===========================================================
SECURITIES PURCHASE AGREEMENT
BETWEEN
HOLLYWOOD MEDIA CORP.
AND
VIACOM INC.
DATED AS OF
APRIL 25, 2001
===========================================================
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of April 25, 2001, between HOLLYWOOD MEDIA CORP., a Florida
corporation (the "Company") and VIACOM INC., a Delaware
corporation ("Viacom" or the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue and sell in the
aggregate (a) 310,425 shares (the "Common Shares") of the
Company's Common Stock (the "Common Stock"), (b) warrants to
purchase up to 162,973 shares of Common Stock pursuant to the
terms set forth in the "A" Warrant, the form of which is annexed
hereto as Exhibit A, and (c) warrants to acquire up to 439,251
shares of Common Stock pursuant to the terms set forth in the
"B" Warrant, the form of which is annexed hereto as Exhibit B
(the "A" Warrant and the "B" Warrant, collectively, the
"Warrants") on a private placement basis pursuant to an exemption
from registration under Section 4(2) of the Securities Act of
1933, as amended, and the Purchaser desires to purchase the
Common Shares and the Warrants, on the terms and subject to the
conditions set forth herein; and
WHEREAS, the registered holders of the Common Shares and the
Warrants will have registration rights with respect to such
Common Shares and shares of Common Stock and/or, if applicable,
other securities issuable upon exercise of the Warrants (such
shares of Common Stock and/or, if applicable, other securities,
the "Warrant Shares") pursuant to the terms of the Registration
Rights Agreement between the Company and the Purchaser (the
"Registration Rights Agreement").
NOW THEREFORE, in consideration of the premises,
representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINITIONS. The following terms shall
have the following respective meanings:
"Affiliate" of a Person means another Person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first-
mentioned Person. The term "control" (including the terms
"controlling," "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise.
"Call Period" has the meaning set forth in Section 2.03.
"Capital Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents
(however designated) of corporate stock, including each class of
common stock and preferred stock, of such Person.
"Closing" has the meaning set forth in Section 2.02.
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any federal or state
government or political subdivision thereof and any agency or
other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Material Adverse Effect" has the meaning set forth in
Section 3.01.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company, Governmental
Authority or other entity of any kind.
"Redemption Date" has the meaning set forth in Section 2.03.
"Redemption Price" has the meaning ascribed to such term in
Section 2.03.
"Redemption Right" has the meaning set forth in Section
2.03.
"Reset Period" means the 20 Trading Day intervals beginning
on each of October 30, 2001, January 30, 2002, April 30, 2002 and
July 30, 2002, or in the event that a registration statement has
not been declared effective with respect to the resale of the
shares of Common Stock underlying the Warrants by October 30,
2001, then the 20 Trading Day intervals beginning on the one
month, four month, seven month and ten month anniversaries of
such date that a registration statement with respect to the
resale of the shares of the Common Stock underlying the Warrants
has been declared effective.
"SEC Reports" means the Company's Annual Report on Form 10-K
for the year ended December 31, 2000.
"Securities Act" means the Securities Act of 1933, as
amended.
"Trading Day" means any day on which the principal market on
which the Common Stock trades is open.
"Transaction Documents" means, collectively, this Agreement,
the Registration Rights Agreement and the Warrants.
"United States" has the meaning ascribed to such term in
Rule 902(p) of Regulation S under the Securities Act.
"U.S. Person" has the meaning ascribed to such term in Rule
902(o) of Regulation S under the Securities Act.
ARTICLE II
SALE AND PURCHASE
SECTION 2.01. AGREEMENT TO SELL AND TO PURCHASE; PURCHASE PRICE.
On the terms and subject to the conditions set forth in this
Agreement, the Company hereby agrees to issue and sell to the
Purchaser, and the Purchaser, hereby agrees to purchase from the
Company, the number of Common Shares set forth opposite the
Purchaser's name on Annex A at the purchase price set forth
opposite the Purchaser's name on Annex A, payable in immediately
available funds to the Company (such purchase price with respect
to any Purchaser, the "Purchase Price").
Section 2.02. CLOSING. The closing of the sale and
purchase of the Common Shares and the Warrants (the "Closing")
shall be deemed to take place as of May 1, 2001. At the Closing,
the following closing transactions shall take place, each of which
shall be deemed to occur simultaneously with the Closing:
(i) the Company shall execute, issue and deliver to the Purchaser
certificates evidencing the Common Shares deliverable to the
Purchaser as set forth on Annex A in such denominations as the
Purchaser shall reasonably request; (ii) the Company shall
execute, issue and deliver to the Purchaser the "A" Warrant and
"B" Warrant to purchase shares of Common Stock deliverable to the
Purchaser as set forth on Annex A; (iii) the Purchaser shall pay
the Purchase Price by wire transfer as set forth on Annex A to
the account designated by the Company in writing prior to the
Closing; (iv) the Company and the Purchaser shall execute and
deliver the Registration Rights Agreement; (v) the Company shall
deliver to the Purchaser a certificate executed by the Secretary
of the Company, signing in such capacity, dated the date of the
Closing (A) certifying that attached thereto are true and
complete copies of the resolutions duly adopted by the Board of
Directors of the Company authorizing the execution and delivery
of the Transaction Documents and the consummation of the
transactions contemplated thereby (including, without limitation,
the issuance and sale of the Common Shares and the Warrants and
the reservation and issuance of the Warrant Shares upon exercise
of the Warrants), which authorization shall be in full force and
effect on and as of the date of such certificate, (B) certifying
and attesting to the office, incumbency, due authority and
specimen signatures of each Person who executed any Transaction
Document for or on behalf of the Company and (C) certifying as to
the accuracy of the representations and warranties of the Company
contained in the Transaction Documents; and (vi) W. Xxxxxx
Xxxxxxx, Senior Vice President and General Counsel to the
Company, shall deliver to the Purchaser an opinion, dated the
date of the Closing and addressed to the Purchaser, covering
customary matters.
Section 2.03. REDEMPTION (a) The Company shall have the
right (the "Redemption Right") from the first Trading Day of each
Reset Period until the fifth Trading Day of each such Reset Period
(the "Call Period") to give notice to repurchase, all, or less than
all, of the Common Shares owned by the Purchaser at $5.637 per
share (the "Redemption Price"). The Company may exercise its
Redemption Right only if shares of Common Stock are issuable
pursuant to the "B" Warrant in respect of such Reset Period as of
the date of delivery of the notice of redemption.
(b) In order to exercise its Redemption Right, the Company
shall deliver to the Purchaser a notice of redemption setting forth the
date of redemption, which shall be five (5) Trading Days from the
date of the notice (the "Redemption Date") and shall be within
the period specified in Section 2.03(a) above that the Redemption
Right may be effected. Any such notice of redemption shall be
irrevocable. The Company shall pay the Redemption Price to the
Purchaser, in cash, on the Redemption Date. Notwithstanding the
receipt of such notice of redemption, the Purchaser shall be
entitled to sell shares of Common Stock at any time prior to the
Redemption Date.
(c) In addition to the foregoing, if (i) the Company fails
to have a registration statement declared effective with respect to
the resale of the shares of Common Stock underlying the Warrants
within eight (8) months of the date of Closing; (ii) the Company
has failed to timely deliver any Warrant Shares to the Purchaser
pursuant to an effective exercise of the Warrants, and upon
receipt of notice of the failure to deliver the Warrant Shares,
has not delivered such shares within five (5) days of receiving
such notice; or (iii) the Company has failed to remove a
restrictive legend from any security within 15 days of when such
legend may be removed pursuant to Section 5.02 hereof, then the
Purchaser may demand that the Company repurchase all, or less
than all, of the Common Shares owned by the Purchaser at $5.637
per share, which amount shall be paid within five (5) Trading
Days from when a Purchaser demands such redemption.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchaser to purchase the
Common Shares and the Warrants, the Company hereby represents and
warrants to the Purchaser that on and as of the date hereof:
Section 3.01. ORGANIZATION AND STANDING. The Company and each
of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and has all requisite corporate power and
authority, and all authorizations, licenses, permits and
certifications necessary for it to own its properties and assets
and to carry on its business as it is now being conducted (and,
to the extent described therein, as described in the SEC Reports)
and proposed to be conducted. The Company and each of its
subsidiaries is duly qualified to transact business and is in
good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its businesses
makes such qualification necessary, except where the failure to
so qualify or be in good standing would not have a material
adverse effect on the business, assets, operations, properties,
condition (financial or otherwise) or prospects of the Company
and its subsidiaries, taken as a whole, or any adverse effect on
the Company's ability to consummate the transactions contemplated
by, or to execute, deliver and perform its obligations under,
each of the Transaction Documents (a "Material Adverse Effect").
Section 3.02. SECURITIES OF THE COMPANY. The authorized
Capital Stock of the Company consists of one hundred million shares
of Common Stock and one million shares of preferred stock; as of
March 31, 2001, 25,161,532 shares of common stock and no shares
of preferred stock were outstanding and 1,450,000 shares of
Common Stock were reserved for issuance upon exercise of
outstanding warrants. Except as set forth in the SEC Reports,
the Company has no other authorized, issued or outstanding equity
securities or securities containing any equity features, or any
other securities convertible into, exchangeable for or entitling
any person to otherwise acquire any other securities of the
Company containing any equity features. The Company has no stock
option, incentive or similar plan other than the (1) 1993 Stock
Option Plan under which 3,150,000 shares of Common Stock may be
issued, (2) the Directors Plan, under which 100,000 shares of
Common Stock may be issued, and (3) the 2000 Stock Incentive Plan
under which 1,250,000 shares of Common Stock may be issued. All
of the outstanding shares of Capital Stock of the Company have
been duly and validly authorized and issued, and are fully paid
and nonassessable. The Common Shares and the Warrants and all of
the Warrant Shares have been duly and validly authorized. When
issued against payment therefor as provided in this Agreement,
the Common Shares and the Warrants will be validly issued, fully
paid and nonassessable, free and clear of all preemptive rights,
claims, liens, charges, encumbrances and security interests of
any nature whatsoever, and will constitute valid and enforceable
obligations of the Company, enforceable against the Company in
accordance with their respective terms (subject to the effects of
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and general principles of equity). When issued upon
exercise of the Warrants (assuming payment of the exercise price
therefor), the Warrant Shares will be validly issued, fully paid
and nonassessable, free and clear of all preemptive rights,
claims, liens, charges, encumbrances and security interests of
any nature whatsoever. A sufficient number of shares of Common
Stock has been duly reserved and will remain available for
issuance upon exercise of the Warrants. Except as set forth in
Schedule 3.02, this Section 3.02 and the SEC Reports, there are
no outstanding options, warrants, conversion rights, subscription
rights, preemptive rights, rights of first refusal or other
rights or agreements of any nature outstanding to subscribe for
or to purchase any shares of Capital Stock of the Company or any
other securities of the Company of any kind binding on the
Company. Except as set forth in Schedule 3.02, neither the
issuance of the Common Shares or the Warrants nor the issuance of
the Warrant Shares is subject to any preemptive rights, rights of
first refusal or other similar limitation. Except as otherwise
required by law, there are no restrictions upon the voting or
transfer of any shares of the Company's Capital Stock pursuant to
the Company's Certificate of Incorporation, bylaws or other
documents. Except as provided herein or in the other Transaction
Documents, there are no agreements or other obligations
(contingent or otherwise) that may require the Company to
repurchase or otherwise acquire any shares of its Capital Stock.
Section 3.03. AUTHORIZATION; ENFORCEABILITY. The Company has
the corporate power and authority to execute, deliver and perform
the terms and provisions of each of the Transaction Documents to
be executed, delivered or performed by it and has taken all
necessary corporate action to authorize the execution, delivery
and performance by it of, and the consummation of the
transactions contemplated by, the Transaction Documents. No
other corporate proceeding on the part of the Company is
necessary, and no consent of any shareholder of the Company is
required, for the valid execution and delivery by the Company of
the Transaction Documents, and the performance and consummation
by the Company of the transactions contemplated by the
Transaction Documents to be performed by the Company. The
Company has duly executed and delivered, or concurrently herewith
is executing and delivering, each of the Transaction Documents.
Assuming the due execution of this Agreement and the Registration
Rights Agreement by the Purchaser, this Agreement, the
Registration Rights Agreement, the Common Stock and the Warrants
constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with each of their
respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law).
Section 3.04. NO VIOLATION; CONSENTS.
(a) The execution, delivery and performance by the Company of
the Transaction Documents and the consummation of the
transactions contemplated thereby to be performed by the Company
do not and will not (i) contravene the applicable provisions of
any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or Governmental Authority to or
by which the Company or any of its subsidiaries or any of its
respective property or assets is bound, (ii) violate, result in a
breach of or constitute (with due notice or lapse of time or
both) a default or give rise to an event of acceleration under
any contract, lease, loan or credit agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to
which the Company is a party or by which it or any of its
subsidiaries is bound or to which any of its respective
properties or assets is subject, nor result in the creation or
imposition of any lien, security interest, charge or encumbrance
of any kind upon any of the properties, assets or Capital Stock
of the Company or any of its subsidiaries, or (iii) violate any
provision of the organizational and other governing documents of
the Company or any of its subsidiaries.
(b) No consent, approval, authorization or order of,
or filing or registration with, any court or Governmental Authority
or other Person is required to be obtained or made by the Company
for the execution, delivery and performance of the Transaction
Documents or the consummation of any of the transactions
contemplated thereby (other than the registration of the resale
of the Common Shares and the Warrant Shares with the Commission
and pursuant to any state "blue sky" laws as contemplated by the
Registration Rights Agreement), except for those consents or
authorizations previously obtained and those filings previously
made.
Section 3.05. SECURITIES ACT REPRESENTATIONS. The Company has
not offered or sold and will not offer or sell any shares of its
Capital Stock (including any shares of Common Stock or any
warrants) in this offering other than the Common Shares and the
Warrants. Assuming the accuracy of the Purchaser's
representations pursuant to Section 4.02 hereof, the sale of the
Common Shares and the Warrants hereunder is, and the issuance of
the Warrant Shares upon exercise of the Warrants will be, exempt
from the registration requirements of the Securities Act.
Neither the Company, nor any of its Affiliates, or, to its
knowledge, any Person acting on its or their behalf has engaged
in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Common Shares, Warrants
or Warrant Shares. Neither the Company, nor any of its
Affiliates, nor to its knowledge, any Person acting on its or
their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security
other than pursuant to this Agreement under circumstances that
would require registration under the Securities Act of the Common
Shares or Warrants to be issued under this Agreement. The
Company is eligible to use Form S-3 under the Securities Act to
file the Registration Statement (as defined in the Registration
Rights Agreement). The Company has not provided the Purchaser
with any material non-public information that, according to
applicable law, rule or regulation, should have been disclosed
publicly by the Company.
Section 3.06. SOLVENCY; NO DEFAULT. (a) The Company is,
and upon giving effect to the transactions contemplated hereby
to be performed by it as of the Closing will be, Solvent.
"Solvent" means that, as of the date of determination,
(i) the then fair saleable value of the assets of
the Company (on a consolidated basis) exceeds the then total
amount (on a consolidated basis) of its debts and other
liabilities, (including any guarantees and other contingent,
subordinated, unmatured or unliquidated liabilities whether or
not reduced to judgment, disputed or undisputed, secured or
unsecured), (ii) the Company has sufficient funds and cash flow
to pay its liability on its existing debts as they become
absolute and matured, (iii) final judgments against the Company
in pending or, to the Company's knowledge, threatened actions for
money damages will not be rendered at a time when, or in an
amount such that, the Company will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into
account (a) the maximum reasonable amount of such judgments in
any such actions (other than amounts that would be remote), (b)
the earliest reasonable time at which such judgments would be
rendered and (c) any reasonably expected insurance recovery with
respect thereto), and (iv) the Company does not have unreasonably
small capital with which to engage in its present business.
(b) The Company is not, and immediately after the
consummation of the transactions contemplated hereby to be performed
by the Company will not be, in default of (whether upon the passage of
time, the giving of notice or both) its organizational and other
governing documents, or any provision of any security issued by
the Company, or of any agreement, instrument or other undertaking
to which the Company is a party or by which it or any of its
property or assets is bound, or the applicable provisions of any
law, statute, rule, regulation, order, writ, injunction, judgment
or decree of any court or Governmental Authority to or by which
the Company or any of its property or assets is bound, which
default or violation, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
Section 3.07. NO BROKERS. No broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, placement or
similar fee or other commission in connection with the
transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company.
Section 3.08. SEC REPORTS; FINANCIAL CONDITION; NO
ADVERSE CHANGES. (a) The audited consolidated financial
statements of the Company and the related notes thereto
as of December 31, 2000 reported on by Xxxxxx Xxxxxxxx LLP,
independent accountants, copies of which have heretofore
been furnished to the Purchaser and are publicly available,
present fairly the financial condition, results of operations
and cash flows of the Company (on a consolidated basis)
at such date and for the periods set forth therein
(such audited consolidated financial statements,
collectively, the "Financial Statements"). The Financial
Statements, including the related schedules and notes thereto (if
any), have been prepared in accordance with generally accepted
accounting principles as set forth in the opinions and
pronouncements of the Accounting Principles Board of American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board as in
effect on the date of filing of such documents with the
Commission, applied on a consistent basis (except for changes
concurred in by the Company's independent public accountants)
unless otherwise expressly stated therein. Except as disclosed
in the SEC Reports, during the period from January 1, 2001 to and
including the date hereof, there has been no sale, transfer or
other disposition by the Company of any material part of the
business, property or securities of the Company and no purchase
or other acquisition of any business, property or securities by
the Company material in relation to the financial condition of
the Company.
(b) Except as are fully reflected or reserved against
in the inancial Statements and the notes thereto, there are no
liabilities or obligations with respect to the Company or any of
its subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) that,
either individually or in the aggregate, after taking into
account (a) the maximum reasonable amount of any liability that
may arise on account of any litigation or any other contingent
liability or obligation (other than amounts that would be
remote), (b) the earliest reasonable time at which any such
liability or obligation may become due and (c) any reasonably
expected insurance recovery with respect thereto, could
reasonably be expected to have a Material Adverse Effect.
(c) Since December 31, 2000, except as set forth in the SEC
Reports, there has been no development or event, nor any
prospective development or event known to the Company or any of
its subsidiaries, or any litigation, proceeding or other action
seeking an injunction or other restraining order, damages or
other relief from a court or administrative agency of competent
jurisdiction pending, threatened or, to the knowledge of the
Company, contemplated, or any action of any Governmental
Authority, that has had or could reasonably be expected to have a
Material Adverse Effect.
Section 3.09. USE OF PROCEEDS; FEDERAL REGULATIONS.
No part of the net proceeds from the sale of the Common Shares
and the Warrants will be used in a manner that would violate the
provisions of Regulation T, U or X of the Board of Governors of
the Federal Reserve System. The Company will not use such
proceeds other than for or in connection with general working
capital.
Section 3.10. SUBSIDIARIES. As of the date hereof, the Company
has no subsidiaries other than those listed on Schedule 3.10
hereto.
Section 3.11. NO INTEGRATED OFFERING. Neither the Company
nor any of its Affiliates, nor to its knowledge any Person acting on
its behalf has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security under
circumstances that would require registration under the
Securities Act of the offer and sale of the Common Shares and
Warrants.
Section 3.12. NO LITIGATION. Except as set forth on
Schedule 3.12, no litigation or claim (including those for unpaid
taxes), or environmental proceeding against the Company or any of its
subsidiaries is pending, threatened or, to the Company's best
knowledge, contemplated that, if determined adversely, would
(after taking into consideration any reasonably expected
insurance recovery with respect thereto) have a Material Adverse
Effect on the Company.
Section 3.13. ENVIRONMENTAL MATTERS. The Company and each of
its subsidiaries is in compliance in all material respects with
all applicable state and federal environmental laws, and no event
or condition has occurred that may interfere in any material
respect with the compliance by the Company or any of its
subsidiaries with any environmental law or that may give rise to
any liability under any environmental law that, individually or
in the aggregate, would have a Material Adverse Effect.
Section 3.14. INTELLECTUAL PROPERTY. The Company (and/or
its subsidiaries) owns or has licenses to use certain patents,
copyrights and trademarks ("intellectual property") associated
with its business. The Company and its subsidiaries have all
intellectual property rights that are needed to conduct the
business of the Company and its subsidiaries as it is now being
conducted as disclosed in the SEC Reports. The intellectual
property rights that the Company (and/or its subsidiaries) owns
are valid and enforceable. The use of such intellectual property
by the Company (and/or its subsidiaries') does not infringe upon
or conflict with any right of any third party in any material
respect, and neither the Company nor any of its subsidiaries has
received notice, written or otherwise, of any such infringement
or conflict. Except as set forth in the SEC Reports, the Company
has no knowledge of any infringement of its (and/or its
subsidiaries) intellectual property by any third party in any
material respect.
Section 3.15. INSURANCE. The Company and each of its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts
as management of the Company believes to be prudent and customary
in the businesses in which the Company and its subsidiaries are
engaged. The Company has no reason to believe that it and its
subsidiaries will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
Section 3.16. RELATED PARTY TRANSACTIONS. Except as set
forth in the SEC Reports and the transactions contemplated by this
Agreement, none of the officers, directors, employees or 5% or
greater shareholders of the Company is presently a party to any
transaction with the Company or any of its subsidiaries (other
than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of
real or personal property to or from, or the advances of money or
otherwise requiring payments to or from any such officer,
director, employee or shareholder or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in
which any such officer, director, employee or shareholder has a
substantial interest or is an officer, director, trustee or
partner.
Section 3.17. PERMITS. The Company and each of its
subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted
(collectively, the "Company Permits"), and there
is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the
Company Permits except for such Company Permits the failure of
which to possess, or the cancellation or suspension of which,
would not, individually or in the aggregate, have a Material
Adverse Effect. To the best of its knowledge neither the Company
nor any of its subsidiaries is in material conflict with, or in
material default or material violation of, any of the Company
Permits.
Section 3.18. INTERNAL ACCOUNTING CONTROLS. The Company and
each of its subsidiaries maintain a system of internal accounting
controls sufficient, in the judgment of the Company's board of
directors, to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
Section 3.19. TAX RETURNS. The Company has filed or caused
to be filed all Federal tax returns and all material state and local
tax returns required to have been filed by it and has paid or
caused to be paid all taxes shown to be due and payable by it on
such returns or on any assessments received by it, except any
such tax, the validity or amount of which is being contested in
good faith by appropriate proceedings and as to which the Company
has set aside on its books adequate reserves with respect thereto
in accordance with generally accepted accounting principles.
Neither the Company nor its subsidiaries has received any tax
assessment, notice of audit, notice of proposed adjustment or
deficiency notice from any taxing authority.
Section 3.20. DISCLOSURE. The statements contained in the
SEC Reports and the schedules, certificates and exhibits furnished to
the Purchaser by or on behalf of the Company in connection
herewith do not contain any untrue statement of a material fact
and do not omit to state any material fact necessary to make the
statements herein or therein not misleading in light of the
circumstances under which they were made. The SEC Reports
contain all material information concerning the Company required
to be set forth therein, and no event or circumstance has
occurred or exists since December 31, 2000, that would require
the Company to disclose such event or circumstance in order to
make the statements in the SEC Reports not misleading as of the
date of the Closing but that has not been so disclosed. The
Company hereby acknowledges that the Purchaser is and will be
relying on the SEC Reports and the Company's representations,
warranties and covenants contained herein in making an investment
decision with respect to the Common Shares and the Warrants and
will be relying thereon (together with future reports filed with
the Commission) in connection with any transfer of Common Shares,
Warrants and Warrant Shares or any acquisition of Warrant Shares
upon exercise of the Warrants.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser hereby acknowledges, represents, warrants and
covenants, to the Company as follows:
Section 4.01. AUTHORIZATION; ENFORCEABILITY; NO VIOLATIONS.
(a) The Purchaser is duly organized, validly existing and in
good standing under the laws of its jurisdiction, has all
requisite power and authority to execute, deliver and perform the
terms and provisions of this Agreement and the Registration
Rights Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement
and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby to be performed by
it.
(b) The execution, delivery and performance by the Purchaser
of this Agreement and the Registration Rights Agreement and the
consummation by the Purchaser of the transactions contemplated
hereby and thereby to be performed by it do not and will not
violate any provision of (i) the Purchaser's organizational
documents or (ii) any law, statute, rule, regulation, order,
writ, injunction, judgment or decree to which the Purchaser is
subject. The Purchaser has duly executed and delivered this
Agreement and has executed and delivered, or concurrently
herewith is executing and delivering, the Registration Rights
Agreement. Assuming the due execution hereof and thereof by the
Company, each of this Agreement and the Registration Rights
Agreement constitutes the legal, valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law).
Section 4.02. SECURITIES ACT REPRESENTATIONS; LEGENDS.
(a) The Purchaser understands that: (i) the offering and sale
of the Common Shares and the Warrants to be issued and sold
hereunder is intended to be exempt from the registration
requirements of the Securities Act; (ii) neither the Common
Shares or the Warrants nor the Warrant Shares have been
registered under the Securities Act or any other applicable
securities laws and such securities may be resold only if
registered under the Securities Act and any other applicable
securities laws or if an exemption from such registration
requirements is available; and (iii) the Company is required to
register any resale of the Common Shares, the Warrants or the
Warrant Shares under the Securities Act and any other applicable
securities laws only to the extent provided in the Registration
Rights Agreement.
(b) The Common Shares and the Warrants to be acquired by the
Purchaser pursuant to this Agreement and the Warrant Shares
issuable upon exercise of the Warrants are being acquired for its
own account, for investment purposes, and not with a view to, or
for sale in connection with, any distribution thereof (other than
the resale of Common Shares and Warrant Shares pursuant to an
effective registration statement as contemplated by the
Registration Rights Agreement) in violation of the Securities Act
or any other securities laws that may be applicable.
(c) The Purchaser (i) has sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Common Shares and
the Warrants and is capable of bearing the economic risks of such
investment, including a complete loss of its investment in the
Common Shares and the Warrants; (ii) believes that its investment
in the Common Shares and the Warrants are suitable for it based
upon its objectives and financial needs, and the Purchaser has
adequate means for providing for its current financial needs and
business contingencies and has no present need for liquidity of
investment with respect to the Common Shares and the Warrants;
(iii) has no present plan, intention or understanding and has
made no arrangement to sell the Common Shares, the Warrants or
the Warrant Shares at any predetermined time or for any
predetermined price; (iv) has not purchased, sold or entered into
any put option, short position or similar arrangement with
respect to the Common Stock, and will not, for so long as it owns
any Common Shares, Warrants or Warrant Shares, purchase, sell or
enter into any such put option, short position or similar
arrangement in any manner that violates the provisions of the
Securities Act or the Exchange Act.
(d) No oral or written statements or representations have
been made to the Purchaser by or on behalf of the Company in
connection with the offering and sale of the Common Shares and
the Warrants hereunder other than those set forth in the SEC
Reports, or as set forth herein or in the other Transaction
Documents, and the Purchaser is not subscribing for the Common
Shares and the Warrants as a result of, or in response to, any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting.
(e) The Purchaser acknowledges that the Securities Act
restricts the transferability of securities, such as the Common
Shares, Warrants and Warrant Shares, issued in reliance upon the
exemption from the registration requirements of the Securities
Act provided by Section 4(2) thereunder, and that, subject to
Section 5.02 hereof, the certificates representing the Common
Shares, the Warrants and the Warrant Shares will bear a legend in
substantially the following form, by which the Purchaser and each
subsequent holder of such securities will be bound:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (AND AS OF
THE DATE OF ORIGINAL ISSUANCE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE, ANY UNDERLYING SECURITIES) HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN
ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH SECURITIES LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A) TO HOLLYWOOD
MEDIA CORP. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT. THE HOLDER OF THIS CERTIFICATE AGREES THAT
IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY OR ANY SECURITY
ISSUED UPON CONVERSION HEREOF IS TRANSFERRED (UNLESS SUCH
SECURITY IS TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT) A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY PROPOSED TRANSFER
PURSUANT TO CLAUSES (B), (C) OR (D) ABOVE, THE COMPANY MAY
REQUIRE THAT THE TRANSFEROR FURNISH IT WITH AN OPINION OF COUNSEL
CONFIRMING THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE
SECURITIES ACT.
SECTION 4.03. NO BROKERS. No broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, placement or
similar fee or other commission in connection with the
transactions contemplated hereby based on any agreement,
arrangement or understanding with the Purchaser.
Section 4.04. RIGHT OF FIRST REFUSAL. The Purchaser
covenants, acknowledges and agrees that the Common Shares and the
Warrant Shares are subject to the terms and conditions of the
Company's Right of First Refusal as set forth in Section 2 of the
Investor's Rights Agreement dated as of January 3, 2000 between
the Company and Purchaser.
ARTICLE V
COVENANTS
SECTION 5.01. LIMITATION ON ISSUANCE OF SECURITIES.
(a) The Company will not make any offer to sell, solicit any
offer to buy, agree to sell or sell any security or right to
acquire any security, except at such time and in such manner so
as not to cause the loss of any of the exemptions for the offer
and sale of the Common Shares or the Warrants hereunder and for
the issuance of the Warrant Shares upon exercise of the Warrants
from the registration requirements under the Securities Act or
under the securities or "blue sky" laws of any jurisdiction in
which such offer, sale or issuance is made.
(b) In addition to the foregoing limitation on the issue of
securities, for a period commencing on the date of the Closing
and ending four (4) months after a registration statement
relating to the resale of the Common Shares and Warrant Shares is
declared effective, without obtaining the prior written consent
of the Purchaser, the Company will not (1) issue a floating
convertible or similar security that provides for a minimum
conversion price less than $4.5099 or (2) issue common stock or
securities convertible into common stock in a capital raising
transaction at a price that is less than 90% of the then existing
Market Price at the time of issuance. For purposes of the
foregoing "Market Price" means the lesser of (i) the ten (10) day
average closing price preceding the closing or (ii) the closing
price on the closing date of such transaction. Notwithstanding
the foregoing, the Company shall be able to issue any such
securities in connection with strategic transactions to a
strategic investor.
Section 5.02. TRANSFER RESTRICTIONS; DELIVERY OF WARRANT SHARES.
(a) The Purchaser acknowledges that any proposed offer, sale,
pledge or other transfer of Common Shares, Warrants or Warrant
Shares prior to the date that is two (2) years from the Closing
(or such other date as may be required pursuant to Rule 144 under
the Securities Act (or similar successor provision) as in effect
from time to time), in the absence of registration under the
Securities Act, is limited. Accordingly, prior to such passage
of time or such registration, the Common Shares, the Warrants or
the Warrant Shares may be offered, sold, pledged or otherwise
transferred only (i) to the Company, (ii) in an offshore
transaction in accordance with Rule 904 under the Securities Act,
(iii) pursuant to any other exemption from registration provided
by the Securities Act, (iv) pursuant to Rule 144 under the
Securities Act or (v) pursuant to an effective registration
statement under the Securities Act; in the case of any transfer
pursuant to clause (ii), (iii) or (iv), the Company shall be
entitled to receive an opinion of the selling Purchaser's
counsel, in form and substance reasonably satisfactory to the
Company, to the effect that registration is not required in
connection with such disposition. Any Common Shares or Warrants
sold to the Company may not be reissued or resold.
(b) The Company agrees to issue certificates representing
the Common Shares, Warrants or Warrant Shares without the legend
referenced in Section 5.02(a) above at such time as (i) the
holder thereof is permitted to dispose of such Common Shares,
Warrants or Warrant Shares pursuant to Rule 144 (k) under the
Securities Act (to the extent applicable), (ii) such Common
Shares, Warrants or Warrant Shares are sold to a purchaser or
Purchaser who (in the opinion of counsel to the seller or the
purchaser(s), in form and substance reasonably satisfactory to
the Company) are able to dispose of such securities publicly
without registration under the Act and such legend is no longer
required to be included on the certificates representing the
Common Shares, Warrants or Warrant Shares or (iii) such Common
Shares, Warrants or Warrant Shares are sold or are available for
resale pursuant to an effective registration statement under the
Securities Act.
(c) In the alternative to physical delivery of certificates
for Warrant Shares, if delivery of the Warrant Shares pursuant to any
conversion thereunder may be effectuated by electronic book-entry
through The Depositary Trust Company ("DTC"), delivery of Warrant
Shares pursuant to such conversion shall, if requested by the
Purchaser (or holder of Warrant Shares), settle by book-entry
transfer through DTC by the third trading day following the date
of exercise of the Warrants pursuant to the terms thereof, as
appropriate. The parties agree to coordinate with DTC to
accomplish this objective.
Section 5.03. RULES 144; CURRENT INFORMATION. For so long as
any Common Shares, Warrants or Warrant Shares are outstanding,
the Company will (i) cause its Common Stock to continue to be
registered under Section 12 of the Exchange Act, file all reports
required to be filed by it under the Securities Act and the
Exchange Act and will take such further actions as any Purchaser
may reasonably request, all to the extent required from time to
time to enable a Purchaser to sell Common Shares, Warrants and
Warrant Shares without registration under the Securities Act
pursuant to the safe harbors and exemptions provided by Rule 144
under the Securities Act (to the extent applicable), as such Rule
may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission, and (ii) furnish
the Purchaser with all reports, proxy statements and registration
statements that the Company files with the Commission or
distributes to its securityholders pursuant to the Securities Act
and the Exchange Act at the times of such filings and
distributions (unless such documents are available electronically
from the Commission or elsewhere without charge and within a
period reasonably contemporaneous with the filing thereof with
the Commission, in which case such documents need not be provided
to any Purchaser). Upon the request of a Purchaser, the Company
will deliver to the Purchaser a written statement as to whether
it has complied with the foregoing requirements.
Section 5.04. RESERVATION OF WARRANT SHARES. The Company shall
at all times reserve and keep available, free from preemptive
rights, out of its authorized but unissued shares of Common Stock
or its issued shares of Common Stock held in its treasury, or
both, sufficient shares of Common Stock to provide for the
issuance of the Warrant Shares in an amount equal to the balance
of the Warrant Shares not then yet issued.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. INDEMNIFICATION. In consideration of the
Purchaser's execution and delivery of this Agreement, the
Registration Rights Agreement and in addition to all of the
Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the
Purchaser and all of its partners, officers, directors,
employees, members and any of the foregoing persons' agents or
other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this
Agreement) (collectively, the "Indemnitees") from and against any
and all losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any
such Indemnitee is a party to the action or which indemnification
hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of any cause of
action, suit or claim brought or made against such Indemnitee by
a third party and arising out of or resulting from the breach by
the Company of any representation, warranty or covenant in the
Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby. Notwithstanding the
foregoing, Indemnified Liabilities shall not include any
liability of any Indemnitee to the extent arising out of such
Indemnitee's breach of the Transaction Documents, willful
misconduct or fraudulent action(s). To the extent that the
foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. Except as otherwise
set forth herein, the mechanics and procedures with respect to
the rights and obligations under this Article VI shall be the
same as those set forth in Section 4 of the Registration Rights
Agreement, including, without limitation, those procedures with
respect to the settlement of claims and Company's right to assume
the defense of claims.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. PRESS RELEASES AND DISCLOSURE. No party hereto
shall issue any press release or make any other public disclosure
related to this Agreement or any of the transactions contemplated
hereby without the prior written approval of the other party
hereto, except as may be necessary or appropriate in the opinion
of the party seeking to make disclosure to comply with the
requirements of applicable law or stock exchange rules. If any
such press release or public disclosure is so required, the party
making such disclosure shall consult with the other party prior
to making such disclosure, and the parties shall use all
reasonable efforts, acting in good faith, to agree upon a text
for such disclosure that is satisfactory to all parties.
Section 7.02. NOTICES. All notices, demands, requests,
consents, approvals or other communications required or permitted
to be given hereunder or that are given with respect to this
Agreement shall be in writing and shall be personally served or
deposited in the mail, registered or certified, return receipt
requested, postage prepaid or delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most
recently by written notice: (i) if to the Company, to: Hollywood
Media Corp., 0000 Xxxxxx Xx., Xxx. 000X, Xxxx Xxxxx, Xxxxxxx,
Attention: Xxxxxxxx Xxxxxxxxxx, Chairman and CEO, Facsimile No.:
(000) 000-0000, with copies (which shall not constitute notice)
to: Hollywood Media Corp., 0000 Xxxxxx Xx., Xxx. 000X, Xxxx
Xxxxx, Xxxxxxx, Attention: W. Xxxxxx Xxxxxxx, Senior Vice
President and General Counsel, Facsimile No.: (000) 000-0000;
and (ii) if to the Purchaser at the address of the Purchaser set
forth on Annex A. Notice shall be deemed given on the date of
service or transmission if personally served or transmitted by
telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given on the third business day following
the date mailed or on the next business day following delivery of
such notice to a reputable air courier service.
Section 7.03. ENTIRE AGREEMENT. This Agreement (together with
the other Transaction Documents and all other documents delivered
pursuant hereto and thereto) constitutes the entire agreement of
the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions
between the parties, whether oral or written, with respect to the
subject matter hereof.
Section 7.04. AMENDMENT AND WAIVER. This Agreement may not
be amended, modified, supplemented, restated or waived except by a
writing executed by the party against which such amendment,
modification or waiver is sought to been enforced. Waivers may
be made in advance or after the right waived has arisen or the
breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement
or provision herein contained. No waiver or extension of time
for performance of any obligations or acts shall be deemed a
waiver or extension of the time for performance of any other
obligations or acts.
Section 7.05. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement and the rights, duties and obligations hereunder may
not be assigned or delegated by the Company or any Purchaser
without the prior written consent of the other parties hereto;
provided that the Purchaser may assign or delegate its rights,
duties and obligations hereunder to any Affiliate of the
Purchaser. Except as provided in the preceding sentence, any
purported assignment or delegation of rights, duties or
obligations hereunder made without the prior written consent of
the other party hereto shall be void and of no effect. This
Agreement and the provisions hereof shall be binding upon and
shall inure to the benefit of each of the parties and their
respective successors and permitted assigns. This Agreement is
not intended to confer any rights or benefits on any Persons
other than as set forth above.
Section 7.06. SEVERABILITY. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability
of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as
a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be
valid and enforceable.
Section 7.07. FURTHER ASSURANCES. Each party hereto, upon the
request of any other party hereto, shall do all such further acts
and execute, acknowledge and deliver all such further instruments
and documents as may be necessary or desirable to carry out the
transactions contemplated by this Agreement.
Section 7.08. TITLES AND HEADINGS. Titles, captions and
headings of the sections of this Agreement are for convenience of
reference only and shall not affect the construction of any
provision of this Agreement.
Section 7.09. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 7.10. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, all of
which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
HOLLYWOOD MEDIA CORP.
By: /s/ Xxxxxxxx Xxxxxxxxxx
-------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: CEO
VIACOM INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name:
Title:
