SECOND AMENDED AND RESTATED INVESTMENT AGREEMENT
------------------------------------------------
Second Amended and Restated Investment Agreement dated as of June 30,
1999, (as amended, supplemented or otherwise modified from time to time, this
"Agreement"), among Transmedia Network Inc., a Delaware corporation (the
"Company"), Samstock, L.L.C., a Delaware limited liability company ("Samstock"),
EGI-Transmedia Investors, L.L.C., a Delaware limited liability company (formerly
known as Transmedia Investors, L.L.C., "TNI"), (each of the foregoing parties,
other than the Company, together with Halmostock Limited Partnership, a Wyoming
limited partnership ("Halmostock") individually an "Investor" and collectively
the "Investors"), and solely with respect to Section 5 of this Agreement, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, as trustee under declaration of trust dated March 9, 1983, as
amended, establishing the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust ("▇▇▇▇▇▇▇ Trust").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Stock Purchase and Sale Agreement,
dated as of November 6, 1997, among the Company, Samstock and TNI (the "Purchase
Agreement"), and that certain Assignment Agreement, dated as of March 3, 1998,
among the Company, Samstock, TNI, and Halmostock, on March 3, 1998, the Company
issued and sold to the Investors an aggregate of 2,500,000 newly issued shares
(collectively, the "Shares") of the Company's Common Stock, par value $.02 per
share ("Common Stock"), and warrants (collectively, the "Warrant") to purchase
an additional 1,200,000 shares (collectively, the "Warrant Shares") of Common
Stock;
WHEREAS, in connection with the Purchase Agreement and the transactions
contemplated thereby, the Company, Samstock, TNI and Halmostock entered into
that certain Amended and Restated Investment Agreement, dated as of March 3,
1998 (the "First Amended Investment Agreement");
WHEREAS, as of ▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ and Halmostock sold to the
▇▇▇▇▇▇▇ Trust an aggregate of 47,000 of the Shares and warrants to purchase an
aggregate of 22,560 of the Warrant Shares, and the ▇▇▇▇▇▇▇ Trust executed a
joinder to Section 5 of the First Amended Investment Agreement;
WHEREAS, reference is made to that certain Credit Agreement dated as of
the date hereof, 1999 (the "Loan Agreement"), by and among GAMI Investments,
Inc., a Delaware corporation and an affiliate of Samstock and TNI ("GAMI") as
lender, and each of the Company and its wholly-owned subsidiaries, Transmedia
Restaurant Company, Inc., Transmedia Service Company, Inc., and TMNI
International Incorporated, as borrowers, whereby GAMI loaned to the borrowers
on the date hereof an aggregate principal amount of $10 million (the "Loan");
WHEREAS, in connection with the Loan and as more particularly described
in the Loan Agreement, the Company intends to implement a rights offering (the
"Rights Offering") pursuant to which it is anticipated that the Company will
distribute to all of its stockholders of record as of record date to be
determined, and on terms and conditions acceptable to GAMI, nontransferable
rights to subscribe for and purchase an aggregate of up to $10,000,000 newly
issued Series A senior convertible redeemable preferred stock of the Company,
par value $.10
per share ("Preferred Stock"), to be established by the Company's Board of
Directors in connection with the Rights Offering pursuant to a Certificate of
Designation of Preferred Stock substantially in the form of Exhibit G to the
Loan Agreement;
WHEREAS, the Loan Agreement requires that the Company pay to GAMI 100%
of the gross cash proceeds received by the Company from the Rights Offering to
be applied by GAMI against obligations owed by the borrowers to GAMI under the
Loan Agreement all as more particularly described in the Loan Agreement;
WHEREAS, in order to assure the success of the Rights Offering, and the
receipt by the Company of sufficient gross cash proceeds therefrom to repay all
outstanding amounts under the Loan, Samstock has entered into that certain
Standby Purchase Agreement with the Company, dated as the date hereof (the
"Standby Purchase Agreement"), whereby Samstock has agreed to act as "Standby
Purchaser" for a specified amount of shares of Series A Preferred Stock
available for purchase upon the expiration of unexercised rights, all as more
particularly set forth in the Standby Purchase Agreement;
WHEREAS, in consideration of GAMI's obligations under the Loan
Agreement and Samstock's obligations to act as Standby Purchaser under the
Standby Purchase Agreement, the Loan Agreement and the Standby Purchase
Agreement require the Company to issue to Samstock a warrant (the "Rights
Offering Warrant"), substantially in the form of Exhibit A to the Standby
Purchase Agreement, to purchase an aggregate of 1,000,000 shares (the "Rights
Offering Warrant Shares") of the Company's Common Stock, upon the terms and
subject to the conditions set forth in the Loan Agreement and the Standby
Purchase Agreement;
WHEREAS, the Company, Samstock, TNI, and ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇,
individuals residing in the State of Florida (together "Chasen"), have entered
into an Amended and Restated Agreement Among Stockholders, dated as of March 3,
1998 (the "Agreement Among Stockholders");
WHEREAS, the Company, Samstock, TNI and Halmostock, have entered into a
Stockholders' Agreement, dated as of March 3, 1998 (the "Stockholders'
Agreement");
WHEREAS, the Company and each of the Investors other than Halmostock
are entering into this Agreement, with the approval of at least a majority of
Disinterested Directors (as defined in the First Amended Investment Agreement),
to establish certain arrangements with respect to the relationships between
them, and intend for this Agreement to amend, restate and supersede the First
Amended Investment Agreement in its entirety, only with respect to the rights
and obligations of each of the parties to the First Amended Investment Agreement
other than Halmostock; it being understood that the First Amended Investment
Agreement will continue in full force and effect with respect to the rights and
obligations of Halmostock vis a vis each of the other Investors and the Company,
and this Agreement will be read together with the First Amended Investment
Agreement to determine the rights and obligations of all the Investors including
Halmostock and the Company vis a vis all of them in respect of the subject
matter of this Agreement and the First Amended Investment Agreement.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the following
meanings:
1.1 The terms "beneficial ownership," "person" and "group" shall have
the respective meanings ascribed to such terms pursuant to Regulation 13D-G
adopted by the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended
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(the "Exchange Act"), as in effect on the date hereof. The term "affiliate"
shall have the meaning ascribed to such term pursuant to Rule 12b-2 under the
Exchange Act, as in effect on the date hereof.
1.2 The "Combined Voting Power" at any measurement date shall mean the
total number of votes which could have been cast in an election of directors of
the Company had a meeting of the stockholders of the Company been duly held
based upon a record date as of the measurement date if all Company Voting
Securities then outstanding and entitled to vote at such meeting were present
and voted to the fullest extent possible at such meeting.
1.3 "Company Voting Securities" shall mean, collectively, Common Stock,
Preferred Stock, any other preferred stock of the Company that is entitled to
vote generally for the election of directors, any other class or series of
Company securities that is entitled to vote generally for the election of
directors and any other securities, warrants, options or rights of any nature
(whether or not issued by the Company) that are convertible into, exchangeable
for, or exercisable for the purchase of, or otherwise give the holder thereof
any rights in respect of, Common Stock, Preferred Stock, any other Company
preferred stock that is entitled to vote generally for the election of
directors, or any other class or series of Company securities that is entitled
to vote generally for the election of directors.
1.4 "Disinterested Director" means Independent Directors who are
"disinterested directors" as that term is used in Section 144 of the Delaware
General Corporate Law.
1.5 "Effective Date" means March 3, 1998.
1.6 "Independent Director" means directors of the Company who (i) are
not current or former employees or officers of the Company, (ii) are not serving
as designees of Samstock pursuant to Article IV hereof, (iii) are not 5% or
greater stockholders of the Company, and (iv) have no financial interest in and
are not otherwise associated with any of the Investors, the Company, any
subsidiary of the Company or any of their respective affiliates, excluding,
however, any equity interest of not more than 2% of any publicly-held entity.
The term "associated" means having a business, financial or familial
relationship that might reasonably be expected to affect the individual's
judgment with respect to matters in which a member of the ▇▇▇▇ Group might be
interested.
1.7 The "Maximum Permitted Voting Power" at any measurement date shall
mean the Voting Power as of such measurement date of all Company Voting
Securities, regardless of the holder thereof, (i) represented by the Shares or
the Warrant Shares, (ii) outstanding as of the date hereof and subject to the
Agreement Among Stockholders or the Stockholders' Agreement, (iii) issued by the
Company after the date hereof and subject to the Agreement Among Stockholders or
the Stockholders' Agreement upon issuance, or (iii) represented by the Preferred
Shares, the Rights Offering Warrant Shares or the Preferred Stock Conversion
Shares; provided, however, that, in the event that the Company issues any
Company Voting Securities after the date hereof, the Maximum Permitted Voting
Power shall be adjusted so that the percentage of the Combined Voting Power
represented by the Maximum Permitted Voting Power shall not be reduced.
1.8 "▇▇▇▇ Affiliate" means Samstock, TNI and any of their respective
affiliates under control of or common control with Samstock or TNI (exclusive of
Halmostock, Chasen and their
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respective affiliates).
1.9 "▇▇▇▇ Group" means (i) Samstock, (ii) TNI, (iii) any member of
Samstock or TNI, (iv) any affiliate of any member of Samstock or TNI under
control of, or common control with, such member, (v) Halmostock, (vi) any
partner of Halmostock, (vii) any affiliate of any partner of Halmostock under
control of, or common control with, Halmostock, and (viii) any corporations,
partnerships, limited liability companies or other legal entities that are the
affiliates of any of the foregoing, collectively; provided, however, that
publicly held entities that might fall within this definition (a "Public ▇▇▇▇
Affiliate") shall not be treated as affiliates of any member of the ▇▇▇▇ Group
hereunder unless any member of the ▇▇▇▇ Group or any of its affiliates took any
action, directly or indirectly, to suggest, encourage or assist such entity in
taking the relevant action to be attributed to the ▇▇▇▇ Group hereunder. For
purposes of the preceding sentence and the similar clause appearing in the
second sentence of Section 3.1, the failure of any member of the ▇▇▇▇ Group or
any of its affiliates, upon learning of a Public ▇▇▇▇ Affiliate's action, to
request that such Public ▇▇▇▇ Affiliate refrain from taking such action because
of the provisions of this Agreement will be deemed to constitute "encouraging or
assisting" in such action.
1.10 "▇▇▇▇ Associates" means any member of the ▇▇▇▇ Group other than
those persons or entities described in clauses (v) through (vii) of Section 1.9
and clause (viii) of Section 1.9 as it pertains to said clauses (v) through
(vii).
1.11 "Preferred Shares" means the shares of Preferred Stock acquired by
Samstock, TNI or other members of the ▇▇▇▇ Group in the Rights Offering,
including without limitation, any shares of Preferred Stock acquired pursuant to
the Standby Purchase Agreement.
1.12 "Preferred Stock Conversion Shares" means shares of Common Stock
issuable upon conversion of Preferred Stock.
1.13 "Standstill Provisions" means collectively Article III hereof in
its entirety and Section 4.5 in its entirety.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Samstock and TNI jointly and severally represent and warrant to the
Company and Chasen as follows:
(a) Each of Samstock and TNI is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware.
Each of Samstock and TNI has the limited liability company power and authority
to enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
each of Samstock and TNI and constitutes the legal, valid and binding agreement
of each of Samstock and TNI, enforceable against each of them in accordance with
the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance by Samstock or TNI of its obligations hereunder will conflict with,
or result in a breach of, or constitute a default under, any law, rule,
regulation, judgment, order or decree of any court,
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arbitrator or governmental agency or instrumentality, or any agreement or
instrument to which Samstock, TNI or their respective properties are bound or by
which they are affected or any organizational documents of Samstock or TNI.
(d) As of the Effective Date, no shares of Common Stock (other than the
Shares and the Warrant Shares) were beneficially owned by Samstock or TNI.
2.2 [Intentionally Omitted]
2.3 The Company represents and warrants to Investors as follows:
(a) The Company is a validly existing corporation under the laws of the
jurisdiction of its organization and has the corporate power and authority to
enter into this Agreement and perform its obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with the terms hereof.
(c) Neither the execution and delivery of this Agreement nor the
performance of its obligations hereunder will conflict with, or result in a
breach of, or constitute a default under, any law, rule, regulation, judgment,
order or decree of any court, arbitrator or governmental agency or
instrumentality, or any agreement or instrument to which the Company is bound or
by which it is affected or any charter documents of the Company.
(d) The execution, delivery and performance of this Agreement by the
Company 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 First Amended
Investment Agreement), and no other corporate
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proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement by the Company.
ARTICLE III
STANDSTILL AGREEMENT
--------------------
3.1 Acquisition of Company Voting Securities. Except as the same may be
approved by a majority of the Disinterested Directors in a specific resolution
to that effect adopted prior to the taking of such action, from and after the
Effective Date and prior to the fifth anniversary of the Effective Date, no
member of the ▇▇▇▇ Group shall, directly or indirectly, acquire, offer to
acquire, agree to acquire, become the beneficial owner of or obtain any rights
in respect of any Company Voting Securities, by purchase or otherwise, or take
any action in furtherance thereof, if the effect of such acquisition, agreement
or other action would be (either immediately or upon consummation of any such
acquisition, agreement or other action, or expiration of any period of time
provided in any such acquisition, agreement or other action) to increase the
aggregate beneficial ownership of Company Voting Securities by the ▇▇▇▇ Group to
such number of Company Voting Securities that represents or possesses greater
than the Maximum Permitted Voting Power. Notwithstanding the foregoing maximum
limitations, (A) no member of the ▇▇▇▇ Group shall be obligated to dispose of
any Company Voting Securities beneficially owned in violation of such maximum
limitations if, and solely to the extent that, its beneficial ownership is or
will be increased solely as a result of (1) a repurchase of any Company Voting
Securities by the Company or any of its subsidiaries if such repurchase was
approved by a majority of the Disinterested Directors or (2) the purchase by any
Public ▇▇▇▇ Affiliate not otherwise constituting a part of the ▇▇▇▇ Group in
accordance with Section 1.9 hereof unless any member of the ▇▇▇▇ Group took any
action, directly or indirectly, to suggest, encourage or assist in such
purchase, and (B) the foregoing shall not prohibit any purchase of Company
Voting Securities directly from the Company pursuant to any rights,
oversubscription rights or standby purchase obligations in connection with
rights offerings by the Company or exercise of any stock options granted by the
Company. For purposes of calculating the maximum limitations, all Company Voting
Securities that are the subject of an agreement, arrangement or understanding
pursuant to which the ▇▇▇▇ Group or any member thereof has the right to obtain
beneficial ownership of such securities in the future (including the Warrant
Shares and the Rights Offering Warrant Shares to the extent the Warrant and the
Rights Offering Warrant have not been exercised or has not expired) shall also
be deemed to be outstanding and beneficially owned by the ▇▇▇▇ Group or the
applicable member thereof.
3.2 Proxy Solicitations, etc. Prior to the fifth anniversary of the
Effective Date, no member of the ▇▇▇▇ Group shall solicit proxies, assist any
other person in any way, directly or indirectly, in the solicitation of proxies,
become a "participant" in a "solicitation" or assist any "participant" in a
"solicitation" (as such terms are defined in Rule 14a-1 of Regulation 14A under
the Exchange Act) in opposition to the recommendation of a majority of the
Disinterested Directors, submit any proposal for the vote of stockholders of the
Company, in each case (a) without the prior approval of the majority of the
Disinterested Directors or (b) other than with respect to Company Voting
Securities (i) held by any member of the ▇▇▇▇ Group or (ii) subject to the
Agreement Among Stockholders or the Stockholders' Agreement.
3.3 No Voting Trusts, Pooling Agreements, or Formation of "Groups".
Except as the same may be approved by a majority of the Disinterested Directors
in a specific resolution to that effect adopted prior to the taking of such
action, prior to the fifth anniversary of the
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Effective Date, no member of the ▇▇▇▇ Group shall (a) form, join or in any other
way participate in a partnership, pooling agreement, syndicate, voting trust or
other "group" with respect to Company Voting Securities other than (i) the ▇▇▇▇
Group or (ii) with any Company stockholders who are parties to the Agreement
Among Stockholders or the Stockholders' Agreement as of the date hereof or
hereafter become parties to the Agreement Among Stockholders or the
Stockholders' Agreement in each case in accordance with the terms thereof as a
result of a sale, assignment or other transfer of Company Voting Securities that
are subject to the Agreement Among Stockholders or the Stockholders' Agreement
("Other Covered Stockholders"); or (b) enter into any agreement or arrangement
or otherwise act in concert with any other person other than a member of the
▇▇▇▇ Group (provided such member of the ▇▇▇▇ Group is itself bound by the terms
of this Agreement), or a holder of any interest in any entity included within
the ▇▇▇▇ Group, for the purpose of acquiring, holding, voting or disposing of
Company Voting Securities, other than with any Other Covered Stockholders.
3.4 No Solicitation of Bidders. Prior to the fifth anniversary of the
Effective Date, no member of the ▇▇▇▇ Group shall directly or indirectly assist,
encourage or induce any person to bid for or acquire outstanding Company Voting
Securities (other than any Company Voting Securities held by the ▇▇▇▇ Group) in
any transaction or series of related transactions, unless the consummation of
such transaction or series of related transactions requires approval of a
majority of the Board of Directors. Prior to disclosing any confidential
non-public information concerning the Company to such person, such person shall
have executed and delivered to the ▇▇▇▇ Group a confidentiality and standstill
agreement on substantially the same terms as those set forth in the letter
agreement dated July 16, 1997, entered into between the Company and an affiliate
of Samstock and TNI in connection with the transactions contemplated by the
Purchase Agreement, with such duration as shall be appropriate under the
circumstances in the reasonable judgment of the ▇▇▇▇ Group. Promptly upon the
▇▇▇▇ Group entering into any written agreement or arrangement with such person
concerning a transaction covered by this Section 3.4 (including such
aforementioned confidentiality and standstill agreement), the ▇▇▇▇ Group shall
notify the Company's Board of Directors and provide the Company's Board of
Directors with copies of the same; provided, however, that the mere sale of
Company Voting Securities by any member of the ▇▇▇▇ Group shall not constitute
assisting, encouraging or inducing within the meaning of this Section 3.4.
3.5 Non-Circumvention. Except as the same may be approved by a majority
of the Disinterested Directors in a specific resolution to that effect adopted
prior to the taking of such action, prior to the fifth anniversary of the
Effective Date, no member of the ▇▇▇▇ Group shall take any action, alone or in
concert with any other person to circumvent the limitations of the provisions of
Article III of this Agreement. Without limiting the generality of the foregoing,
without such approval no member of the ▇▇▇▇ Group shall (i) present to the
Company or to any third party any proposal that can reasonably be expected to
result in any increase beyond the Maximum Permitted Voting Power of Company
Voting Securities beneficially owned in the aggregate by the ▇▇▇▇ Group, (ii)
publicly suggest or announce its willingness or desire to engage in a
transaction or group of transactions that would result in any increase beyond
the Maximum Permitted Voting Power of Company Voting Securities beneficially
owned in the aggregate by the ▇▇▇▇ Group, or (iii) initiate, request, induce or
attempt to induce or give encouragement to any other person to initiate any
proposal that can reasonably be expected to result in any increase beyond the
Maximum Permitted Voting Power of Company Voting Securities beneficially owned
in the aggregate by the ▇▇▇▇ Group.
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ARTICLE IV
VOTING OF COMPANY SECURITIES AND RELATED MATTERS
------------------------------------------------
4.1 Each member of the ▇▇▇▇ Group that is a holder of record of Company
Voting Securities shall be present, and each member of the ▇▇▇▇ Group that is a
beneficial owner of Company Voting Securities shall cause the holder of record
to be present, in person or by proxy, at all meetings of stockholders of the
Company so that all Company Voting Securities owned of record or beneficially by
the ▇▇▇▇ Group may be counted for the purpose of determining the presence of a
quorum at such meetings.
4.2 So long as Samstock is entitled to designate any directors in
accordance with the provisions of this Article IV, except to the extent
otherwise provided herein, the Company shall take all necessary or appropriate
action to assist in the nomination and election as directors of (i) that number
of individuals specified in this Article IV designated by Samstock to be elected
as directors of the Company (provided, with respect to designees designated
under Sections 4.4 and 4.6 only, such designees are reasonably acceptable to the
Independent Directors at the time of their designation), and (ii) two
Independent Directors. All persons to be so designated as Independent Directors
shall be individuals selected by a majority of the Independent Directors then in
office and shall be mutually acceptable to Samstock on the one hand and a
majority of the Independent Directors on the other hand. The Company hereby
agrees and acknowledges that ▇▇▇ ▇▇▇▇, F. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ are reasonably acceptable to the Independent Directors as directors of
the Company. The Company hereby agrees and acknowledges that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is
reasonably acceptable as an Independent Director. The Company further agrees
that one position on the Board of Directors of the Company is intended to be
filled by the chief executive officer to be selected by the Board of Directors
of the Company, and that in no event shall the chief executive officer of the
Company count as a designee of Samstock. Samstock shall cause its designees on
the Board of Directors of the Company to take all necessary or appropriate
action to assist in the nomination and election as directors of all such
nominees as may be selected to serve as Independent Directors in the manner
described above. Except in furtherance of the exercise of Samstock's rights
pursuant to Section 4.7, the ▇▇▇▇ Group and the directors designated by Samstock
shall not vote (as stockholders or directors) in favor of, and shall not take
any other action in furtherance of or seeking to cause, a reduction of the
number of directors of the Company below seven directors or the removal of any
Independent Directors.
4.3 For purposes of this Agreement, directors "designated by Samstock"
shall include directors designated by Samstock as anticipated by this Article
IV, and any other directors of the Company (other than the Company's chief
executive officer) affiliated or associated with any member of the ▇▇▇▇ Group.
4.4 In addition to any other rights to designate directors of the
Company under this Article IV, Samstock shall be entitled to designate the
following number of directors pursuant to Section 4.2 hereof:
(a) so long as the members of the ▇▇▇▇ Group that have executed this
Agreement as parties (the "▇▇▇▇ Contracting Parties") beneficially own
collectively at least 15% of the Combined Voting Power of all Company Voting
Securities (including, for these purposes, the Warrant Shares and the Rights
Offering Warrant Shares issuable upon exercise of the Warrant and the Rights
Offering Warrant, respectively, until such time as the Warrant or the Rights
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Offering Warrant, as applicable, expires), Samstock shall have the right to
designate two directors of the Company, provided such designees are reasonably
acceptable to the Independent Directors at the time of their designation (it
being hereby acknowledged and agreed by the Company that each of ▇▇▇ ▇▇▇▇, F.
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will be acceptable to the
Company at the time of designation); and
(b) so long as the ▇▇▇▇ Contracting Parties beneficially own less than
15%, but at least 5% of the Combined Voting Power of all Company Voting
Securities (as so calculated), Samstock shall have the right to designate one
director of the Company, provided such designee is reasonably acceptable to the
Independent Directors at the time of his or her designation (it being hereby
acknowledged and agreed by the Company that each of ▇▇▇ ▇▇▇▇, F. ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will be acceptable to the Company at the time
of designation);
provided, however, that at any time when the ▇▇▇▇ Contracting Parties
shall no longer beneficially own at least 15% of the Combined Voting Power of
all Company Voting Securities (as so calculated), Samstock shall cause one of
its two designees under this Section 4.4 (but not those, if any, designated
under Section 4.7 hereof) to resign forthwith such that only one designee under
this Section 4.4 remains on the Board of Directors of the Company; and provided,
further, that at any time when the ▇▇▇▇ Contracting Parties shall no longer
beneficially own at least 5% of the Combined Voting Power of all Company Voting
Securities (as so calculated), Samstock shall not have the right to designate
any directors of the Company under this Section 4.4, Samstock's rights under
this Section 4.4 shall terminate, Samstock shall cause its designees under this
Section 4.4 (but not those, if any, designated under Section 4.7 hereof) to
resign forthwith such that no designee of Samstock under this Section 4.4
remains on the Board of Directors of the Company and all of the covenants under
Article IV of this Agreement pertaining to Samstock's designees under Section
4.4 shall lapse and no longer be of any force or effect. In addition, all of the
covenants under Article III of this Agreement shall lapse and no longer be of
any force or effect if for any reason any of the director designees who are
designated by Samstock pursuant to the rights granted by this Article IV, and,
with respect to any of the director designees who are designated by Samstock
under Sections 4.4 or 4.6 only, are reasonably acceptable to the Independent
Directors at the time of their designation in accordance with Sections 4.2, 4.4
and/or 4.6, shall not be nominated for election as a director of the Company
with the unanimous recommendation of all of the directors of the Company (other
than those directors designated by Samstock pursuant to this Article IV) at the
next election of directors of the Company following Samstock's designation. At
any time when Samstock shall have the right to designate any directors pursuant
to this Article IV, the Company shall not increase the number of directors to
more than seven directors without the prior written consent of Samstock, except
in furtherance of the exercise by Samstock of its rights under Section 4.6 or
Section 4.7.
4.5 Except as expressly set forth above, the Investors shall vote all
Company Voting Securities owned of record by the Investors and shall cause all
Company Voting Securities owned beneficially by the Investors to be voted with
respect to the election or removal of directors of Company, (a) either (i) in
accordance with the recommendations of a majority of the Disinterested
Directors, or (ii) in the same proportions (including abstentions) as the
holders of record of Company Voting Securities other than those beneficially
owned by the ▇▇▇▇ Group that are entitled to vote on the election of directors
(or such other matter) vote their Company Voting Securities, provided, however,
that notwithstanding the foregoing subparagraph (a), the
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Investors may at all times vote their Company Voting Securities for the election
or retention of any directors designated by Samstock in accordance with this
Article IV.
4.6. Notwithstanding anything to the contrary in this Agreement, in
addition to any other rights to designate directors of the Company under this
Article IV, in the event Samstock, pursuant to the Standby Purchase Agreement,
purchases more than 25% of the total number of shares of Preferred Stock issued
by the Company in the Rights Offering (exclusive of those shares of Preferred
Stock purchased by Samstock pursuant to its basic subscription privilege or its
obligation to purchase shares of Preferred Stock not purchased by TNI or TNI's
members pursuant to its or their basic subscription privileges), Samstock shall
have the right to designate one additional director to the Company, which
individual may be designated in Samstock's sole discretion without obtaining the
acceptance or approval of the Disinterested Directors or any other person or
entity, to serve for a period of three years or, if earlier, until the time when
the ▇▇▇▇ Contracting Parties shall no longer beneficially own at least 15% of
the Combined Voting Power of all Company Voting Securities (including, for these
purposes, the Warrant Shares and the Rights Offering Warrant Shares issuable
upon exercise of the Warrant and the Rights Offering Warrant, respectively,
until such time as the Warrant or the Rights Offering Warrant, as applicable,
expires), in which event, Samstock shall cause its designee under this Section
4.6 (but not those designees, if any, designated under Section 4.7 hereof) to
resign forthwith.
4.7 Notwithstanding anything to the contrary in this Agreement, in
addition to any other rights to designate directors of the Company under this
Article IV, upon the occurrence of any Event of Default (as defined in the Loan
Agreement), and at any time thereafter during the continuance thereof, Samstock
shall have the right to designate such additional number of directors (which
individuals may be designated in Samstock's sole discretion without obtaining
the acceptance or approval of the Disinterested Directors or any other person or
entity), and the Company shall take all necessary or appropriate action to
increase the number of directors constituting the Company's Board of Directors
and/or use its reasonable best efforts to obtain resignations of individuals
then serving as directors (other than directors designated by Samstock), and
assist in the nomination and election as directors such additional designees of
Samstock, such that, after taking such actions into account, the number of
individuals designated by Samstock under this Article IV serving as directors of
the Company shall constitute at least a majority of the total number of
directors, effective as soon as practicable, but in any event no later than two
(2) business days after Samstock notifies the Company in writing of its intent
to exercise the right provided herein and the identity of the individuals
Samstock desires to designate (and, if applicable, the individuals Samstock
desires to resign).
4.8 Notwithstanding anything to the contrary in this Agreement,
automatically upon the occurrence of an Event of Default (as defined in the Loan
Agreement) and the expiration of any and all cure periods, if any, applicable
thereto, without further action or notice by any party, the Standstill
Provisions shall lapse in their entirety and no longer be of any force or effect
with respect to the ▇▇▇▇ Associates, and none of the Standstill Provisions shall
be enforceable against any ▇▇▇▇ Associate, as if such Standstill Provisions had
never existed; it being understood, that this provision shall not apply to any
members of the ▇▇▇▇ Group other than the ▇▇▇▇ Associates, and notwithstanding
the foregoing the Standstill Provisions shall continue in full force and effect
with respect to any members of the ▇▇▇▇ Group other than the ▇▇▇▇ Associates.
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ARTICLE V
REGISTRATION RIGHTS
-------------------
5.1 Definitions. For purposes of this Article V:
(a) The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Act").
(b) The term "Registrable Securities" means shares of Common Stock or
Preferred Stock held, from time to time, by any member of the ▇▇▇▇ Group or any
Other Covered Stockholders.
(c) The term "Holder" means any (i) ▇▇▇▇ Contracting Party, (ii) Other
Covered Stockholder who is a party hereto or who executes and delivers to the
Company a joinder agreement, agreeing to be legally bound by this Article V, and
(iii) the ▇▇▇▇▇▇▇ Trust, in each case who owns of record Registrable Securities.
(d) The term "Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Act.
(e) The term "Shelf Registration Statement" means a registration
statement intended to effect a shelf registration in connection with a Rule 415
Offering.
5.2 Shelf Registrations.
(a) Shares and Warrant Shares. As soon as practicable after the
Effective Date, but in any event no later than ninety (90) days after the
Effective Date, the Company shall prepare and file with the SEC a Shelf
Registration Statement (which shall include pledgees of any selling stockholder
under the caption "plan of distribution" contained in such Shelf Registration
Statement) with respect to all Shares and Warrant Shares and use its reasonable
efforts to cause such Shelf Registration Statement to become effective and keep
such registration statement effective until such time as all Shares and Warrant
Shares have been sold or disposed of thereunder or sold, transferred or
otherwise disposed of (other than pursuant to a pledge of such Registrable
Securities) to a person that is not a Holder or, with respect to any Warrant
Shares for which the Warrant has not been exercised prior to its expiration,
until such time as the Warrant has expired. Notwithstanding the foregoing, if
the Company shall furnish to Samstock a certificate signed by the Chief
Executive, Chief Operating, or Chief Financial Officer of the Company stating
that, in the good faith judgment of a majority of the Disinterested Directors,
it would be materially detrimental to the Company for such registration
statement to be filed, the Company shall have the right to defer such filing for
a period of not more than 120 days after receipt of the Samstock's request;
provided, however, that the Company may not utilize this right more than once in
any 12-month period.
(b) Additional Shares. If the Company shall at any time receive a
written request from Samstock (or its designee) on behalf of any ▇▇▇▇ Affiliates
who are the Holders of Registrable Securities that the Company file a Shelf
Registration Statement with respect to any Registrable Securities, then, within
sixty (60) days after the receipt of such request, the Company shall prepare and
file with the SEC a Shelf Registration Statement (which shall
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include pledgees of any selling stockholder in the "plan of distribution") with
respect to all Registrable Securities which the Holders request to be registered
and use its reasonable efforts to cause such Shelf Registration Statement to
become effective and keep such Shelf Registration Statement effective until such
time as all Registrable Securities covered thereby have been sold or disposed of
thereunder or sold, transferred or otherwise disposed of (other than pursuant to
a pledge of such Registrable Securities) to a person that is not a Holder. The
rights to cause the Company to file a Shelf Registration Statement under this
Section 5.2(b) shall be in addition to the rights to cause the Company to file a
Shelf Registration Statement under Section 5.2(a). Notwithstanding the
foregoing, if the Company shall furnish to Samstock a certificate signed by the
Chief Executive, Chief Operating, or Chief Financial Officer of the Company
stating that, in the good faith judgment of a majority of the Disinterested
Directors, it would be materially detrimental to the Company for such
registration statement to be filed, the Company shall have the right to defer
such filing for a period of not more than 120 days after receipt of the
Samstock's request; provided, however, that the Company may not utilize this
right more than twice in any 12-month period.
(c) Schedule 13D Statement. Samstock and TNI covenant and agree that
they will, and that they shall cause each ▇▇▇▇ Affiliate which shall at any time
hold Shares and/or Warrant Shares subject to Section 5.2(a) hereof, or Preferred
Shares, Preferred Stock Conversion Shares and/or Rights Offering Warrant Shares
subject to Section 5.2(d) hereof, to include in any Schedule 13D filed by or on
behalf of such Holder a statement to the effect that such Shelf Registration
Statement was put in effect for the sole purpose of facilitating such Holder's
ability to margin its stock and does not represent any present intention on
behalf of the Holder to dispose of any Shares, Warrant Shares, Preferred Shares,
Preferred Stock Conversion Shares or Rights Offering Warrant Shares covered
thereby.
(d) Preferred Shares, Preferred Stock Conversion Shares and Rights
Offering Warrant Shares. As soon as practicable after the closing of the Rights
Offering, but in any event no later than ninety (90) days thereafter, the
Company shall prepare and file with the SEC a Shelf Registration Statement
(which shall include pledgees of any selling stockholder under the caption "plan
of distribution" contained in such Shelf Registration Statement) with respect to
all Preferred Shares, Preferred Stock Conversion Shares and Rights Offering
Warrant Shares and use its reasonable efforts to cause such Shelf Registration
Statement to become effective and keep such registration statement effective
until such time as all Preferred Shares, Preferred Stock Conversion Shares and
Rights Offering Warrant Shares have been sold or disposed of thereunder or sold,
transferred or otherwise disposed of (other than pursuant to a pledge of such
Registrable Securities) to a person that is not a Holder or, with respect to any
Rights Offering Warrant Shares for which the Rights Offering Warrant has not
been exercised prior to its expiration, until such time as the Rights Offering
Warrant has expired. Notwithstanding the foregoing, if the Company shall furnish
to Samstock a certificate signed by the Chief Executive, Chief Operating, or
Chief Financial Officer of the Company stating that, in the good faith judgment
of a majority of the Disinterested Directors, it would be materially detrimental
to the Company for such registration statement to be filed, the Company shall
have the right to defer such filing for a period of not more than 120 days after
receipt of the Samstock's request;
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provided, however, that the Company may not utilize this right more than once in
any 12-month period.
5.3 Additional Obligations of the Company. Whenever the Company has
filed a Shelf Registration Statement under this Article V, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to
such Shelf Registration Statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered thereby.
(b) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities covered by such Shelf
Registration Statement owned by them.
(c) Use its best efforts to register and qualify the securities covered
by such Shelf Registration Statement under such other securities or Blue Sky
laws of such states or other jurisdictions as shall be reasonably requested by
the Holders, provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions where it is not so subject.
(d) Notify each Holder of Registrable Securities covered by such Shelf
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and then
use its best efforts to promptly correct such statement or omission.
Notwithstanding the foregoing and anything to the contrary set forth in this
Section 5.2, each Holder acknowledges that the Company shall have the right to
suspend the use of the prospectus forming a part of a Shelf Registration
Statement if such offering would interfere with a pending corporate transaction
or for other reasons until such time as an amendment to the Shelf Registration
Statement has been filed by the Company and declared effective by the SEC, or
until such time as the Company has filed an appropriate report with the SEC
pursuant to the Exchange Act. Each Holder hereby covenants that it will (a) keep
any such notice strictly confidential, and (b) not sell any shares of Common
Stock pursuant to such prospectus during the period commencing at the time at
which the Company gives the Holder notice of the suspension of the use of such
prospectus and ending at the time the Company gives the Holder notice that it
may thereafter effect sales pursuant to such prospectus. The Company shall only
be able to suspend the use of such prospectus for periods aggregating no more
than 90 days in respect of any registration.
5.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities and as may be required from time to time to keep such registration
current.
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5.5 Expenses of Shelf Registration. All expenses incurred by or on
behalf of the Company in connection with registrations, filings or
qualifications pursuant to Section 5.2 , including, without limitation, all
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for the Company, shall be borne by the
Company. In no event shall the Company be obligated to bear any underwriting
discounts or commissions or brokerage fees or commissions relating to
Registrable Securities or the fees and expenses of counsel to the selling
Holders.
5.6 Indemnification. In the event any Registrable Securities are
included in a Shelf Registration Statement under this Article V:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder and the affiliates of such Holder, and their respective
directors, officers, general and limited partners, agents and representatives
(and the directors, officers, affiliates and controlling persons thereof), and
each other person, if any, who controls such Holder within the meaning of the
Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus (but only if such
statement is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such omission is not
corrected in the final prospectus), or (iii) any violation or alleged violation
by the Company in connection with the registration of Registrable Securities
under the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, affiliate or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 5.6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person. Each indemnified party shall furnish such
information regarding itself or the claim in question as an indemnifying party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims,
-14-
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Section 5.6(b) in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 5.6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this Section 5.6(b) exceed the gross proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
5.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 5.6 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 5.6.
The indemnified party shall have the right, but not the obligation, to
participate in the defense of any action referred to above through counsel of
its own choosing and shall have the right, but not the obligation, to assert any
and all separate defenses, cross claims or counterclaims which it may have, and
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel has been
specifically authorized in advance by the indemnifying party, (ii) there is a
conflict of interest that prevents counsel for the indemnifying party from
adequately representing the interests of the indemnified party or there are
defenses available to the indemnified party that are different from, or
additional to, the defenses that are available to the indemnifying party, (iii)
the indemnifying party does not employ counsel that is reasonably satisfactory
to the indemnified party within a reasonable period of time, or (iv) the
indemnifying party fails to assume the defense or does not reasonably contest
such action in good faith, in which case, if the indemnified party notifies the
indemnifying party that it elects to employ separate counsel, the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party and the reasonable fees and expenses of such separate
counsel shall be borne by the indemnifying party; provided, however, that, the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to one firm acting as local
counsel) for all indemnified parties.
(d) The obligations of the Company and the holders under this Section
5.6 shall survive the completion of any offering of Registrable Securities in a
Shelf Registration Statement under this Article V.
(e) Notwithstanding the foregoing, to the extent that the provisions on
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indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
5.7 Reports Under the Exchange Act. With a view to making available to
the holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) use its best efforts to make and keep public information available,
as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required under the Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144, or as to whether it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information (and the Company shall take such
action) as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
5.8 No Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Article V may only
be assigned by a Holder to a transferee or assignee of any Registrable
Securities if (i) such transferee or assignee is a ▇▇▇▇ Contracting Party and
(ii) immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act.
5.9 Waiver Procedures. The observance by the Company of any provision
of this Article V may be waived (either generally or in a particular instance
and either retroactively or prospectively) with the written consent of the
Holders of a majority of the Registrable Securities, and any waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities.
5.10 "Market Stand-off" Agreement. Any Holder of Registrable
Securities, if requested by an underwriter of any registered public offering of
Company securities being sold in a firm commitment underwriting, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other Company
Voting Securities) held by such Holder other than shares of Registrable
Securities included in the registration during the seven days prior to, and
during a period of up to 180 days following, the effective date of the
registration statement. Such agreement shall be in writing in a form reasonably
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of the required stand-off period.
5.11 Listing of Shares. The Company shall use its commercially
reasonable efforts to cause (i) the Shares, (ii) upon exercise of the Warrant,
the Warrant Shares, (iii) the Preferred Shares, (iv) upon conversion of the
Preferred Shares, the Preferred Stock Conversion Shares,
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and (v) upon exercise of the Rights Offering Warrant, the Rights Offering
Warrant Shares, to be listed on the New York Stock Exchange as soon as
practicable.
ARTICLE VI
CONFIDENTIALITY
---------------
6.1 Confidential Material.
(a) Definitions. For purposes of this Section 6.1:
(i) The term "Confidential Material" means all information,
whether oral, written or otherwise (including any information furnished prior to
the execution of this Agreement), furnished by the Company to any member of the
▇▇▇▇ Group or any of the Representatives (as defined below), and all notes,
reports, analyses, compilations, studies and other materials prepared by the
▇▇▇▇ Group or any of the Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing or based upon, in whole
or in part, any such information, and the fact that such information has been
delivered to the ▇▇▇▇ Group or any of its Representatives. The term
"Confidential Material" does not include information which is or becomes
generally available to the public other than as a result of a disclosure by any
member of the ▇▇▇▇ Group or any of the Representatives or becomes available to
any member of the ▇▇▇▇ Group or any of the Representatives on a non-confidential
basis from any source that is not known by such member of the ▇▇▇▇ Group or such
Representative to be bound by an obligation of confidentiality to the Company.
(ii) The term "Representatives" shall mean any and all
employees, agents, financial advisors, partners, affiliates or other
representatives of any member of the ▇▇▇▇ Group.
(b) Each member of the ▇▇▇▇ Group and each of the Representatives will
preserve the confidentiality of the Confidential Material and will not disclose
any of the Confidential Material in any manner whatsoever; provided, however,
that (i) the ▇▇▇▇ Group may make any disclosure of such information to which the
Company gives its prior consent, (ii) any of such information may be disclosed
to the Representatives who need to know such information, and who are informed
of the confidential nature of the Confidential Material and of the terms of this
Section 6.1 and who agree to keep such information confidential, (iii) any
member of the ▇▇▇▇ Group may make any disclosure of such information in
connection with any activity which such member of the ▇▇▇▇ Group reasonably
believes to be in the best interests of the Company and not prohibited by this
Agreement, provided the recipient of such information is informed of the
confidential nature of the Confidential Material and of the terms of this
Section 6.1 and agrees to keep such information confidential and (iv) any member
of the ▇▇▇▇ Group may make any disclosure of such information to any other
member of the ▇▇▇▇ Group. In any event, the ▇▇▇▇ Group will be responsible for
any actions by the Representatives which are not in accordance with the
provisions hereof.
(c) If any member of the ▇▇▇▇ Group or any of the Representatives are
requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any informal or
formal investigation by any government or governmental agency or authority or
otherwise) to disclose any Confidential Material or such person's opinion,
judgment, view or recommendation concerning the Company as developed from the
Confidential Material, the ▇▇▇▇ Group agrees (i) to promptly notify the Company
of the
-17-
existence, terms and circumstances surrounding such a request, (ii) to the
extent possible, to consult with the Company on the advisability of taking
legally available steps to resist or narrow such request and (iii) if disclosure
of such information is required, to furnish only that portion of the
Confidential Material which, in the opinion of counsel to the relevant member of
the ▇▇▇▇ Group, the ▇▇▇▇ Group is legally compelled to disclose, and to
cooperate with any action by the Company to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Material.
(d) Each Investor hereby acknowledges that the United States securities
laws prohibit, in certain circumstances, any person who has received from an
issuer material, non-public information, including certain information that may
be part of the Confidential Material, while such information is non-public, from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
(e) This Section 6.1 shall survive until the earlier of the fifth
anniversary of this Agreement or two years following the date of termination of
this Agreement.
ARTICLE VII
MISCELLANEOUS
-------------
7.1. [Intentionally deleted]
7.2. Term of Agreement; Certain Provisions Regarding Termination.
Unless this Agreement specifically provides for earlier or later termination
with respect to any particular right or obligation, this Agreement shall
terminate if the ▇▇▇▇ Group shall, at any time, sell or otherwise dispose of or
otherwise cease to own Company Voting Securities such that the ▇▇▇▇ Group
beneficially owns in the aggregate Company Voting Securities representing less
than 5% of the Combined Voting Power of all Company Voting Securities
(calculated in accordance with Section 3.1 and including the Shares and, to the
extent the Warrant has not been exercised or has not expired, the Warrant
Shares).
7.3 Legend and Stop Transfer Order. To assist in effectuating the
provisions of this Agreement, each of the Investors hereby consents to the
placement, in connection with the transactions contemplated by the Purchase
Agreement and the Standby Purchase Agreement or otherwise within 10 business
days after any Company Voting Securities become subject to the provisions of
this Agreement, of the applicable legend specified below on all certificates
representing ownership of Company Voting Securities owned of record or
beneficially by any member of the ▇▇▇▇ Group, until such shares are sold,
transferred or disposed in a manner permitted hereby to a person who is not then
a member of the ▇▇▇▇ Group. The Company agrees to remove promptly all legends
and stop transfer orders with respect to the transfer of Company Voting
Securities being made to a person who is not then a member of the ▇▇▇▇ Group in
compliance with the provisions of this Agreement.
Certificates representing any Shares or Warrant Shares held by Samstock
or TNI shall contain 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
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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 Second Amended and Restated Investment
Agreement dated as of June 30, 1999, the Amended and Restated Agreement
Among Stockholders dated as of March 3, 1998, and the Stockholder's
Agreement dated as of March 3, 1998, 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."
Certificates representing any Preferred Shares, the Rights Offering
Warrant Shares or the Preferred Stock Conversion Shares held by Samstock or TNI
shall contain 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 Second Amended and Restated
Investment Agreement dated as of June 30, 1999, 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."
Certificates representing any Shares or Warrant Shares held by
Halmostock shall contain 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 Second Amended and Restated
Investment Agreement dated as of June 30, 1999, and the Stockholders'
Agreement dated as of March 3, 1998, 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."
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7.4 Remedies.
(a) Each of the Investors and the Company acknowledge and agree that
(i) the provisions of this Agreement are reasonable and necessary to protect the
proper and legitimate interests of the parties hereto, and (ii) the parties
would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by the other party (or its affiliates) without the
necessity of proving actual damages or of posting any bond, and to enforce
specifically the terms and provisions hereof and thereof in any court of the
United States or any state thereof having jurisdiction, which rights shall be
cumulative and in addition to any other remedy to which the parties may be
entitled hereunder or at law or equity.
(b) In addition to any other remedy the Company may have under this
Agreement or in law or equity, if any member of the ▇▇▇▇ Group shall acquire or
transfer any Company Voting Securities in violation of this Agreement, such
Company Voting Securities which are in excess of the number permitted to be
owned or controlled by the ▇▇▇▇ Group or which have been transferred by a member
of the ▇▇▇▇ Group in violation of the provisions of this Agreement may not be
voted by the owner thereof or any proxy therefor.
7.5 Additional ▇▇▇▇ Group Parties; Several Obligations. All of the
liabilities and obligations under this Agreement: (a) of members of the ▇▇▇▇
Group who are ▇▇▇▇ Affiliates shall be joint and several; (b) as between members
of the ▇▇▇▇ Group who are ▇▇▇▇ Affiliates, on the one hand, and any other
persons or groups who are not ▇▇▇▇ Affiliates, on the other hand, shall be
several and not joint. Notwithstanding anything to the contrary in this
Agreement, in no event shall any member of the ▇▇▇▇ Group who is a ▇▇▇▇
Affiliate be responsible in any manner for any liability or obligation of any
person or group who is not a ▇▇▇▇ Affiliate. Notwithstanding anything to the
contrary in this Agreement, in no event shall any member of the ▇▇▇▇ Group who
is not a ▇▇▇▇ Affiliate be responsible in any manner for any liability or
obligation of any person or group who is a ▇▇▇▇ Affiliate. Notwithstanding
anything to the contrary in this Agreement, no natural person or entity that is
not a signatory party to this Agreement shall have any liability or obligation
under this Agreement, except as otherwise provided in Section 7.12 of this
Agreement. Each member of the ▇▇▇▇ Group that shall become or have the right to
become the beneficial owner, within the meaning and scope of Section 3.1 hereof,
of Company Voting Securities shall, promptly upon becoming such owner or holder,
execute and deliver to the Company a joinder agreement, agreeing to be legally
bound by this Agreement to the same extent as if it had signed this Agreement as
an original signatory as a member of the ▇▇▇▇ Group (each such member of the
▇▇▇▇ Group, a "▇▇▇▇ Contracting Party"); provided that failure to execute such
an agreement shall not excuse such member's non-compliance with any provision of
this Agreement. No member of the ▇▇▇▇ Group shall transfer securities to another
member of the ▇▇▇▇ Group unless the transferee shall agree to be bound by this
Agreement in the manner specified above in this Section 7.5.
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7.6 Notices. All notices, and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, facsimile, to
the appropriate address or facsimile number set forth below (or at such other
address or facsimile number for a party as shall be specified by like notice):
if to Samstock or TNI:
Samstock, L.L.C.
Two ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Halmostock:
Halmostock Limited Partnership
▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with an additional copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company:
Transmedia Network Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the ▇▇▇▇▇▇▇ Trust:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as trustee
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
7.7 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The parties hereto agree that they will use
their best efforts at all times to support and defend this Agreement.
7.8 Amendments. This Agreement may be amended only by an agreement in
writing signed by each of the parties hereto; provided, however, that any
amendment executed by the Company must prior thereto be approved by a majority
of the Disinterested Directors then in office.
7.9 Governing Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Delaware applicable to contracts
made in that State.
7.10 Descriptive Headings. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
7.11 Counterparts; Facsimile Signatures. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
bears the signatures of each of the parties hereto. This Agreement may be
executed in any number of counterparts, each of which shall be an original as
against the party whose signature appears thereon, or on whose behalf such
counterpart is executed, but all of which taken together shall be one and the
same agreement. A facsimile copy of a signature of a party to this Agreement or
any such counterpart shall be fully effective as if an original signature.
7.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
7.13 Assignments. This Agreement may not be assigned without the prior
written consent of each party hereto, and any attempt to effect an assignment
hereof without such consent shall be void.
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IN WITNESS WHEREOF, each of the Investors other than Halmostock and
the Company have executed this Second Amended and Restated Investment Agreement
as of the date first above written.
INVESTORS:
EGI-TRANSMEDIA INVESTORS, L.L.C.
---------------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
SAMSTOCK, L.L.C.
---------------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
SOLELY FOR PURPOSES OF SECTION 5 HEREOF:
▇▇▇▇▇▇▇ TRUST:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as trustee under declaration
of trust dated March 9, 1983, as amended,
establishing the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust
COMPANY:
TRANSMEDIA NETWORK INC.
---------------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
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