-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkHT+SUKQmKiiTAc48c7RvtlqCkm2M0Rgb2kDYXzG4EcGNE2oCCEa75JHmZdvuPP VcftieUYAgDcEFrbgSFvYQ== 0000909518-02-000658.txt : 20020828 0000909518-02-000658.hdr.sgml : 20020828 20020828171020 ACCESSION NUMBER: 0000909518-02-000658 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020828 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020828 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOLLYWOOD MEDIA CORP CENTRAL INDEX KEY: 0000912544 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 650385686 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14332 FILM NUMBER: 02751563 BUSINESS ADDRESS: STREET 1: 2255 GLADES RD STREET 2: STE 237 W CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5619988000 MAIL ADDRESS: STREET 1: 2255 GLADES RD STREET 2: STE 237 W CITY: BOCA RATON STATE: FL ZIP: 33431 FORMER COMPANY: FORMER CONFORMED NAME: BIG ENTERTAINMENT INC DATE OF NAME CHANGE: 19930924 FORMER COMPANY: FORMER CONFORMED NAME: HOLLYWOOD COM INC DATE OF NAME CHANGE: 20000511 8-K 1 mv8-28_8k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 28, 2002 -------------------------------- HOLLYWOOD MEDIA CORP. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) FLORIDA 0-22908 65-0385686 - -------------------------------------------------------------------------------- (STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER JURISDICTION IDENTIFICATION NO.) OF INCORPORATION) 2255 GLADES ROAD, SUITE 237 WEST, BOCA RATON, FLORIDA 33431 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 998-8000 ---------------------------- INFORMATION TO BE INCLUDED IN THE REPORT ITEM 5. OTHER EVENTS. On August 28, 2002, Hollywood Media Corp. announced that it had entered into an Exchange Agreement, dated August 28, 2002 (the "Exchange Agreement"), among Hollywood Media, its wholly owned subsidiaries, hollywood.com, Inc. and Broadway.com, Inc., and Viacom Inc. Pursuant to the Exchange Agreement, Viacom reconveyed to Hollywood Media an aggregate of 8,614,687 shares of Hollywood Media's common stock, $.01 par value per share, and warrants held by Viacom to purchase 262,973 shares of Hollywood Media's common stock were cancelled. Viacom also paid Hollywood Media $2.0 million in cash. As a result of the transaction, Viacom no longer owns any shares of Hollywood Media's common stock or warrants to purchase common stock and Hollywood Media's shares outstanding decreased to approximately 20.4 million shares from approximately 29.0 million shares. Hollywood Media retained $5.0 million in non-cash advertising and promotion across CBS properties for use through December 31, 2003. Each of the Advertising and Promotion Agreement and Content License Agreement, dated as of January 3, 2000, between hollywood.com, Inc. and Viacom, including hollywood.com, Inc.'s right to air additional advertising and promotion on CBS properties through October 2006, was terminated. The value of the terminated advertising and promotion under the Advertising and Promotion Agreement and Content License Agreement as carried on Hollywood Media's balance sheet was approximately $66.0 million. The reduction to fair value for the remaining $5.0 million in advertising plus the difference between (1) the carrying value of hollywood.com, Inc.'s terminated advertising rights and (2) the value of the securities transferred and cancelled by Viacom and the $2.0 million in cash paid by Viacom will be reported in the third quarter of 2002 as a non-cash accounting charge of approximately $58.0 million. As a result of the transaction, Hollywood Media will decrease its annual non-cash amortization expense by approximately $17.0 million per year over the next four years. The parties also terminated each of the following additional agreements to which they were a party: (1) the Stock Purchase Agreement dated as of August 26, 1999, (2) the Investor's Rights Agreement dated as of January 3, 2000, (3) the Voting Agreement dated as of January 3, 2000, (4) the Securities Purchase Agreement dated as of April 25, 2001, and (5) the Registration Rights Agreement dated as of May 1, 2001. Under the Voting Agreement, Viacom had the right to nominate two individuals for election to Hollywood Media's board of directors. Viacom's designees were Peter Glusker and Bryon Rubin. As a result of the termination of the Voting Agreement and Viacom's right to nominate individuals for election to Hollywood Media's board of directors, Mr. Glusker and Mr. Rubin resigned as directors of Hollywood Media. The foregoing description of the Exchange Agreement does not purport to be complete and is qualified by reference to the full text of the Exchange Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K. Hollywood Media's press release dated August 28, 2002 announcing the 2 transactions contemplated by the Exchange Agreement is filed as Exhibit 99.1 to this Current Report on Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. 1. Exchange Agreement, dated as of August 28, 2002, among Hollywood Media Corp., hollywood.com, Inc., Broadway.com, Inc. and Viacom Inc. 2. Press Release dated August 28, 2002 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HOLLYWOOD MEDIA CORP. By: /s/ Mitchell Rubenstein --------------------------------------- Mitchell Rubenstein Chairman and Chief Executive Officer Date: August 28, 2002 4 EXHIBIT INDEX Exhibit Number Description -------------- ----------- 10.1 Exchange Agreement, dated August 28, 2002, among Hollywood Media Corp., hollywood.com, Inc., Broadway.com, Inc. and Viacom Inc. 99.1 Press Release dated August 28, 2002 5 EX-10 3 mv828_ex10-1.txt Exhibit 10.1 EXECUTION COPY EXCHANGE AGREEMENT EXCHANGE AGREEMENT dated as of August 28, 2002, among Hollywood Media Corp., Inc., a Florida corporation ("HOLLYWOOD MEDIA"), Broadway.com, Inc., a Delaware corporation ("BROADWAY.COM"), hollywood.com, Inc., a California corporation ("HOLLYWOOD CALIFORNIA" and, together with Hollywood Media and Broadway.com, the "COMPANY") and Viacom Inc., a Delaware corporation (as successor to CBS Corporation, "VIACOM"). WHEREAS, Viacom (a) owns (i) 8,614,687 shares (the "VIACOM OWNED COMMON STOCK") of Common Stock of the Company, par value $0.01 (the "COMMON STOCK"), (ii) a Warrant issued by the Company on September 18, 2000, for the purchase of up to 100,000 shares of Common Stock upon exercise, (iii) a Warrant (Certificate No. W-A-3) issued by the Company on May 1, 2001, for the purchase of up to 162,973 shares of Common Stock upon exercise and (iv) a Warrant (Certificate No. W-B-3) issued by the Company on May 1, 2001, for the purchase of up to 439,251 shares of Common Stock upon exercise ((ii) through (iv) collectively being the "WARRANTS") and (b) acquired the Viacom Owned Common Stock and the Warrants directly from the Company; WHEREAS, the Company and Viacom are parties to (i) the Stock Purchase Agreement dated as of August 26, 1999, as amended, (ii) the Content License Agreement dated as of January 3, 2000, as amended (the "CONTENT LICENSE"), (iii) the Investor's Rights Agreement, dated January 3, 2000, as amended, (iv) together with each of the other parties signatory thereto, the Voting Agreement, dated January 3, 2000 (the "VOTING AGREEMENT"), (v) the Securities Purchase Agreement, dated as of April 25, 2001, as amended, (vi) the Registration Rights Agreement, dated as of May 1, 2001, (vii) the Advertising and Promotion Agreement dated as of January 3, 2000, as amended (the "ADVERTISING AGREEMENT") and (viii) the letter agreement dated May 1, 2001 (collectively, the "EXISTING AGREEMENTS"); WHEREAS, the Company's principal source of revenue has become wholesale ticket sales and the business to business syndication of data and is no longer the sale of advertising on its websites, and therefore the consumer-oriented advertising and promotion that the Company receives from Viacom is now less significant to the Company's strategic focus; WHEREAS, Viacom wishes to reconvey to the Company, and the Company wishes to accept from Viacom, the Viacom Owned Common Stock and the Warrants, on the terms and conditions set forth herein; WHEREAS, Viacom and the Company wish to terminate each of the Existing Agreements and, as between them, the Voting Agreement, in each case on the terms and conditions set forth herein; and WHEREAS, Viacom will pay the Company $2,000,000 in connection with the transactions contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: SECTION 1. TERMINATION. Effective as of the Closing, each Existing Agreement (with respect to the Voting Agreement, solely as between the Company and Viacom) is hereby terminated in full and shall be of no further force or effect. Thereafter, neither the Company nor Viacom shall have any further rights or obligations under such terminated Existing Agreements. SECTION 2. CONVEYANCES. At the Closing, Viacom shall (i) convey to the Company, and the Company shall accept from Viacom, all right, title and interest in and to the Viacom Owned Common Stock and each Warrant and (ii) make a payment to the Company in an amount equal to $2,000,000 (the "Payment"). SECTION 3. CLOSING; CLOSING DELIVERIES. The transactions contemplated by this Agreement shall be consummated at a closing (the "CLOSING") to be held at the offices of Viacom, at 10:00 a.m. on the date of execution of this Agreement, or as otherwise agreed by the parties hereto. At the Closing, the parties shall make the following deliveries: (a) Viacom shall deliver, or cause to be delivered to the Company, (1) with respect to the Viacom Owned Common Stock represented by stock certificates, certificates registered in the name of Viacom evidencing such Viacom Owned Common Stock, together with an undated stock power for each certificate endorsed to the Company, (2) with respect to the Viacom Owned Common Stock held by book entry, appropriate evidence of the electronic conveyance of such shares to the Company, (3) the Payment, in cash, by wire transfer in immediately available funds to the account designated in Schedule I to this Agreement, (4) each Warrant, together with evidence of the cancellation thereof, and (5) a written resignation for each of Peter Glusker and Bryon Rubin from the Board of Directors of the Company and any committees thereof. (b) The Company shall deliver, or cause to be delivered, to Viacom, (i) a receipt for the stock certificates referred to in Section (3)(a)(1) above, the shares of Common Stock referred to in Section 3(a)(2) above and the funds referred to in Section (3)(a)(3) above and (ii) resolutions evidencing the approvals of the transactions contemplated by this Agreement required to be obtained by the Company in order to permit the Company to make the representations and warranties set forth in Section 8(b)(ii) of this Agreement. SECTION 4. RELEASE. Effective as of the Closing, each of Viacom and the Company hereby releases and discharges, absolutely and forever, any and all claims, causes of action, obligations, covenants, agreements, representations, warranties, losses, damages, fees, expenses, judgments and liabilities of each and every kind ("CLAIMS") such party has ever had, now has, or may hereafter have against, directly or indirectly, the other party, or any person or entity directly or indirectly controlling, controlled by, or under common control with any such party (such person or entity being an "AFFILIATE") or any or all of such party's or such Affiliates' past or present officers, directors, agents, shareholders, employees, attorneys, representatives, successors, heirs or assigns, arising out of or relating to any of the Existing Agreements or the transactions contemplated by such agreements; provided that such release and discharge does not include any Claims arising under this 2 Agreement or the transactions contemplated hereby. Without limiting the generality of the foregoing, each of Viacom and the Company gives such release and discharge regardless of whether such Claims or the consequences thereof or the facts on which they are based are known or unknown, anticipated or unanticipated, absolute or contingent, and whether or not such Claims could have been asserted at the time of the execution of this Agreement. Nothing in this Agreement is intended or shall be deemed or construed as an admission of liability by any party hereto and each party hereto expressly denies any and all liability relating to any and all Claims released and discharged under this Agreement. In light of the intention of the parties that the foregoing release extend to any and all claims of whatsoever kind or character, known or unknown, each of Viacom and the Company expressly waives any and all rights granted by California Civil Code Section 1542 (or any other analogous federal or state law or regulation). Section 1542 reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. SECTION 5. ADVERTISING AND PROMOTION. (a) Viacom shall arrange for the placement of advertising and promotion of the Broadway Site (as defined below) and Affiliated Properties (as defined below), having an aggregate value of $5,000,000 ("POST-CLOSING ADVERTISING"), from the date of this Agreement until December 31, 2003 or such additional period thereafter to the extent Viacom is not able to air all of the Post-Closing Advertising prior to December 31, 2003 (the "AIRING PERIOD"), in accordance with the Media Plan attached hereto as Schedule II (the "MEDIA PLAN"), using the categories and types of media set forth on Exhibit A to the Advertising Agreement. All advertising and promotional materials shall be subject to the applicable CBS Television Network Advertising Guidelines, Viacom's standards and practices and Viacom's standard preemption policies, in each case as in effect from time to time. Subject to Viacom's obligation to deliver the full amount of the Post-Closing Advertising in accordance with this Section 5, Viacom shall not have to make any particular ad placements if the exigencies of time or current or future contractual obligations entered into prior to the date hereof prevent or restrict Viacom from doing so. As used herein, "BROADWAY SITE" means the Internet Web Site owned or controlled by Broadway.com (accessed via the URL www.broadway.com) that features content related to live theater, and "AFFILIATED PROPERTIES" means the Hollywood Site (as defined in the Advertising Agreement). The Company shall not use more than twenty percent (20%) of the Post-Closing Advertising in the aggregate to advertise and promote any Affiliated Properties. (b) If the Company fails for any reason to order the full $5,000,000 of Post-Closing Advertising for airing during the Airing Period, such unordered Post-Closing Advertising shall be permanently forfeited. Upon the earliest of the date on which such Post-Closing Advertising is aired in full and any termination by Viacom pursuant to paragraph (g) below (the "FINAL TIME"), Viacom's obligations under this Section 5 shall be terminated in full and neither Viacom nor the Company shall have any further rights or obligations under this Section 5. 3 (c) The pricing to be applied to the airing of the Post-Closing Advertising set forth in the Media Plan shall be generally consistent with the pricing Viacom has applied with respect to advertising and promotion aired for the Company up to and including the date of this Agreement, which pricing methodology Viacom and the Company acknowledge is fair. The Company acknowledges that (A) Viacom makes no audience guarantees, (B) there are no make-goods, and (C) no party hereto has any audit rights except solely to confirm whether the Post-Closing Advertising, or any portion thereof, has been aired. (d) Effective as of the Final Time, each of Viacom and the Company hereby releases and discharges, absolutely and forever, any and all Claims such party has ever had, now has, or may hereafter have against, directly or indirectly, the other party, any Affiliate thereof or any person or entity or any or all of such party's past or present Affiliates or any or all of such party's or such Affiliates' past or present officers, directors, agents, shareholders, employees, attorneys, representatives, successors, heirs or assigns, arising out of or relating to this Section 5 or the transactions contemplated by this Section 5, other than claims by the Company that the pricing applied by Viacom to the airing of the Post-Closing Advertising is not generally consistent with the pricing Viacom has applied with respect to advertising and promotion aired for the Company up to and including the date of this Agreement, provided that such claims shall also be released and discharged in accordance with the terms of this paragraph (d) on the six month anniversary of the Final Time, except any such claim which shall have been made to Viacom in writing prior to such six month anniversary. Without limiting the generality of the foregoing, each of Viacom and the Company gives such release and discharge regardless of whether such Claims or the consequences thereof or the facts on which they are based are known or unknown, anticipated or unanticipated, absolute or contingent, and whether or not such Claims could have been asserted at the time of the execution of this Agreement. Nothing in this Section 5 is intended or shall be deemed or construed as an admission of liability by any party hereto and each party hereto expressly denies any and all liability relating to any and all Claims released and discharged under this Section 5. In light of the intention of the parties that the foregoing release extend to any and all claims of whatsoever kind or character, known or unknown, each of Viacom and the Company expressly waives any and all rights granted by California Civil Code Section 1542 (or any other analogous federal or state law or regulation). Section 1542 reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. (e) Until the Final Time, Broadway.com covenants as follows: (i) Broadway.com shall produce, advertise and transmit the Broadway Site (as defined in the Advertising Agreement) in accordance with all applicable federal, state, local and foreign laws and regulations. 4 (ii) At all times, Broadway.com shall maintain the Broadway Site in a professional manner consistent with applicable industry standards. In connection therewith, Broadway.com shall satisfy the following minimum performance standards: (A) use its best efforts to maintain continuous accessibility to the public on the Internet; (B) capability of sustaining traffic of no less than 22 million page views per month, including, without limitation, the existence of a viable technological response, in the event that the foregoing traffic number is exceeded, that is designed to handle at least 44 million page views per month; (C) monitoring of the Broadway Site's traffic flows on a regular basis and (in addition to and above and beyond clause (B) above) implementation of plans to meet expected traffic flows and (D) maintenance of standards of quality and ease of use no less than the quality and ease of use of the Broadway Site as of this date. (iii) Advertising or promotional material or any portion thereof furnished by the Company to Viacom for use pursuant to this Section 5 shall not violate any law or violate the rights of any person or entity. (f) Viacom shall have the right to suspend and/or withdraw placement of all advertising and promotion under this Section 5: (i) During such time as Broadway.com is enjoined from using the tradename, trademark or terms(s) "Broadway.com" on or in connection with the Broadway Site and has not renamed the site. Broadway.com shall rename the Broadway Site within twenty (20) days following the issuance of any injunction or the resolution of any claim which requires Broadway.com to cease using the tradename, trademark or term(s) "Broadway.com" on or in connection with its Website. (ii) In the event that the Broadway Site is not operational for a period of seventy-two (72) consecutive hours until it becomes operational in a manner consistent with the standards in the industry. Viacom may exercise its right to suspend and/or withdraw placement of all advertising and promotion pursuant to this paragraph (f) by sending the appropriate notice to the Company. Viacom's rights to suspend and/or withdraw placement of all advertising and promotion shall be Viacom's sole remedy for any breach by the Company of the covenants in this paragraph (f). (g) Viacom shall have a right to terminate this Section 5 prior to the Final Time if any of the following occur: (i) The Broadway Site contains Content (as defined in the Advertising Agreement) which, in Viacom's reasonable business judgment, violates Article I or Article III of the CBS License Guidelines (as set forth in the Content License) and Broadway.com fails to remove such Content from the Broadway Site within ten (10) days after receipt of written notice of Viacom's objection thereto demanding the removal of such Content; provided, however, that Broadway.com shall in any event be permitted to (A) display advertising and related content on the Broadway Site promoting beer, wine and hard liquor and (B) link from the Broadway Site to other websites promoting beer, wine and hard liquor. 5 (ii) Except as otherwise set forth in subparagraph (i) above, the Company breaches any material term or condition of Section 5 and fails to: (1) cure such breach within thirty (30) days after Viacom's notice of such breach, or (2) complete curing such breach within sixty (60) days following Viacom's notice of such breach; provided however that this clause (2) shall only apply to a default that is incapable of being cured in thirty (30) days. The foregoing cure period will not apply: (1) solely with respect to this Agreement, to a term or condition (in this Agreement) for which a specific cure period is provided, or (2) to a breach incapable of being cured. (iii) Hollywood Media or Broadway.com: (1) is the subject of a voluntary petition in bankruptcy or any voluntary proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, if such petition or proceeding is not dismissed or stayed within sixty (60) days of filing; (2) becomes the subject of any involuntary petition in bankruptcy or any involuntary proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, if such petition or proceeding is not dismissed or stayed within sixty (60) days of filing; or (3) is liquidated or dissolved. (iv) The Broadway Site ceases to operate due to any circumstance(s) (other than circumstances beyond Broadway.com's reasonable control, which circumstances simultaneously affect a substantial number of web sites on the Internet) for (1) a period of thirty (30) consecutive days or (2) a period of one week at least two times in any six (6) month period. Viacom may exercise its right to terminate pursuant to this paragraph (g) by sending the appropriate notice to the Company. Viacom's right to terminate this Section 5 shall be Viacom's sole remedy for any breach by the Company of the covenants in this paragraph (g). (h) Hollywood Media covenants and agrees that from and after such time as the Post-Closing Advertising is used to promote any Affiliated Properties, such Affiliated Properties shall comply with and be subject to Sections 5(e), (f) and (g). SECTION 6. FURTHER ASSURANCES. (a) Subject to the terms and conditions of this Agreement, the Company and Viacom will use their commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations or otherwise to consummate the transactions contemplated by this Agreement, and execute and deliver such documents and other papers as may be required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated hereby. (b) As of the date hereof, the Company shall cease using any CBS Content (as defined in the Content License) licensed by the Company under the Content License or Content derived therefrom. In that connection, the Company shall immediately remove or erase any CBS Content from the Hollywood Site (as defined in the Content License) and the Broadway Site and, at Viacom's request, the Company shall furnish Viacom with certified evidence of such removal or erasure satisfactory to Viacom. 6 SECTION 7. PUBLIC ANNOUNCEMENTS. Neither the Company nor Viacom will issue any press release or make any public statement with respect to this Agreement or the transactions contemplated hereby without the prior consent of the other party hereto, except as may be required by applicable law or any national stock exchange or market regulations. Any filing made by the Company with the United States Securities and Exchange Commission relating to the transactions contemplated by this Agreement, including without limitation any filing on Form 8-K, shall be subject to prior review by Viacom, and the Company shall make any reasonable modifications thereto requested by Viacom. Notwithstanding the foregoing, the Company and Viacom may make public statements with respect to this Agreement and the transactions contemplated hereby, including statements in filings with the Securities and Exchange Commission, that are consistent with prior public statements made pursuant to this Section 7, except in the case of any such prior public statement to which the Company or Viacom shall have subsequently objected in writing to the other party. SECTION 8. REPRESENTATIONS AND WARRANTIES. Each party (except where only a specific party is identified) hereto represents and warrants to the other parties hereto as of the date hereof as follows: (a) Organization and Qualification. Such party is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not have, individually or in the aggregate, a material adverse effect on such party. (b) Authorization. (i) The execution, delivery and performance by such party of this Agreement, and the consummation by such party of the transactions contemplated hereby, are within such party's corporate powers and have been duly authorized by all necessary corporate action on the part of such party. This Agreement has been duly executed and delivered by such party and this Agreement constitutes a valid and binding agreement of such party, enforceable against such party in accordance with its terms. (ii) Hollywood Media represents and warrants that its Board of Directors, excluding any Viacom-appointed director, has determined that the transactions contemplated hereby are fair to and in the best interests of the stockholders of Hollywood Media and that a majority of the disinterested directors (as defined in Section 607.0901 of the Florida Statutes applicable to Business Organizations) sitting on Hollywood Media's Board of Directors have approved this Agreement and the transactions contemplated hereby. (c) No Conflicts. (i) The execution, delivery and performance by such party of this Agreement, and the consummation by such party of the transactions contemplated hereby, require no action by or in respect of, or filing with, any governmental body, agency, official or authority, domestic, foreign or supranational, other than (1) compliance with any applicable requirements of the NASDAQ National Market System, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and any other applicable securities laws, whether state or foreign and (2) any actions or filings the absence of which would not have, individually or in the aggregate, a 7 material adverse effect on such party's ability to perform its obligations under this Agreement. (ii) The execution, delivery and performance by such party of this Agreement, and the consummation of the transactions contemplated hereby, do not (1) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of such party, (2) assuming compliance with the matters referred to in Section 8(c)(i), contravene, conflict with or result in a violation or breach of any provision of any applicable law, statute, ordinance, rule, regulation, judgment, injunction, order, or decree applicable to such party or any of its subsidiaries, (3) require any consent or other action by any person or entity under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which such party or any of its subsidiaries is entitled under any provision of any agreement or other instrument binding upon such party or any of its subsidiaries or any of their assets or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of such party and its subsidiaries or (4) result in the creation or imposition of any lien or encumbrance on any asset of such party or any of its subsidiaries, except for such contraventions, conflicts and violations referred to in clause (2) and for such failures to obtain any such consent or other action, defaults, terminations, cancellations, accelerations, changes, losses, liens or encumbrances referred to in clauses (3) and (4) that would not have, individually or in the aggregate, a material adverse effect on such party's ability to perform its obligations under this Agreement. (d) Solvency. The Company represents and warrants that it is Solvent as of the Closing, both before and after giving effect to the transactions contemplated by this Agreement. The Company further represents and warrants that it has received reasonably equivalent value and fair consideration in exchange for the consideration provided to it by Viacom pursuant to this Agreement. "SOLVENT" means, with respect to the Company on a particular date, that on such date (i) the fair value of the property of the Company is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of the Company and (ii) the present fair salable value of the assets of the Company is not less than the amount that will be required to pay the probable liability of the Company on its debts as they become absolute and matured. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. (e) Ownership of Equity. Viacom represents and warrants that it is the record, legal and beneficial owner of the Viacom Owned Common Stock and the Warrants, free and clear of any and all liens, charges, encumbrances, options and adverse claims or rights whatsoever. Viacom further represents and warrants that the Viacom Owned Common Stock constitutes all of the outstanding capital stock of the Company beneficially owned by Viacom or its Affiliates. SECTION 9. MISCELLANEOUS. (a) Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given, 8 if to the Company, to: Hollywood Media Corp. 2255 Glades Road, Suite 237W Boca Raton, Florida 33431-7383 Attention: Chief Executive Officer Fax: 561-998-2974 and Attention: General Counsel Fax: 561-998-2974 if to Viacom, to: Viacom Inc. 1515 Broadway 52nd Floor New York, New York 10036 Attention: Chief Financial Officer Fax: 212-846-1797 and Attention: General Counsel Fax: 212-258-6099 or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m., and such day is a business day, in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt. (b) Survival of Representations and Warranties. The representations and warranties and agreements contained herein shall survive the Closing. (c) Amendments; Waivers. Any provision of this Agreement may be amended or waived prior to the Closing if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. (d) Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. (e) Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, 9 delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto. Except as expressly provided in Sections 4, 5(d) and Section 9(h), no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any person or entity other than the parties hereto and their respective successors and assigns. (f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (g) Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the federal court or state court located in the county of New York in the State of New York, and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient form. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 9(a) shall be deemed effective service of process on such party. (h) WAIVER OF JURY TRIAL; DAMAGES LIMITATION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. NO PARTY TO THIS AGREEMENT OR ANY OF SUCH PARTY'S AFFILIATES WILL BE LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT OR SUCH OTHER PARTY'S AFFILIATES FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. (i) Counterparts; Effectiveness. This Agreement may be signed, manually or by facsimile, in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. (j) Entire Agreement. This Agreement and the agreements referred to herein constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. (k) Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 10 (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. HOLLYWOOD MEDIA CORP. By: /s/ Mitchell Rubenstein ------------------------------------------ Mitchell Rubenstein Chairman and Chief Executive Officer HOLLYWOOD.COM, INC. By: /s/ Mitchell Rubenstein ------------------------------------------ Mitchell Rubenstein Chief Executive Officer BROADWAY.COM, INC. By: /s/ Mitchell Rubenstein ------------------------------------------ Mitchell Rubenstein President VIACOM INC. By: /s/ Richard J. Bressler ------------------------------------------ Name: Richard J. Bressler Title: Senior Executive Vice President and CFO 11 EX-99 4 mv828_ex99-1.txt Exhibit 99.1 HOLLYWOOD MEDIA CORP. HOLLYWOOD MEDIA ANNOUNCES EXCHANGE AGREEMENT (Boca Raton, FL - August 28, 2002) - Hollywood Media Corp. (Nasdaq: HOLL) announced today that it is exchanging approximately $49.0 million in non-cash advertising that it has available for use over the next four years for Viacom's transfer to Hollywood Media of its entire equity interest in Hollywood Media plus Viacom's payment of $2.0 million in cash to Hollywood Media. Viacom currently holds 8,614,687 shares of Hollywood Media common stock, plus warrants to purchase an additional 262,973 shares of common stock, which together represent approximately 30.8% of Hollywood Media's shares outstanding. Hollywood Media will retain $5.0 million in non-cash advertising and promotion across CBS properties for use through calendar year 2003. As a result of the exchange, Hollywood Media's shares outstanding will decrease to approximately 20.4 million shares from approximately 29.0 million shares, significantly increasing the remaining shareholders' percentage interest in Hollywood Media. Importantly, this transaction is expected to accelerate the company's timetable for profitability due to the elimination of approximately $17.0 million in annual amortization expense. Today's transaction does not affect either Hollywood Media's or Viacom's relationship with MovieTickets.com, of which both companies are shareholders. Mitchell Rubenstein, CEO of Hollywood Media, commented, "This transaction benefits Hollywood Media in that it greatly accelerates our expected timetable for profitability, with positive GAAP earnings now expected to be reached during 2003. It also reduces our shares outstanding by approximately 30%, which significantly increases our remaining shareholders' percentage interest in Hollywood Media. As we have evolved into a diversified media company with established brand names and an increasing number of business customers, our overall need for a high level of consumer advertising has diminished substantially. Consequently, CBS' advertising platform, which in the early stages of our development was quite beneficial, is no longer a strategic asset for us. We are retaining $5 million in non-cash advertising, which we believe should be more than ample to promote our consumer properties through calendar year 2003. Given the evolution of our business, we believe the benefits of this transaction to our shareholders far outweigh the present value of the non-cash advertising that was available to us over the next four years." Attached are unaudited pro forma financial statements as of and for the quarter ended June 30, 2002 assuming that the exchange between Hollywood Media and Viacom had occurred on January 1, 2002. Continued . . . HOLLYWOOD MEDIA ANNOUNCES EXCHANGE AGREEMENT Page 2 ABOUT HOLLYWOOD MEDIA - --------------------- Hollywood Media Corp. is a leading provider of news, information and ticketing covering the entertainment and media industries. On the strength of its history in developing comprehensive entertainment industry databases, as well as its unique content, the Company has launched a network of commercial and consumer businesses. The Company's commercial units include CinemaSource, EventSource, AdSource, Baseline/FilmTracker, and Theatre Direct International. These services supply thousands of media outlets with specific information on entertainment events such as movies, live theater and concerts. The Company's ticketing units sell live theater tickets to shows in New York and London to consumers through its Broadway.com and 1-800-Broadway units, and to businesses through Theatre Direct International. The Company also owns Hollywood.com and a minority interest in MovieTickets.com. In addition, the Company also owns and operates two recently launched digital cable television networks, Totally Broadway TV and Totally Hollywood TV. The Company's shares are traded on the Nasdaq Stock Market under the symbol HOLL. The matters discussed herein that are forward-looking statements are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. Potential risks and uncertainties include, but are not limited to, the risks described in Hollywood Media Corp.'s filings with the Securities and Exchange Commission. CONTACT For Hollywood Media: John Buckley/Kim Holt Brainerd Communicators, Inc. 212-986-6667 buckley@braincomm.com Holt@braincomm.com HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
Pro forma * June 30, 2002 --------------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,163,451 Receivables, net 1,616,324 Inventories, net 6,643,550 Prepaid expenses 1,448,495 Other receivables 656,770 Other current assets 184,993 Deferred advertising - CBS 950,119 --------------------- Total current assets 16,663,702 PROPERTY AND EQUIPMENT, net 4,470,986 INVESTMENTS IN AND ADVANCES TO EQUITY METHOD INVESTEES 938,685 NONCURRENT DEFERRED ADVERTISING - CBS - IDENTIFIABLE INTANGIBLE ASSETS, net 3,077,405 GOODWILL, net 40,775,736 OTHER ASSETS 1,263,303 --------------------- TOTAL ASSETS $ 67,189,817 ===================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,885,309 Accrued expenses and other 2,491,591 Notes payable 250,000 Loan from shareholder/officer - Accrued exit and retail closure costs 130,257 Deferred revenue 8,313,481 Current portion of capital lease obligations 414,180 --------------------- Total current liabilities 13,484,818 --------------------- CAPITAL LEASE OBLIGATIONS, less current portion 292,899 --------------------- DEFERRED REVENUE 604,433 --------------------- MINORITY INTEREST 28,278 --------------------- OTHER DEFERRED LIABILITY 3,145,211 --------------------- CONVERTIBLE DEBENTURES, NET 2,900,691 --------------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred Stock, $.01 par value, 539,127 shares authorized; none outstanding - Common stock, $.01 par value, 100,000,000 shares authorized; 19,970,364 and 27,971,409 shares issued and outstanding at June 30,2002 and December 31, 2001, respectively 199,704 Deferred compensation (1,034,074) Additional paid-in capital 276,624,062 Accumulated deficit (229,056,205) --------------------- Total shareholders' equity 46,733,487 --------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 67,189,817 =====================
- -------------------------- * Pro forma. Assumes the Viacom Exchange Transaction occurred on January 1, 2002. The pro forma above takes into account the one-time non-cash accounting charge resulting from the Viacom Exchange Transaction. HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, ------------------------------------------------ 2002 2002 ---------------------- ----------------------- Pro forma* Actual NET REVENUES $ 16,522,685 $ 16,522,685 COST OF REVENUES 11,468,041 11,468,041 ---------------------- ----------------------- Gross margin 5,054,644 5,054,644 ---------------------- ----------------------- OPERATING EXPENSES: General and administrative 1,245,679 1,245,679 Selling and marketing 861,779 861,779 Salaries and benefits 3,489,967 3,489,967 Amortization of CBS advertising ** 238,125 5,025,145 Depreciation and amortization 942,681 942,681 ---------------------- ----------------------- Total operating expenses 6,778,231 11,565,251 ---------------------- ----------------------- Operating loss (1,723,587) (6,510,607) EQUITY IN EARNINGS - INVESTMENTS 14,575 14,575 OTHER: Interest expense (237,705) (237,705) Interest income 7,209 7,209 Other, net (18,446) (18,446) ---------------------- ----------------------- Loss before minority interest (1,957,954) (6,744,974) MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (189,411) (189,411) ---------------------- ----------------------- Net loss $ (2,147,365) $ (6,934,385) ====================== ======================= Basic and diluted loss per common share $ (0.11) $ (0.25) ====================== ======================= Weighted average common and common equivalent shares outstanding - basic and diluted 19,662,197 28,276,884 ====================== =======================
- --------------------- * Pro forma. Assumes the Viacom Exchange Transaction occurred on January 1, 2002. ** The pro forma above assumes a straight line amortization of $1.27 million over a period of 16 months. The $1.27 million reflects the approximate book value of the $5 million in advertising retained in the Viacom Exchange Transaction. -----END PRIVACY-ENHANCED MESSAGE-----