Offering (the "Standby Shares").
1.2 The purchase price of the Standby Shares sold pursuant
to this Agreement to the Standby Purchaser shall be at the price and terms
offered to the Other Stockholders pursuant to the Rights Offering; provided
that the aggregate gross purchase price for all Series A Preferred Shares
offered and sold to all Stockholders, including all Standby Shares offered and
sold to the Standby Purchaser, shall not exceed $10 million.
1.3 In consideration of the Standby Purchaser's obligations
under this Agreement and Lender's obligations under the Loan Agreement, the
Company agrees to issue to the Standby Purchaser (or as the Standby Purchaser
shall direct) a warrant (the "Warrant"), substantially in the form of Exhibit
A hereto, to purchase an aggregate of 1,000,000 shares (the "Warrant Shares")
of the Company's common stock, $.02 par value per share (the "Common Stock").
The Warrant shall be issued and delivered to the Standby Purchaser at the
Closing (as hereinafter defined), upon repayment to the Company of the cash
fee (or at Lender's option, upon offset of the amount of said cash fee against
obligations owing to Lender under the Loan Agreement) previously paid to
Lender or a portion thereof, to the extent required by, and otherwise in
accordance with, Section 2.10 of the Loan Agreement.
Section 2. Determination of Standby Shares.
2.1 As soon as practicable following the expiration of the
exercise period of the Rights (as the same may be extended) and promptly
following its determination of the number of Series A Preferred Shares validly
subscribed for through the exercise of the Rights in accordance with the terms
of the Rights Offering (including the exercise of any oversubscription options
or privileges), the Company shall notify the Standby Purchaser in writing of
the number of Standby Shares, if any, to be purchased by it pursuant to
Section 1.
Section 3. Closing.
3.1 The delivery of and payment for the Standby Shares shall
take place at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at
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10:00 a.m., New York City time, on the date of the sale of the Series A
Preferred Shares to the subscribing Stockholders in the Rights Offering (such
time and date being referred to as the "Closing Time," the date of the Closing
Time being referred to as the "Closing Date" and the consummation of the
transaction being referred to as the "Closing").
3.2 At the Closing:
(a) the Company shall deliver to the Standby Purchaser (i)
stock certificates representing the Standby Shares to be purchased by
the Standby Purchaser hereunder, registered in the name of the
Standby Purchaser or such of its nominees as it may specify at least
three business days prior to the Closing Date, for the Standby
Purchaser's account, and (ii) the Warrant, in each case free and
clear of all liens, claims or encumbrances of any kind, and
(b) the Standby Purchaser shall deliver the Subscription
Price for each Standby Share purchased by it in immediately available
funds in the form of a wire transfer to an account designated by the
Company at least one business day prior to the Closing Date.
Section 4. Representations and Warranties.
4.1 The Company represents and warrants to, and covenants with, the
Standby Purchaser, as of the date hereof and again as of the Closing Date, as
follows:
(a) As soon as practicable, the Company shall file with the
Securities and Exchange Commission (the "Commission") a registration
statement on Form S-2 to register under the Securities Act of 1933
(the Securities Act") such number of Rights, Series A Preferred
Shares and shares of Common Stock into which the Series A Preferred
Shares may, from time to time, be convertible in relation to the
Rights Offering such that the gross proceeds thereof, assuming full
subscription, shall be $10 million. The Company will file such
amendments to the registration statement as may be necessary to
permit the registration statement, as so amended, to become
effective. Such registration statement as amended at the time it
becomes effective (the "Effective Date"), including all exhibits and
all documents incorporated therein by reference, is herein called the
"Registration Statement." The prospectus first filed with the
Commission pursuant to Rule 424(b) under the Securities Act of 1933
(the "Securities Act") is herein called the "Prospectus."
(b) On the Effective Date and at the time when the
Prospectus is first filed with the Commission pursuant to Rule
424(b), the Registration Statement and the Prospectus will comply in
all material respects with the provisions of the Securities Act and
the rules and regulations promulgated thereunder, and on the
Effective Date neither the Registration Statement nor the Prospectus
will contain any untrue statement of a
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material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; except
that the foregoing does not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon
information furnished by the Standby Purchaser to the Company
expressly for use therein.
(c) The documents incorporated by reference in the
Prospectus (the "Incorporated Documents"), at the time they were
filed with the Commission, complied as to form in all material
respects with the requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and the rules and regulations of the Commission
promulgated thereunder, and, when read together with the other
information in the Prospectus, will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company
included in the Incorporated Documents 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 be indicated in notes thereto) and fairly
present the consolidated financial position of the Company and its
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 Incorporated Documents,
neither the Company nor any of its subsidiaries has any obligation or
liability of any nature whatsoever (direct or indirect, matured or
unmatured, absolute, accrued, contingent or otherwise) either (1)
required by generally accepted accounting principles to be set forth
on a consolidated balance sheet of the Company and its subsidiaries
or in the notes thereto or (ii) which, individually or in the
aggregate, could reasonably be expected to have 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 its subsidiaries, taken as a whole, 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 March 31, 1999, 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 its subsidiaries taken as a whole.
(d) As soon as practicable, the Company shall file with the
Commission a Proxy Statement in preliminary form relating to a
special meeting of stockholders (the
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"Stockholders Meeting") to be duly called and convened for the
purpose of considering and taking action upon the Proxy Proposals
(as defined in the Registration Statement). The Company will use its
reasonable efforts to cause the Proxy Statement to be mailed to
stockholders as promptly as practicable after the Registration
Statement is declared effective under the Securities Act. At the
time it is first mailed to stockholders, the Proxy Statement will
comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and will not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; except that the foregoing does not apply to statements
or omissions in the Proxy Statement made in reliance upon
information furnished by the Standby Purchaser to the Company
expressly for use therein.
(e) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by the
Company of this Agreement (including the issuance of the Warrant)
have been duly and validly authorized by the Board of Directors of
the Company (the "Board") and have been approved by a majority of the
Disinterested Directors of the Company (within the meaning of Section
3.1 of the Amended and Restated Investment Agreement dated March 3,
1998 by and among the Company, Samstock, TNI and Halmostock), and no
other corporate proceedings on the part of the Company are necessary
to authorize the execution, delivery and performance by the Company
of this Agreement, other than Stockholder Approval (as defined
below). The Board has approved this Agreement and the consummation of
the transactions contemplated hereby, including, without limitation,
the issuance to the Standby Purchaser of the Standby Shares, the
Warrant and the Warrant Shares, so as to render inapplicable thereto
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.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and is the valid and binding obligation of
the Company and is enforceable against the Company by the Standby
Purchaser in accordance with its terms.
(g) The Rights, the Series A Preferred Shares offered by the
Company to the Stockholders upon exercise of Rights, and the Standby
Shares to be sold by the Company under this Agreement have been duly
authorized by the Company and will be included in the Registration
Statement. Upon the approval of the Proxy Proposals by the requisite
vote of the stockholders of the Company at the Stockholders Meeting
in accordance with the Delaware General Corporation Law, the
applicable rules of the New York Stock Exchange and the provisions of
the Company's Certificate of Incorporation and By-laws (the
"Stockholder Approval") and the filing by the Company of the
Certificate of
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Amendment, in substantially the form attached hereto as Exhibit B, and
the Certificate of Designations, in substantially the form attached
hereto as Exhibit C, with the Secretary of State of the State of
Delaware (together, the "Delaware Filings"), the Standby Shares and any
shares of Common Stock into which the Standby Shares may be convertible
shall have been reserved for issuance by the Company and the Standby
Shares, when issued and delivered by the Company against payment
therefor as provided in this Agreement, will be validly issued, fully
paid and nonassessable, and the Standby Purchaser shall acquire good
and valid title to the Standby Shares (and any shares of Common Stock
into which they may be convertible) and 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, the Standby Purchaser will
acquire good and valid title to the Warrant Shares, free and clear of
all Liens, and such Warrant Shares shall be validly issued, fully paid
and nonassessable. For purposes of this paragraph (g), "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 the Standby Purchaser or pursuant to this Agreement. No
vote of the holders of any class or series of capital stock or other
securities of the Company or any subsidiary of the Company is required
to approve or effect this Agreement or any transaction contemplated
hereby, including, without limitation, under applicable law, applicable
stock exchange rules or regulations, the certificate or articles of
incorporation (including, without limitation, Article Seventh of the
Company's Certificate of Incorporation) or by-laws of the Company or
any subsidiary of the Company or any agreement of any kind applicable
to the Company, any subsidiary of the Company, or their assets, except
that the Proxy Proposals require Stockholder Approval. The affirmative
vote of the holders of no more than a majority of the outstanding
shares of the Company's Common Stock is the only vote of the holders of
any class or series of capital stock or other securities of the Company
or any subsidiary of the Company necessary to obtain Stockholder
Approval of the Proxy Proposals.
(h) The execution, delivery and performance of this
Agreement will not (i) conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets
of the Company or any of its subsidiaries pursuant to the terms of,
or constitute a default under, any material agreement, indenture or
instrument to which the Company or any of its subsidiaries is a
party, or (ii) upon receipt of the Stockholder Approval and making
the Delaware Filings, result in a violation of the Certificate of
Incorporation or By-laws of the Company or any of its subsidiaries or
any order, rule or regulation of any court or governmental agency
having jurisdiction over the Company or any of its subsidiaries or
any of their respective properties. Except for the Delaware Filings
and as required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 0000
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(xxx "XXX Xxx"), the Securities Act, the Securities Exchange Act of
1934 (the "Exchange Act"), and applicable state securities law, no
consent, authorization or order of, or filing or registration with, any
court or governmental agency is required for the execution, delivery
and performance of this Agreement.
4.2 The Standby Purchaser represents and warrants to, and covenants
with, the Company as follows:
(a) The Standby Purchaser shall receive from the Company and
carefully review a copy of the registration statement, the
Incorporated Documents, and the Proxy Statement, in the form in which
they are filed with the Commission and the information relating to
the Standby Purchaser contained therein furnished by the Standby
Purchaser to the Company expressly for use therein shall not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(b) The Standby Purchaser understands and acknowledges that
neither the Warrant nor the Warrant Shares have been registered under
Section 5 of the Securities Act and may not be sold or otherwise
transferred unless so registered or pursuant to a valid exemption
therefrom. The Standby Purchaser further agrees that it will not
sell, transfer, hypothecate or dispose of (i) any Series A Preferred
Shares, (ii) any shares of Common Stock into which the Series A
Preferred Shares are convertible, (iii) the Warrant, or (iv) any
Warrant Shares except in compliance with the Securities Act and
applicable state securities laws.
(c) The Standby Purchaser has all necessary corporate power
and authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution, delivery and performance by
the Standby Purchaser of this Agreement have been duly and validly
authorized by the Managing Member of the Standby Purchaser, and no
other proceedings on the part of the Standby Purchaser are necessary
to authorize the execution, delivery and performance by the Standby
Purchaser of this Agreement. The Managing Member has approved this
Agreement and the consummation of the transactions contemplated
hereby, including, without limitation, the purchase by the Standby
Purchaser of the Standby Shares.
(d) This Agreement has been duly authorized, executed and
delivered by the Standby Purchaser and is the valid and binding
obligation of the Standby Purchaser and is enforceable against the
Standby Purchaser by the Company in accordance with its terms.
(e) On the Closing Date, the Standby Purchaser will have
sufficient cash funds on hand to purchase the Standby Shares on the
terms and conditions contained in this Agreement.
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4.3 The Standby Purchaser and the Company shall file or cause to be
filed promptly following their mutual determination to do so with the Federal
Trade Commission (the "FTC") and the Department of Justice (the "DOJ") all
requisite notification and report forms and documentary materials which comply
with the provisions of the HSR Act and the rules thereunder, and will
cooperate and coordinate with each other to file promptly any additional
information requested as soon as practicable after receipt of a request from
the FTC or the DOJ. The Standby Purchaser and the Company shall use their
respective best efforts to obtain early termination of the applicable waiting
period under the HSR Act and to overcome any objection made by either the FTC
or the DOJ in connection therewith. All of the fees and costs of filing any
such notification and report forms by either the Standby Purchaser or the
Company (including the expenses of legal, financial or other professionals
engaged to provide services in respect of such filing) and related materials
incurred by either the Standby Purchaser or the Company shall be borne or
reimbursed by the Company.
Section 5. Conditions to Closing.
5.1 The obligation of the Standby Purchaser to purchase the
Standby Shares as set forth in this Agreement is subject to the following
conditions:
(a) The Registration Statement shall have been declared
effective by the Commission. No order suspending the effectiveness of
the Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the Commission
and any requests for additional information by the Commission (to be
included in the Registration Statement, in the Prospectus or
otherwise) shall have been complied with to the reasonable
satisfaction of the Standby Purchaser.
(b) The Standby Shares shall have been approved for listing on
the New York Stock Exchange.
(c) The Stockholder Approval shall have been obtained.
(d) Any required waiting period applicable to the
transactions contemplated by this Agreement under the HSR Act shall
have terminated or expired.
(e) The representations and warranties of the Company
contained herein shall be true and correct in all material respects
as of the Closing Date, the Company shall have performed all
covenants and agreements herein required to be performed on its part
at or prior to the Closing Date and the Standby Purchaser shall
receive a certificate to such effect dated the Closing Date and
executed by either the President or a Vice President of the Company.
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(f) The Warrant shall have been issued and delivered to the
Standby Purchaser (or its designees) concurrently with the Closing;
(g) Purchaser shall have received an opinion of Xxxxxx,
Xxxxx & Bockius LLP, counsel to the Company, in substantially the
form attached hereto as Exhibit D .
(h) In the event that Samstock is entitled to designate an
additional director to the Board pursuant to Section 4.6 of the
Second Amended and Restated Investment Agreement, and shall have so
designated an individual to serve as such additional director, such
individual shall have been elected to the Board to serve commencing
upon the Closing.
(i) Concurrently with the Closing, the gross proceeds of the
Rights Offering shall have been paid to Lender against the Company's
obligations under the Loan Agreement (net of amounts owing to the
Company in accordance with Section 2.10 of the Loan Agreement).
5.2 The obligation of the Company to issue and sell the
Standby Shares as set forth in this Agreement is subject to the following
conditions:
(a) The Company shall not have withdrawn or canceled the
Rights Offering prior to the Expiration Time (as defined in the
Registration Statement).
(b) The Standby Shares shall have been approved for listing
on the New York Stock Exchange.
(c) The Stockholder Approval shall have been obtained.
(d) Any required waiting period applicable to the
transactions contemplated by this Agreement under the HSR Act shall
have terminated or expired.
(e) The representations and warranties of the Standby
Purchaser contained herein shall be true and correct in all material
respects as of the Closing Date and the Standby Purchaser shall have
performed all covenants and agreements herein required to be
performed on its part at or prior to the Closing Date.
Section 6. Indemnification.
6.1 The Company agrees to indemnify and hold the Standby
Purchaser, its affiliates, and their respective officers, directors,
employees, agents, representatives, and successors (each, a "Standby Purchaser
Indemnitee") harmless from and against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any
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action, suit or proceeding or any claim asserted) (collectively, "Losses"), to
which any Standby Purchaser Indemnitee may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such Losses arise out of or are based upon
(i) any inaccuracy in, breach of or failure to comply with, any representation,
warranty, or covenant made by the Company in this Agreement, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the Proxy
Statement, any preliminary prospectus, the Registration Statement or the
Prospectus (as amended or supplemented, if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as any such untrue statement or omission
or alleged untrue statement or omission was made in such Proxy Statement,
preliminary prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement in reliance upon, and in conformity with, information
furnished to the Company by the Standby Purchaser expressly for use therein.
6.2 The Standby Purchaser agrees to indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each director of the Company and
each officer of the Company who signs the Registration Statement (each, a
"Company Indemnitee"), from and against any and all Losses to which any
Company Indemnitee may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such Losses are based upon (i) any inaccuracy in, breach
of or failure to comply with, any representation, warranty, or covenant made
by the Standby Purchaser in this Agreement or (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Proxy Statement,
any preliminary prospectus, the Registration Statement or the Prospectus (as
amended or supplemented, if the Company shall have filed with the Commission
any amendment thereof or supplement thereto), or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only insofar as any such untrue statement or omission or
alleged untrue statement or omission was made in such Proxy Statement,
preliminary prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon, and in conformity with, information
furnished to the Company by the Standby Purchaser expressly for use therein;
provided, however, that the obligation of the Standby Purchaser to indemnify
the Company Indemnitees hereunder shall be limited to the total price for the
Series A Preferred Shares purchased by the Standby Purchaser pursuant to this
Agreement.
6.3 Any party which proposes to assert the right to be
indemnified under this Section 6 will promptly after receipt of notice of a
claim or of commencement of any action, suit or proceeding against such party
in respect of which a claim is to be made against any indemnifying party under
this Section 6, notify each such indemnifying party of the nature of the claim
or the commencement of such action, suit or proceeding, enclosing a copy of
all correspondence received and papers served, but the omission so to notify
such indemnifying
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party of any such claim, action, suit or proceeding shall not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 6. In case any such claim shall be asserted or any such action,
suit or proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the assertion or commencement thereof, the
indemnifying party shall be entitled to participate in, and to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its selection so
to assume the defense thereof the indemnifying party shall not be liable to such
indemnified party for any subsequent legal or other expenses. The indemnified
party shall have the right to employ its counsel in any such action where the
indemnifying party has assumed the defense as aforesaid, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized by the indemnifying party, (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party shall not in fact have employed counsel satisfactory to
the indemnified party to assume the defense of such action, in any of which
events such fees and expenses shall be borne by the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action or claim
effected without its consent so long as it is performing its obligations under
this Section 6.
Section 7. Termination.
This Agreement may be terminated by Samstock upon written notice to
the Company and thereafter shall be of no further force and effect (without
any liability by the Company to the Standby Purchaser, Lender or any other
party) upon the occurrence of an event of default under the Loan Agreement.
Section 8. Survival.
The indemnification agreement contained in Section 6 hereof and the
representations, warranties, covenants and agreements of the Company and the
Standby Purchaser set forth in this Agreement shall remain operative and in
full force and effect regardless of (a) any termination of this Agreement, (b)
any investigation made on behalf of the Standby Purchaser, or (c) acceptance
of Standby Shares under this Agreement.
Section 9. Miscellaneous
9.1 This Agreement is made solely for the benefit of the
Standby Purchaser and, to the extent provided herein, Lender, and the Company,
and their respective successors, and no other person, partnership, association
or corporation shall acquire or have any right under or by virtue of this
Agreement.
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9.2 Neither the Company nor the Standby Purchaser may assign
any of its rights under this Agreement without the prior written consent of
the other party hereto.
9.3 This Agreement, together with the Loan Documents (as
defined in the Loan Agreement), the Second Amended and Restated Investment
Agreement and the Warrant, constitute the entire agreement between the Standby
Purchaser and Lender, on the one hand, and the Company on the other, and
supersedes all prior agreements and understandings relating to the subject
matter hereof. In case any one or more of the provisions contained in this
Agreement, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect under the laws of any jurisdiction,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way affected or impaired thereby or under the laws of any other jurisdiction.
9.4 This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, and all such counterparts together constitute but one and the same
instrument.
9.5 This Agreement may not be amended, modified or changed,
in whole or in part, except by an instrument in writing signed by the Company
and the Standby Purchaser.
Section 10. Notices.
Except as otherwise provided in this Agreement, and unless otherwise
notified by the respective addressee, all notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
personally to the recipient, one day after being sent by overnight courier
(charged prepaid), five days after being mailed to the recipient (postage
prepaid) or upon confirmation if transmitted via fax. Notices should be
directed as follows:
If to the Company: Transmedia Network Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
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
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If to the Standby Purchaser: Samstock, L.L.C.
Two X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
Section 11. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of laws
rules thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
TRANSMEDIA NETWORK INC.
----------------------------------------
By: Xxxx Xxxxxxxxx, President and
Chief Executive Officer
SAMSTOCK, L.L.C.
----------------------------------------
By: Xxxxxx X. Xxxxxxxxxxx, Vice President
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EXHIBIT A
[FORM OF WARRANT]
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 NON-TRANSFERABLE,
EXCEPT AS PROVIDED HEREIN.
TRANSMEDIA NETWORK INC.
WARRANT TO PURCHASE 1,000,000 SHARES OF COMMON STOCK
Void after _______, 2004
THIS CERTIFIES THAT, for value received, [____________, a _________
limited liability company] (the "Holder"), is entitled to subscribe for and
purchase from Transmedia Network Inc., a Delaware corporation (the "Company"),
an aggregate of 1,000,000 shares (as adjusted pursuant to Section 3 hereof) of
fully paid and nonassessable Common Stock (the "Shares") of the Company, at
the price of $ ______ per share [insert the average of the closing prices of
the Common Stock as reported by the New York Stock Exchange during the 20
consecutive trading days preceding the Closing] (the "Exercise Price") (as
adjusted pursuant to Section 3 hereof), and subject to the provisions and upon
the terms and conditions hereinafter set forth.
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 ________, 2004.
(b) Method of Exercise.
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(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.
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
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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 Exercise
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. 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 Exercise 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.
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(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 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
-17-
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.
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 Amended and Restated Investment
Agreement, dated as of March 3, 1998, among the Company, Samstock, L.L.C.,
EGI-Transmedia Investors, L.L.C. and Halmostock Limited Partnership) 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 Stockholders. 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 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.
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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 _______, 1999.
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.
-21-
