As filed with the Securities and Exchange Commission on November 2, 2001
Registration No. 333-64262
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
HOLLYWOOD MEDIA CORP.
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(Exact name of registrant as specified in its charter)
Florida 65-0385686
--------------------------------- -------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2255 Glades Road, Suite 237 West Mitchell Rubenstein
Boca Raton, Florida 33431 Chief Executive Officer
(561) 998-8000 Hollywood Media Corp.
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(Address, including zip code and 2255 Glades Road, Suite 237 West
telephone number, including area code, Boca Raton, Florida 33431
of registrant's principal executive Telephone No. (561) 998-8000
offices) Facsimile No. (561) 998-2974
----------------------------------
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Copies of communications to:
W. Robert Shearer, Esq.
General Counsel and Senior Vice
President
2255 Glades Road, Suite 237 West
Boca Raton, Florida 33431
Telephone No. (561) 998-8000
Facsimile No. (561)
998-2974
---------------------------
Approximate date of commencement of proposed sale to
the public: From time to time after this registration
statement becomes effective.
---------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
================================================================================
CALCULATION OF REGISTRATION FEE FOR SHARES ADDED BY AMENDMENT
Proposed Maximum Proposed Maximum Amount Of
Title of Shares Amount To Offering Price Aggregate Offering Registration
To Be Registered Be Registered(1) Per Share Price Fee
----------------------------------- ------------------ -------------------- ---------------------- ---------------
Common stock, par value $.01 254,885 $3.035 (2) $773,575.975 (3) $193.39
per share
Common stock, par value $.01 3,439,226 (4)
per share
TOTAL FEE: $5,144.33
-----------------------------------
(1) The registration statement also includes an indeterminate number of
additional shares of common stock that may become offered, issuable or
sold to prevent dilution resulting from stock splits, stock dividends
and similar transactions, which are included pursuant to Rule 416 under
the Securities Act of 1933, as amended (the "Securities Act").
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(3) Calculated pursuant to paragraph (c) of Rule 457 under the Securities
Act, on the basis of $ 3.035 per share, which was the average of the
high and low prices of the Registrant's common stock as reported on the
Nasdaq National Market on October 31, 2001.
(4) Registration fee of $4,950.94 previously paid in respect of these
shares of common stock.
================================================================================
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 31, 2001
PROSPECTUS
----------
3,694,111 Shares of Common Stock
HOLLYWOOD MEDIA CORP.
THE OFFERING:
This prospectus relates to the resale of 3,694,111 shares of common
stock, which consist of 1,542,672 shares of common stock currently outstanding
and 2,151,439 shares of common stock issuable upon the exercise of warrants. All
of these shares and warrants were issued and sold pursuant to private placements
to the selling shareholders listed on page 17 of this prospectus. We are
registering these shares of common stock pursuant to commitments to register the
shares with the selling shareholders.
USE OF PROCEEDS:
We will not receive any proceeds from the sale of the shares of common
stock by the selling shareholders, other than payment of the exercise price of
the warrants. The selling shareholders may sell the shares at prices determined
by the prevailing market price for the shares or in negotiated transactions. The
selling shareholders may also sell the shares to or with the assistance of
broker-dealers who may receive compensation in excess of their customary
commissions.
TRADING MARKET:
Our common stock is quoted on the Nasdaq National Market under the
symbol "HOLL." On October 31, 2001, the last reported sales price of our common
stock on the Nasdaq National Market was $3.060 per share.
OFFERING EXPENSES:
We will pay the expenses of registering the shares.
You should carefully consider the "Risks of Investing in Our Shares" section
beginning on page 3 of this prospectus.
--------------------------------------------------------------------------------
These shares have not been approved by the Securities and Exchange
Commission or any state securities commission nor have these organizations
determined whether this prospectus is complete or accurate. Any representation
to the contrary is a criminal offense.
You should only rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. Our common stock is not being
offered in any state where the offer or sale is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
The date of this prospectus is _____________, 2001
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TABLE OF CONTENTS
Page
----
RISKS OF INVESTISNG IN OUR SHARES......................................... 3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS......................11
ABOUT HOLLYWOOD MEDIA CORP................................................12
PROCEEDS FROM SALE OF THE SHARES..........................................16
SELLING SHAREHOLDERS......................................................16
HOW THE SHARES MAY BE DISTRIBUTED.........................................22
OUR CAPITAL STOCK.........................................................24
LEGAL OPINION.............................................................27
EXPERTS...................................................................27
WHERE YOU CAN FIND MORE INFORMATION.......................................27
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RISKS OF INVESTING IN OUR SHARES
The shares offered are speculative and involve a high degree of risk.
You should carefully consider the following matters, as well as the other
information in this prospectus, before investing.
We have a history of losses and an accumulated deficit. We anticipate
further losses in the future and our operating results could fluctuate
significantly on a quarterly and annual basis.
We have incurred significant losses since we began doing business. In
the years ended December 31, 2000, 1999 and 1998 we had net losses of
approximately $51.8, $24.7 and $10.7 million, respectively. In the six months
ended June 30, 2001, we had a net loss of $16.5 million. As of June 30, 2001, we
had an accumulated deficit of approximately $129.3 million. We expect to incur
additional losses during the next several years while we continue to grow our
businesses. Our future success will depend on the continued growth in the use of
the Internet in general and our web sites and services in particular and our
ability to generate ticketing, advertising and syndication revenues.
In addition, our Internet and ticketing operating results may fluctuate
significantly in the future as a result of a variety of factors, including:
o our ability to maintain and increase levels of traffic on our
web sites;
o our ability to sell advertisements to be displayed on our web
sites;
o seasonal trends in Internet usage and Internet sales and
advertising placements;
o seasonal variations in the demand for Broadway tickets and
resulting variations in our revenue from Broadway ticket
sales;
o the possibility of decreased demand for our syndicated content
as a result of decreases in the number of content-oriented web
sites and general downturns in the Internet industry;
o our ability to enter into or renew strategic relationships and
agreements with popular media and entertainment organizations,
web sites and media celebrities;
o the amount and timing of our marketing expenditures and other
costs relating to the expansion of our operations;
o new products, web sites or Internet services introduced by us
or our competitors; and
o technical difficulties, security concerns or system downtime
affecting the Internet generally or the operation of our web
sites in particular.
As a result, our operating results for any particular period may not
accurately predict our future operating results.
We may not be able to compete successfully.
Internet Businesses. The market for Internet services and products is
relatively new, intensely competitive and rapidly changing. The number of web
sites on the Internet competing for consumers' attention and spending has
proliferated and we expect that competition will continue to intensify.
Competition could result in less user traffic to our web sites, price reductions
for content that we syndicate and advertising that we offer, a decline in
product sales, reduced margins or loss of market share, any of which could cause
a material decrease in our revenues. We compete, directly and indirectly, for
advertisers, viewers, members and content providers with the following
categories of companies:
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o online services or web sites targeted to entertainment
enthusiasts, particularly moviegoers and theatergoers, such as
Film.com, IMDb.com and Playbill.com;
o publishers and distributors of traditional off-line media,
such as television, radio and print, including those targeted
to movie enthusiasts, many of which have established or may
establish web sites, such as Eonline.com;
o traditional movie and entertainment organizations and vendors
of entertainment merchandise and products, including
conventional retail stores and catalog retailers, many of
which have established web sites, including Disney and Warner
Brothers;
o general purpose consumer online services such as AOL, Yahoo!
and Microsoft Network, each of which provides access to
movie-related information and services; and
o web search and retrieval and other online services, such as
Excite, Lycos and Yahoo! and other high-traffic web sites.
We believe that the principal competitive factors in attracting and
retaining users are the depth, breadth and timeliness of content, the ability to
offer compelling and entertaining content and brand recognition. Other important
factors in attracting and retaining users include ease of use, service quality
and cost. We believe that the principal competitive factor in attracting and
retaining advertisers include the number of users of our web site, the
demographics of our users, price and the creative implementation of
advertisement placements and sponsorship promotions. There can be no assurance
that we will be able to compete favorably with respect to these factors.
Based on our review of publicly available documents, we believe some of
our existing competitors, as well as potential new competitors, have longer
operating histories, significantly greater financial, technical and marketing
resources, greater name recognition and substantially larger user bases than we
do and, therefore, have significantly greater ability to attract advertisers and
users. In addition, many of these competitors may be able to respond more
quickly than us to new or emerging technologies and changes in Internet user
requirements and to devote greater resources than us to the development,
promotion and sale of their services. There can be no assurance that our current
or potential competitors will not develop products and services comparable or
superior to those developed by us or adapt more quickly than us to new
technologies, evolving industry trends or changing Internet user preferences.
Increased competition could result in price reductions, reduced margins or loss
of market share, any of which would result in a decrease in our revenues. In
addition, as we expand internationally, we will face new competition. There can
be no assurance that we will be able to compete successfully against current and
future competitors, or that competitive pressures faced by us would not impair
our ability to expand our operations or grow our revenues.
Ticketing Businesses. The market for Internet and wireless
ticketing services and products is relatively new, intensely competitive and
rapidly changing. The number of telephone services, online services, wireless
services and web sites competing for consumers' attention and spending has
proliferated and we expect that competition will continue to intensify. We
compete, directly and indirectly, for customers, advertisers, members and
content providers with the following categories of companies:
o telephone services, wireless services and web sites targeted
to entertainment enthusiasts, moviegoers, theatergoers and
other eventgoers, which feature directories of movies, shows,
events, showtimes, theater and event locations and related
content, and also allow users to purchase tickets; and
-4-
o travel agents and other traditional ticketing organizations,
companies, agents and brokers.
Intellectual Properties and Book Development and Licensing
Businesses. Numerous companies and individuals are engaged in the book
development business. We also compete with a large number of companies that
license characters and properties into film, television, books and merchandise.
Competition in these businesses is largely based on the number and quality of
relationships that we are able to develop with authors and celebrities. There
can be no assurance that our current or future competitors will not be
successful in developing relationships with authors and celebrities with whom we
have previously had relationships. Our revenues will decrease if we are unable
to maintain these relationships or develop new relationships.
We may require additional capital to finance our operations and there
can be no assurance that additional financing will be available.
We have required substantial financing to fund our acquisitions and
growth since our inception. We may continue to require additional financing for
marketing and promotional activities, to fund our growth plan and for working
capital. Our current operating plans and assumptions indicate that anticipated
cash flows when combined with cash on hand and other potential sources of
capital will be enough to meet our working capital requirements for the next
twelve months. If plans change or our assumptions prove to be inaccurate, we may
need to seek further financing or curtail our operations. The actual amount and
timing of our future capital requirements may differ materially from our
estimates as a result of, among other things, decreases in revenue from
advertising sales compared to our projections, the possibility that we acquire
new businesses that generate cash losses, and unanticipated capital expenditures
to maintain and improve our web sites and other operations. Our long-term
financial success depends on our ability to generate enough revenue to offset
operating expenses. To the extent we do not generate sufficient revenues to
offset expenses we will require further financing to fund our ongoing
operations. We cannot assure you that any additional financing will be available
or if available, that it will be on favorable terms. The terms of any financing
that we enter into will vary depending on, among other things, our then current
financial condition, the market price of our common stock and the number of
outstanding options and warrants to purchase our common stock and the exercise
price of those options and warrants.
We may not be able to successfully protect our trademarks and
proprietary rights.
Internet Businesses. We own trademark registrations in the
United States for ALL ABOUT MOVIES, HOLLYWOOD ONLINE, MOVIETUNES, THE GOLDEN
HITCH, GIVING TRAILERS THE RESPECT THEY DESERVE and ISN'T IT TIME YOU WENT
HOLLYWOOD! and in a number of foreign countries for HOLLYWOOD ONLINE. We have
filed trademark applications in the United States and in foreign countries for
the marks HOLLYWOOD MEDIA CORP., HOLLYWOOD.COM, MOVIETUNES.COM, BROADWAY.COM and
the slogans ON STAGE! ONLINE, and WHERE MOVIEGOERS GO.
Our performance and ability to compete are dependent to a significant
degree on our internally developed and licensed content and technology. We rely
on a combination of copyright, trademark and trade secret laws, confidentiality
and nondisclosure agreements with our employees and with third parties and
contractual provisions to establish and maintain our proprietary rights. There
can be no assurance that the steps taken by us to protect our proprietary rights
will be adequate, or that third parties will not infringe upon or misappropriate
our copyrights, trademarks, service marks and similar proprietary rights. In
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addition, effective copyright and trademark protection may be unenforceable or
limited in certain foreign countries. In the future, litigation may be necessary
to enforce and protect our trademarks, service marks, trade secrets, copyrights
and other intellectual property rights. Any such litigation would be costly and
could divert management's attention from other more productive activities.
Adverse determinations in such litigation could result in the loss of certain of
our proprietary rights, subject us to significant liabilities, require us to
seek licenses from third parties, or prevent us from selling our services.
There can be no assurance that third parties will not bring copyright
or trademark infringement claims against us, or claim that our use of certain
technology violates a patent. Even if these claims are not meritorious, they
could be costly and could divert management's attention from other more
productive activities. If it is determined that we have infringed upon or
misappropriated a third party's proprietary rights, there can be no assurance
that any necessary licenses or rights could be obtained on terms satisfactory to
us, if at all. The inability to obtain any required license on satisfactory
terms could force us to incur expenses to change the way we operate our
businesses. If our competitors prepare and file applications that claim
trademarks owned or registered by us, we may oppose these applications and have
to participate in administrative proceedings to determine priority of right in
the trademark, which could result in substantial costs to us, even if the
eventual outcome is favorable to us. An adverse outcome could require us to
license disputed rights from third parties or to cease using such trademarks. In
addition, inasmuch as we license a portion of our content from third parties,
our exposure to copyright infringement or right of privacy or publicity actions
may increase; because we must rely upon such third parties for information as to
the origin and ownership of such licensed content. We generally obtain
representations as to the origins, ownership and right to use such licensed
content and generally obtain indemnification to cover any breach of any such
representations; however, there can be no assurance that such representations
will be accurate or that such indemnification will provide adequate compensation
for any breach of such representation. There can be no assurance that the
outcome of any litigation between such licensors and a third party or between us
and a third party will not lead to royalty obligations for which we are not
indemnified or for which such indemnification is insufficient, or that we will
be able to obtain any additional license on commercially reasonable terms if at
all.
In 1999 we obtained a federal trademark registration for the name
HOLLYWOOD ONLINE and in 1998 we obtained a federal trademark registration for
the name BIG ENTERTAINMENT. In December 2000 we changed our corporate name and
primary branding to HOLLYWOOD MEDIA CORP. We have filed a number of United
States trademark applications for HOLLYWOOD MEDIA CORP., HOLLYWOOD.COM,
BROADWAY.COM and variants thereof, and foreign trademark applications for
HOLLYWOOD.COM. There can be no assurance that we will be able to secure adequate
protection for these names or other trademarks in the United States or in
foreign countries. If we obtain registration of those trademarks, we may not be
able to prevent our competitors from using different trademarks that contain the
words "Hollywood" or "Broadway." Many countries have a "first-to-file" trademark
registration system; and thus we may be prevented from registering our marks in
certain countries if third parties have previously filed applications to
register or have registered the same or similar marks. It is possible that our
competitors or others will adopt product or service names similar to ours,
thereby impeding our ability to build brand identity and possible leading to
customer confusion. Our inability to protect our HOLLYWOOD.COM and BROADWAY.COM
marks and other marks adequately could impair our ability to maintain and expand
our core brands and thus impair our ability to generate revenue from these
brands.
-6-
Intellectual Properties Business. Hollywood Media has applied
for trademark and copyright protection for each of its major intellectual
property titles and featured characters. Hollywood Media (including Netco
Partners) currently has approximately 46 U.S. registered trademarks and
approximately seven trademark applications are pending related to this business.
As Hollywood Media's properties are developed, Hollywood Media intends to apply
for further trademark and copyright protection in the United States and certain
foreign countries.
Copyright protection in the United States on new publications of works
for hire extend for a term of 95 years from the date of initial publication or
120 years from the year of creation, whichever expires first. Trademark
registration in the United States extends for a period of ten years following
the date of registration. To maintain the registration, affidavits must be filed
between the fifth and sixth years following the registration date affirming that
the trademark is still in use in commerce and providing evidence of such use.
The trademark registration must be renewed prior to the expiration of the
ten-year period following the date of registration.
We must manage our growth in order to achieve the desired results.
We have significantly expanded our Internet and ticketing operations
over the past two years through our acquisitions of the businesses of
hollywood.com, Inc., CinemaSource, Inc., Baseline II, Inc., BroadwayTheater.com,
Inc. and Theatre Direct NY, Inc. and through the launch of Broadway.com and
MovieTickets.com. We plan to continue to expand our operations and market
presence by entering into joint ventures, acquisitions, business combinations,
investments, or other strategic alliances. These transactions create risks such
as:
o difficulty assimilating the operations, technology and
personnel of the combined companies;
o disruption of our ongoing businesses due to the resources
needed to complete these transactions;
o increased marketing and advertising expenses to promote new
ventures;
o problems retaining key technical and managerial personnel;
o the availability of financing to make acquisitions;
o expenses associated with amortization of goodwill and other
purchased intangible assets;
o additional operating losses and expenses of acquired
businesses; and
o the inability to maintain relationships with the customers or
other business partners of acquired businesses.
We may not succeed in addressing these risks if we do not adequately
increase our management, operational and financial resources and systems. To the
extent that we are unable to identify and successfully integrate future ventures
into our operations, our growth strategy may not be successful and our stock
price could decrease.
We are dependent on our ability to develop strategic relationships with
media and entertainment organizations and best-selling authors.
The success of our Internet operations is dependent in part on our
ability to enter into and renew strategic relationships and agreements with
media and entertainment organizations. Our intellectual property division is
dependent on our ability to identify, attract and retain best-selling authors
and media celebrities who create our intellectual properties. Our business could
be harmed by the loss of the services of Dr. Martin H. Greenberg, who has been
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primarily responsible for developing relationships with the best-selling authors
who create our intellectual properties. Dr. Greenberg owns the remaining 49%
interest in Tekno Books through which the Company operates its intellectual
properties division, but he is not subject to an employment agreement with Tekno
Books. Although many of the authors with whom we have relationships are bound to
multiple book contracts, our ability to renew these contracts or enter into
contracts with new authors would be impaired without the services of Dr.
Greenberg.
Our operations could be negatively impacted by systems interruptions.
The hardware and software used in our Internet and ticketing
operations, or that of our affiliates, could be damaged by fire, floods,
earthquakes, power loss, telecommunications failures, break-ins and similar
events. Our web sites could also be affected by computer viruses, electronic
break-ins or other similar disruptive problems. These system problems could
affect our business. Insurance may not adequately compensate us for any losses
that may occur due to any failures or interruptions in systems. We do not
currently have a formal system disaster recovery plan. General Internet traffic
interruptions or delays could also harm our business. As with Internet web sites
in general, our web sites may experience slower response times or decreased
traffic for a variety of reasons. Additionally, online service providers have
experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
To the extent our services are disrupted, we could lose users of our web sites
and our ticketing and advertising revenues could decline.
We are subject to additional security risks by doing business over the
Internet.
A significant obstacle to consumer acceptance of electronic commerce
over the Internet has been the need for secure transmission of confidential
information in transaction processing. Internet usage could decline if any
well-publicized compromise of security occurred. We may incur additional costs
to protect against the threat of security breaches or to alleviate problems
caused by these breaches. If a third person were able to misappropriate our
users' personal information or credit card information, we could be held liable
for failure to adequately protect such information and subject to monetary
damages to the extent our users suffer financial losses or other harm as a
result thereof.
We may not be able to adapt as Internet technologies and customer
expectations continue to evolve.
To be successful, we must adapt to rapidly changing Internet
technologies by continually enhancing our web sites and ticketing services and
introducing new services to address our customers' changing expectations. We
must evaluate and implement new technologies that are available in the
marketplace or risk that our customers will not continue using our services.
Examples of new technologies that we are currently evaluating include those
related to streaming and downloading of audio and video content on our web
sites, delivery of content over wireless devices and the convergence of cable
television, satellite and Internet services and delivery systems. We could incur
substantial costs if we need to modify our services or infrastructure in order
to adapt to changes affecting providers of content and services through the
Internet. Our customer base and thus our revenues could decrease if we cannot
adapt to these changes.
Government regulation of the Internet could impact our business.
The application of existing laws and regulations to our business
relating to issues such as user privacy, pricing, taxation, content,
sweepstakes, copyrights, trademarks, advertising, and the characteristics and
-8-
quality of our products and services can be unclear. We also may be subject to
new laws and regulations related to our business. Although we endeavor to comply
with all applicable laws and regulations and believe that we are in compliance,
because of the uncertainty of existing laws and the possibility that new laws
may be adopted, there is a risk that we will not be in full compliance.
Several recently passed federal laws could have an impact on our
business. The Digital Millennium Copyright Act establishes binding rules that
clarify and strengthen protection for copyrighted works in digital form,
including works used via the Internet and other computer networks. The Child
Online Protection Act is intended to restrict the distribution of certain
materials deemed harmful to children. The Children's Online Privacy Protection
Act of 1998 protects the privacy of children using the Internet, by requiring,
among other things, (1) that in certain specific instances the operator of a web
site must obtain parental consent before collecting, using or disclosing
personal information from children under the age of 13, (2) the operator of a
web site to make certain disclosures and notices on the web site or online
service regarding the collection, use or disclosure of such personal
information, and (3) the operator of a web site or online service to establish
and maintain reasonable procedures to protect the confidentiality, security and
integrity of personal information collected from children under the age of 13.
Compliance with these laws will subject our business to additional costs and
failure to comply could expose our business to liability.
We may not be able to acquire or maintain effective web addresses.
We hold rights to more than 150 web domain names, including
hollywood.com, hollywood.net, broadway.com, broadway.net, musicsite.com,
showtimes.com, theater.com, allaboutmovies.com, cableguide.com, cablesite.com,
cdguide.com, cdsite.com, cinemasite.com, eguide.com, esites.com, filmpick.com,
moviecritics.com, movieguide.com, moviepeople.com and moviesite.com.
Governmental agencies typically regulate domain names. These regulations are
subject to change. We may not be able to acquire or maintain appropriate domain
names in all countries in which we plan to do business. Furthermore, regulations
governing domain names may not protect our trademarks and similar proprietary
rights. We may be unable to prevent third parties from acquiring domain names
that are similar to, infringe upon or diminish the value of our trademarks and
other proprietary rights. In addition, we may not be able to secure the rights
to appropriate domains using new top level domains that are developed and
marketed from time to time, such as ".biz," ".info" and ".cc."
We are dependent on Mitchell Rubenstein and Laurie S. Silvers, our
founders.
Mitchell Rubenstein, our Chairman of the Board and Chief Executive
Officer, and Laurie S. Silvers, our Vice Chairman, President and Secretary, have
been primarily responsible for our organization and development. The loss of the
services of either of these individuals would hurt our business. If either of
these individuals were to leave the Company unexpectedly, we could face
substantial difficulty in hiring qualified successors and could experience a
loss in productivity while any successor obtains the necessary training and
experience. The employment agreements between Hollywood Media and each of these
individuals provide, among other things, that if we terminate either of their
agreements without "cause," we will have also terminated the other's agreement
without "cause."
Our future success will be dependent upon our ability to attract and
retain qualified and creative key management personnel. The competition for
qualified personnel in our industry and the limited availability of qualified
individuals could make it difficult for us to attract and retain qualified
personnel. If we do not succeed in attracting new qualified personnel, or
retaining and motivating existing qualified personnel, we may not be able to
grow our revenues or expand our operations.
-9-
Viacom Inc. beneficially owns approximately 31% of our common stock and
its interests may differ from yours.
Viacom Inc.'s significant equity interest in us and other rights we
have granted to Viacom could delay or prevent a merger or other transaction
involving a change of control of us that could be beneficial to you. Viacom
beneficially owns approximately 31% of our outstanding common stock. Viacom also
currently has the right to nominate two individuals for election to our board of
directors. If we issue common stock or securities convertible into common stock
in the future, Viacom will, with some exceptions, have the right to purchase for
cash securities from us so it can maintain its percentage ownership. As a result
of its equity interest in us and its right to nominate individuals for election
to our board, Viacom may be able to influence our management and affairs.
The accounting treatment of Viacom Inc.'s investment in us will result
in future non-cash expenses on our income statement.
Viacom Inc.'s commitment to provide $105.5 million of advertising,
promotion and content for our Hollywood.com and Broadway.com web sites is
recorded as an asset on our balance sheet. The asset was recorded on our books
at approximately $137 million, the fair market value of the common stock and
warrants issued to Viacom in exchange for the $105.5 million of advertising and
$10.8 million in cash. As we receive the advertising, promotion and content from
Viacom over the seven-year term of the agreements, we will record a non-cash
expense on our income statement in an amount equal to the value paid for the
advertising, promotion and content received. We currently expect to record an
expense of approximately $18.8 million per year to reflect the value of the
advertising, promotion and content expected to be received each year during the
seven-year term. This expense will result in a net loss to us to the extent our
revenues do not increase by an amount at least equal to the amount of the
expense.
Our stock price is volatile.
The trading price of our common stock has and may continue to fluctuate
significantly. During the 12 months ended September 30, 2001, the trading price
for our common stock on the Nasdaq Stock Market has ranged from $3.00 to $8.00
per share. Our stock price may fluctuate in response to a number of events and
factors, such as our quarterly operating results, announcements of new products
or services, announcements of mergers, acquisitions, strategic alliances, or
divestitures and other factors, including similar announcements by other
companies that investors may consider to be comparable to us. In addition, the
stock market in general, and the market prices for Internet-related companies in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of the companies. These broad market and industry
fluctuations may cause the market price of our stock to decrease, regardless of
our operating performance.
Our stock price may be hurt if the number of investors seeking to sell
shares of our common stock in the public market increases.
As of September 30, 2001, approximately 14 million shares of our common
stock, representing approximately 50% of our outstanding shares of common stock,
constituted "restricted securities" as defined in Rule 144 under the Securities
Act. Most of these shares are subject to agreements with Hollywood Media
permitting the holders thereof to demand that Hollywood Media register the
shares for resale under the Securities Act. This will permit the sale of
registered shares of common stock in the open market or in privately negotiated
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transactions without compliance with the requirements of Rule 144. In addition,
as of September 30, 2001, we had options and warrants outstanding for the
purchase of an aggregate of approximately 5.6 million shares of our common
stock, and we plan to issue additional options from time to time to our
employees and directors. Approximately 3.6 million of the shares issuable upon
exercise of the options were registered under the Securities Act and will be
freely tradeable upon issuance. To the extent the exercise price of the options
and warrants is less than the market price of the common stock, the holders of
the options and warrants are likely to exercise them and sell the underlying
shares of common stock. We are unable to estimate the amount, timing or nature
of future sales of outstanding common stock. Sales of substantial amounts of our
common stock in the public market could cause the market price for our common
stock to decrease. In addition, a decline in the price of our common stock would
likely impede our ability to raise capital through the issuance of additional
shares of common stock or other equity securities.
Our stock price may be hurt by the effects of outstanding warrants that
include market-based adjustment features.
In connection with our financing in May 2001, we issued adjustment
warrants to Viacom Inc., Societe Generale and Velocity Investment Partners Ltd.
If at the conclusion of any of four adjustment periods specified in the
warrants, the average of the ten lowest closing sale prices of the common stock
during twenty consecutive days of the adjustment period is below $5.19,
Hollywood Media will be obligated to issue additional shares to the investors
for no consideration. For example, if the average price was $4.00 during any
adjustment period, Hollywood Media would issue a total of 323,230 additional
shares of common stock to the investors under the warrants. The maximum number
of shares issuable under the warrants is 1,537,380, which number of shares would
only be issuable if the average price of the common stock was $2.15 or less
during any adjustment period.
The lower the market price of the common stock during any adjustment
period, the more shares that will be issuable to the investors upon exercise of
the warrants. If the investors exercise the warrants and sell the common stock,
the market price of the common stock may decrease due to the presence of
additional shares in the market. This decrease in the market price of the stock
could allow the investors to receive greater amounts of common stock through
subsequent exercises of the warrants. Sales of these additional shares could
further depress the market price of the common stock. Significant downward
pressure on the market price of the common stock could encourage short sales of
the common stock. Any material amount of short sales could place further
downward pressure on the market price of the common stock.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus or that are otherwise made by us
or on our behalf about our financial condition, results of operations and
business constitute "forward-looking statements," within the meaning of federal
securities laws. Hollywood Media cautions readers that certain important factors
may affect Hollywood Media's actual results, levels of activity, performance or
achievements and could cause such actual results, levels of activity,
performance or achievements to differ materially from any future results, levels
of activity, performance or achievements anticipated, expressed or implied by
any forward-looking statements that may be deemed to have been made in this
prospectus or that are otherwise made by or on behalf of Hollywood Media. For
this purpose, any statements contained in this prospectus that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, "forward-looking statements"
are typically phrased using words such as "may," "will," "should," "expect,"
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"believe," "anticipate," "intend," "could," "estimate," "pro forma" or
"continue" or the negative variations thereof or similar expressions or
comparable terminology. Factors that may affect Hollywood Media's results and
the market price of our common stock include, but are not limited to, our
continuing operating losses, negative cash flows from operations and accumulated
deficit, our limited operating history, the need for additional capital to
finance our operations, the need to manage our growth and integrate new
businesses into Hollywood Media, our ability to develop strategic relationships,
our ability to compete with other Internet companies, technology risks and the
general risk of doing business over the Internet, future government regulation,
dependence on our founders, the interests of our largest shareholder, Viacom
Inc., accounting considerations related to our strategic alliance with Viacom
Inc., the volatility of our stock price, and the effects of outstanding warrants
that include market-based adjustment features. Hollywood Media is also subject
to other risks detailed herein, including those risk factors discussed in the
"Risks of Investing in Our Shares" section as well as those discussed elsewhere
in this prospectus or detailed from time to time in Hollywood Media's filings
with the Securities and Exchange Commission.
Because these forward-looking statements are subject to risks and
uncertainties, we caution you not to place undue reliance on these statements,
which speak only as of the date of this prospectus. We do not undertake any
responsibility to review or confirm analysts' expectations or estimates or to
release publicly any revisions to these forward-looking statements to take into
account events or circumstances that occur after the date of this prospectus. As
a result of the foregoing and other factors, no assurance can be given as to the
future results, levels of activity or achievements and neither us nor any other
person assumes responsibility for the accuracy and completeness of such
statements.
ABOUT HOLLYWOOD MEDIA CORP.
This is only a summary and does not contain all the information that
may be important to you. You should read the more detailed information,
including the financial statements and the related footnotes, incorporated by
reference into this prospectus, as discussed in the "Where You Can Find More
Information" section of this prospectus.
Introduction
We are an entertainment-focused media and Internet company that offers
widely recognized brands and a broad collection of entertainment content data
and related information in the industry, which we license to media and other
companies including The New York Times, AOL Time Warner, Yahoo!, Sprint, AT&T
Wireless, Verizon and others. Hollywood Media owns an extensive ticketing
network and is engaged in the development and licensing of intellectual
properties and licensing of books. Hollywood Media generates revenues through
the business-to-business syndication of entertainment-related content, the sale
of live theater tickets, the sale of advertising and from advances paid by
publishers and royalties received from our library of book titles.
The mailing address of our principal executive office is 2255 Glades
Road, Suite 237W, Boca Raton, Florida 33431 and our telephone number is (561)
998-8000.
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Businesses to Business Syndication Divisions
CinemaSource. CinemaSource is the largest supplier of movie showtimes
to the Internet as measured by market share and compiles movie showtimes for
every movie theater in the United States and Canada, representing approximately
36,000 movie screens. Since its start in 1995, CinemaSource has substantially
increased its operations and currently provides movie showtime listings to more
than 200 newspapers, wireless companies, Internet sites, and other media
outlets, including newspapers such as The New York Times and Newsday, Internet
companies including AOL's Digital City, Yahoo!, Lycos, Excite,
Ticketmaster/CitySearch and NBCi and wireless providers such as Sprint PCS, AT&T
Wireless and Verizon.
CinemaSource also syndicates entertainment news, movie reviews, and
celebrity biographies. In addition to charging fixed amounts for the data that
it provides to its customers, CinemaSource often shares in the advertising
revenue generated by its customers in connection with the data.
EventSource. We launched the EventSource business in mid-1999 as an
expansion of the operations of CinemaSource. EventSource compiles and syndicates
detailed information on community events in cities around the country, including
concerts and live music, sporting events, festivals, fairs and live theater.
EventSource entered into an agreement with AOL's Digital City in April 2000 to
provide event listings for up to 200 cities nationwide. In addition to Digital
City, other EventSource customers include the web sites of The New York Times
and Knight Ridder.
TheaterSource. We launched the TheaterSource business in mid-2000 as a
further expansion of the operations of EventSource. TheaterSource compiles and
syndicates a comprehensive database of theater productions and showtimes,
covering shows on Broadway, off-Broadway, touring companies, community
playhouses, and dinner theaters throughout North America and in London's West
End theater district.
ConcertSource. We launched this business in October 2000. ConcertSource
offers extensive local listings of concerts and music-related events from major
arenas to small local jazz clubs, including a complete listing of every
performance from major touring groups to hometown bands. ConcertSouce currently
covers concert and event listings for the top 60 markets in the United States
and plans to expand its coverage to more than 200 markets throughout North
America.
Baseline. We own and operate Baseline, a business which includes a
pay-per-use subscription web site (located at Baseline.hollywood.com) and
various publications geared to movie studios, investment banks, news agencies,
consulting firms and other professionals in the entertainment industry. We
acquired Baseline from media analyst Paul Kagan. Based on its 15-year history,
we believe the Baseline business maintains one of the most comprehensive movie
and television-related databases. Baseline is a comprehensive database of
information on over 67,000 films and television programs, as well as biographies
on entertainment industry professionals. This rich, interactive database is
accessible online to our subscribers and includes credits, synopses, reviews and
box office statistics. Baseline continuously tracks production, distribution,
and exhibition of feature films worldwide, including box office projections,
budgets, and trends. Baseline customers include Bloomberg, Daily Variety, People
Magazine, Lexis-Nexis, 20th Century Fox, DreamWorks, Paramount Pictures, Sony
Pictures, MGM, Warner Bros., E! Entertainment Television, Boston Consulting
Group and Booz, Allen, Hamilton.
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Ticketing Divisions
Theatre Direct International and Broadway.com. We acquired Theatre
Direct International (TDI) as of September 15, 2000. Founded in 1990, TDI is a
live theater marketing and sales agency serving over 40,000 domestic and
international travel professionals, traveling consumers and New York-area
theater patrons. TDI is a ticketing wholesaler to the travel industry that
provides groups and individuals with access to theater tickets and knowledgeable
service, covering shows on Broadway, long running shows off-Broadway, shows in
London's West End theatre district and shows in Toronto. TDI sells tickets
through the 800-Broadway toll-free number, via the Broadway.com web site and by
fax. As a marketing agency, TDI represents 10 producers and 14 Broadway shows to
the travel industry around the world. The 14 Broadway shows are Aida, Beauty and
the Beast, Cabaret, Chicago, Contact, 42nd Street, Kiss Me Kate, Les Miserables,
Mamma Mia!, Rent, The Full Monty, The Lion King, The Music Man, and The Phantom
of the Opera. In addition, TDI's education division, Broadway Classroom, markets
group tickets to schools across the country. TDI's offline ticketing service
complements the online ticketing services available on Broadway.com. The
combined companies provide live theater ticketing and related content for over
200 venues in multiple markets to a customer base consisting of over 40,000
travel agencies, tour operators, corporations and educational institutions, in
addition to numerous newspapers and web sites.
MovieTickets.com. MovieTickets.com, Inc., was launched in late May
2000. Hollywood Media Corp., owns approximately 30% of the equity of
MovieTickets.com, Inc. MovieTickets.com entered into an agreement with Viacom
Inc. effective August 2000 whereby Viacom acquired a five percent interest for
$25 million of advertising and promotion over five years. MovieTickets.com is
promoted through on-screen advertising in each participating exhibitor's movie
screens and through the Viacom advertising and promotion. In March 2001, America
Online Inc. purchased a 3% preferred equity interest in MovieTickets.com for
$8.5 million in cash. In connection with that transaction, MovieTickets.com's
ticket inventory will be promoted throughout America Online's interactive
properties and ticket inventory of AOL's Moviefone will be featured on
MovieTickets.com.
MovieTickets.com's current participating exhibitors include AMC
Entertainment Inc., National Amusements, Inc., Famous Players Inc., Hoyts
Cinemas, Marcus Theaters and several regional exhibitors. These exhibitors
operate theaters located in all of the top 20 markets and approximately 70% of
the top 50 markets in the United States and Canada and represent approximately
50% of the top 100 grossing theaters in North America. AMC Entertainment Inc. is
the largest movie theater operator in the United States based on box office
sales and Famous Players generates approximately half of all box office sales in
Canada. The MovieTickets.com web site allows users to purchase movie tickets and
retrieve them at "will call" windows or kiosks at theaters. The web site also
features bar coded tickets that can be printed at home and presented directly to
the ticket taker at the theater. The web site contains movie content from
Hollywood Media's various divisions for all current and future release movies,
movie reviews and synopses, digitized movie trailers and photos, and box office
results. The web site generates revenues from service fees charged to users for
the purchase of tickets and the sale of advertising.
Internet Divisions
Hollywood.com. Hollywood.com is a premier entertainment related web
site featuring over one million pages of in-depth movie, television and other
entertainment content, including movie descriptions and reviews, digitized movie
trailers and photos, movie showtimes listings, entertainment news, box office
results, interactive games, movie soundtracks, television listings, concert
information, celebrity profiles and biographies, comprehensive coverage of
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entertainment awards shows and film festivals and exclusive video coverage of
movie premieres.
We sell banner advertising and sponsorships on Hollywood.com through
relationships with advertising rep. firms and through an internal sales staff.
Some of our recent advertisers include BMW, General Motors, Universal Studios,
Proctor & Gamble, Visa, IBM, Diet Coke, New Line Cinema, MGM, US Army, Sprint,
AT&T, The Food Network, Ben & Jerry's Ice Cream, Microsoft, People Magazine,
Verizon, Purina, Fox, and Warner Bros.
We promote the Hollywood.com web site through our strategic
relationships with Viacom Inc. and the National Association of Theatre Owners
("NATO"). Through exclusive contracts with NATO and over 85 of its member
theater exhibitors, we promote the Hollywood.com web site to movie audiences by
airing trailers about Hollywood.com before feature films that play in
participating theaters and by displaying posters and other promotional materials
in those theaters. In exchange, we develop and maintain web sites for many of
the theater exhibitors that feature their movie showtimes.
In January 2000, we entered into a strategic, seven-year relationship
with Viacom Inc. that provides for extensive promotion of the Hollywood.com and
Broadway.com web sites. Viacom has agreed to provide Hollywood.com and
Broadway.com with $105 million of promotion across its full range of CBS and
Infinity media properties, including the CBS television network, CBS owned and
operated television stations, CBS cable networks, Infinity Broadcasting
Corporation's radio stations and outdoor billboards and CBS syndicated
television and radio programs. The promotion provided by Viacom is valued based
upon the average price charged by Viacom for similar promotions during the
applicable time period. To supplement our internal sales efforts, we also have
the right to reallocate a portion of each year's promotional budget and require
Viacom to sell up to $1.5 million of advertising on the Hollywood.com and
Broadway.com web site. Viacom has agreed to include the Hollywood.com web site
in all advertising sale programs and presentations that are appropriate for the
sale of advertising on the web site. We will pay an 8% commission on any
additional advertising revenues generated by Viacom for us in excess of the $1.5
million guaranteed amount selected by us each year.
Broadway.com. We launched Broadway.com on May 1, 2000. Broadway.com
features the ability to purchase Broadway, off-Broadway and West End theater
tickets online (See - Ticketing Divisions); theater showtimes for professional
live theater venues throughout the U.S. as well as London's West End and
hundreds of college and local live theater venues; the latest theater news;
interviews with stage actors and playwrights; opening-night coverage; original
theater reviews; and video excerpts from selected shows. Broadway.com also
offers current box office results, show synopses, cast and crew credits and
biographies, digitized show previews, digitized showtunes, and an in-depth Tony
Awards(R) area. Broadway.com generates revenue from ticket sales, advertising
sales, and syndication of its content to other Internet companies.
Intellectual Properties Business
Intellectual Properties. Our intellectual properties division owns the
exclusive rights to intellectual properties, which are complete stories and
ideas for stories, created by best-selling authors and media celebrities. Some
examples of our intellectual properties are Anne McCaffrey's Acorna the Unicorn
Girl, Leonard Nimoy's Primortals, and Mickey Spillane's Mike Danger. We license
rights to our intellectual properties to companies such as book publishers, film
and television studios, multi-media software companies and producers of other
products. These licensees develop books, television series and other products
based on the intellectual properties licensed from us. We generally obtain the
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exclusive rights to the intellectual properties and the right to use the
creator's name in the titles of the intellectual properties (e.g., Mickey
Spillane's Mike Danger and Leonard Nimoy's Primortals).
NetCo Partners. In June 1995, Hollywood Media and C.P. Group Inc.
("C.P. Group"), entered into an agreement to form NetCo Partners. NetCo Partners
is engaged in the development and licensing of Tom Clancy's NetForce.
Hollywood Media and C.P. Group are each 50% partners in NetCo Partners.
Tom Clancy is a shareholder of C.P. Group. At the inception of the partnership,
C.P. Group contributed to NetCo Partners all rights to Tom Clancy's NetForce,
and Hollywood Media contributed to NetCo Partners all rights to Tad Williams'
MirrorWorld, Arthur C. Clarke's Worlds of Alexander, Neil Gaiman's Lifers, and
Anne McCaffrey's Saraband. NetCo Partners owns Tom Clancy's NetForce which was
licensed to Putnam Berkley for a series of mass market paperbacks and to ABC
Television for a television mini-series and video distribution in accordance
with the terms of the partnership agreement and the other properties have
reverted back to Hollywood Media.
Book Development and Book Licensing. Our intellectual properties
division also includes a book development and book licensing operation through
our 51% owned subsidiary, Tekno Books, that develops and executes book projects,
typically with best-selling authors. Tekno Books has worked with approximately
50 New York Times best-selling authors, including Tom Clancy, Jonathan
Kellerman, Dean Koontz, Tony Hillerman, Robert Ludlum and Scott Turow, and
numerous media celebrities, including David Copperfield, Louis Rukeyser and
Willard Scott. Our intellectual properties division has licensed books for
publication with more than 60 book publishers, including HarperCollins, Bantam
Doubleday Dell, Random House, Simon & Schuster, Penguin Putnum and Warner Books.
The book development and book licensing division has a library of more than
1,200 books. The Chief Executive Officer of Tekno Books, Dr. Martin H.
Greenberg, is also a director of Hollywood Media and owner of the remaining 49%
interest in Tekno Books.
Tekno Books also owns a 50% interest in Mystery Scene Magazine, a trade
journal of the mystery genre of which Dr. Greenberg is co-publisher. During
1995, Hollywood Media acquired an additional 25% interest in the magazine.
PROCEEDS FROM SALE OF THE SHARES
We will receive no proceeds from the sale of any of or all of the
shares being offered by the selling shareholders under this prospectus. We will
receive an amount ranging from $2,769,406 to $3,954,540 upon the exercise of the
warrants, if exercised, for which we are registering the underlying shares of
common stock. We estimate we will spend approximately $160,000 in registering
the offered shares.
SELLING SHAREHOLDERS
We are registering all 3,694,111 shares covered by this prospectus on
behalf of the selling shareholders named in the table below. We issued all of
the shares and the warrants exercisable for shares to the selling shareholders
in private placement transactions. We have registered the shares to permit the
selling shareholders and their respective pledgees, donees, transferees or other
successors-in-interest that receive their shares from a selling shareholder as a
gift, partnership distribution or other non-sale related transfer after the date
of this prospectus to resell the shares when they deem appropriate.
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The following table sets forth certain information with respect to the
beneficial ownership of our common stock by the selling shareholders as of the
date of this prospectus.
Ownership of Common Ownership of Common
Stock Before Offering Number of Stock After Offering
--------------------- Shares Being --------------------
Selling Shareholders Number Percentage Offered Number Percentage
--------------------------------------- ------ ---------- ------- ------ ----------
Viacom Inc.(4)......................... 8,863,572(1) 31.3% 912,649(1) 7,950,923 29.5%
Societe Generale....................... 1,508,944(2) 3.2% 1,508,944(2) - -
Velocity Investment Partners Ltd.(5) 935,133(3) 2.0% 935,133(3) - -
Zeke L.P............................... 229,885 * 229,885 - -
ZCM Asset Holding Company
(Bermuda) Limited...................... 47,500 * 47,500 - -
KA Investments LDC(6).................. 35,000 * 35,000 - -
Robert DeVivio......................... 12,500 * 12,500 - -
Peter Falconello....................... 12,500 * 12,500 - -
-------------------------
*Less than 1%.
(1) Represents (i) 8,161,348 shares of common stock that are held directly,
(ii) 100,000 shares of common stock issuable under a currently
exercisable warrant, and (iii) 162,973 shares of common stock that are
issuable upon exercise of a series A warrant having an exercise price of
$6.44 per share. The aggregate number (but not the percentage ownership)
also includes up to 439,251 shares of common stock that are not currently
issuable but may be issuable in the future upon exercise of a series B
adjustment warrant.
(2) Represents (i) 576,504 shares of common stock that are held directly, and
(ii) 273,562 shares of common stock that are issuable upon exercise of a
series A warrant having an exercise price of $6.44 per share. The
aggregate number (but not the percentage ownership) also includes up to
658,878 shares of common stock that are not currently issuable but may be
issuable in the future upon exercise of a series B adjustment warrant.
The series A warrant and series B adjustment warrant issued to Societe
Generale prohibit it from beneficially owning more than 4.9% of our
common stock at any time.
(3) Represents (i) 318,358 shares of common stock that are held directly, and
(ii) 177,524 shares of common stock that are issuable upon exercise of a
series A warrant having an exercise price of $6.44 per share. The
aggregate number (but not the percentage ownership) also includes up to
439,251 shares of common stock that are not currently issuable but may be
issuable in the future upon exercise of a series B adjustment warrant.
The series A warrant and series B adjustment warrant issued to Velocity
Investment Partners Ltd. prohibit it from beneficially owning more than
4.9% of our common stock at any time.
(4) This information is based on a Schedule 13D, filed with the Securities
and Exchange Commission on May 15, 2000, which was jointly filed by
Sumner M. Redstone and Viacom Inc. Beneficial ownership of the shares of
Hollywood Media common stock is attributed to Sumner M. Redstone, as
trustee of a trust that owns 66 2/3% of the issued and outstanding shares
of capital stock of National Amusements, Inc. ("NAI"). NAI owns 100% of
the outstanding capital stock of NAIRI, Inc., which in turn owns
approximately 68% of the voting stock of Viacom Inc. Each of Sumner M.
Redstone and Viacom Inc. has shared voting and dispositive power over the
shares of Hollywood Media common stock.
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(5) John D. Ziegelman, as president of Velocity Asset Management LDC, the
investment manager to Velocity Investment Partners Ltd., may be deemed to
have beneficial ownership of the shares of Hollywood Media common stock
owned by Velocity Investment Partners Ltd.. Mr. Ziegelman disclaims
beneficial ownership of these shares.
(6) Irvin Kessler, as fund manager of Deephaven Capital Management LLC, the
investment manager to KA Investments LDC, may be deemed to have
beneficial ownership of the shares of Hollywood Media common stock owned
by KA Investments LDC.
The selling shareholders have not been employed by, held office in, or
had any other material relationship with us or any of our affiliates within the
past three years except as described below.
May 2001 Investments by Viacom Inc., Societe Generale and Velocity
Investment Partners Ltd. In May 2001 Hollywood Media raised an aggregate of
$7.25 million in cash, consisting of an aggregate $4.25 million investment by
Societe Generale and Velocity Investment Partners Ltd., and a $3 million
investment by Viacom Inc. consisting of a $1.4 million investment in Hollywood
Media and a $1.6 million prepayment of future cash advertising and promotion
commitments to Hollywood Media.
Hollywood Media issued an aggregate of 1,252,787 shares of Hollywood
Media's common stock to Societe Generale, Velocity Investment Partners Ltd. and
Viacom Inc. at a purchase price of $4.51 per share for a total purchase price of
$5.65 million in cash. The purchase price per share represents 105% of the
"Market Price" of the common stock, which is defined as the average volume
weighted average price for the 20 business days prior to the closing date. The
investors also received series A warrants to acquire an aggregate of 614,059
shares of common stock at a price of $6.44 per share (150% of the Market Price
at closing). If on each of January 30, 2002 and April 30, 2002, any investor
holds at least seventy-five percent of any of the investor's shares of common
stock issued to it in the transaction, then the exercise price of the series A
warrants will be decreased to $5.37 per share and $4.51 per share, respectively,
on such dates. The series A warrants are exercisable by the investors during the
five-year period ending on May 1, 2006.
The investors also received series B adjustment warrants to acquire
additional shares of common stock from time to time in amounts in proportion to
each of their respective investments. The investors will be entitled to receive
additional shares of common stock upon exercise of the series B adjustment
warrants for no additional consideration if the "market price" of the common
stock as of October 30, 2001, January 30, 2002, April 30, 2002 or July 30, 2002
is less than $5.19 per share. The Series B warrants are exercisable for 15
trading days following the last day of each twenty trading day period beginning
on each of these four dates. The "market price" of the common stock under the
series B warrants as of any date within each twenty trading day period is
defined as the lowest "average price" of the common stock during each twenty day
period preceding each such date. The "average price" is defined as the average
of the ten lowest closing sale prices of the common stock during each twenty
trading day period. The market price will in no event be less than $2.15. The
number of shares issuable upon exercise of a series B warrant on the first of
these four exercise dates is equal to (1) $5.19 minus the market price, divided
by (2) the market price, and multiplied by (3) a number of shares specified in
each series B warrant. The number of shares issuable upon exercise of a series B
warrant on each of the subsequent three exercise dates is equal to (1) the lower
of $5.19 and the lowest market price as of any prior exercise date minus the
market price, divided by (2) the market price, and multiplied by (3) a number of
shares specified in each series B warrant. The specified number of shares is
310,425 for Viacom Inc., 465,638 for Societe Generale, and 310,425 for Velocity
Investment Partners Ltd.
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The series A warrants and series B adjustment warrants issued to each
of Societe Generale and Velocity Investment Partners Ltd. prohibit each of them
from beneficially owning more than 4.9% of our common stock at any time. The
series A warrants and series B adjustment warrants issued to each of the
investors contain anti-dilution provisions, which, upon certain specified
events, such as certain specified changes in common stock (i.e., dividends or
distributions, or a reclassification, subdivision or combination of Hollywood
Media's common stock), and certain specified issuances of common stock or
convertible securities, require Hollywood Media to adjust the number of shares
of common stock of Hollywood Media issuable upon exercise of such warrants, to
prevent dilution of the number of shares of common stock of Hollywood Media
issuable upon exercise of such warrants.
In connection with this investment, Viacom also invested an additional
$1,600,000 in Hollywood Media as a prepayment of future cash advertising and
promotion commitments owing under the Advertising and Promotion Agreement, dated
as of January 3, 2000, between Hollywood Media and Viacom. This payment reduces
Viacom's annual promotional commitment under the Advertising and Promotion
Agreement by $1,500,000 for calendar year 2002 and by $1,500,000 for calendar
year 2003.
In connection with this investment, we entered into registration rights
agreements with each of Viacom Inc., Societe Generale and Velocity Investment
Partners Ltd. The registration rights agreements require that we register
3,404,226 of the shares of common stock covered by this prospectus. We will
prepare and file such amendments and supplements to the registration statement
as may be necessary in accordance with the Securities Act, and the rules and
regulations promulgated thereunder. We are subject to compensatory payments if
we do not fulfill our obligations under the registration rights agreement. For
example, in the event that the registration statement for the shares is not
filed by the filing deadline set forth in the registration rights agreements, or
is not declared effective by the effectiveness deadline set forth in the
registration rights agreements, then Hollywood Media shall pay to each such
purchaser pro rata based on their relative ownership of registrable securities
an amount in cash equal to (i) $84,750 times (ii) the sum of: (A) the number of
months (prorated per day for partial months) following the filing deadline that
the registration statement is not filed or following the effectiveness deadline
that the registration statement is not declared effective by the Commission, as
the case may be, plus (B) the number of months (prorated per day for partial
months) following the effectiveness deadline that sales cannot be made pursuant
to the registration statement after the registration statement has been declared
effective for more than 10 days in any 365-day period.
Viacom Inc. In January 2000, Hollywood Media entered into a strategic,
seven-year relationship with Viacom Inc. that provides for extensive promotion
of the Hollywood.com and Broadway.com web sites. In connection with our
strategic relationship, Viacom Inc. purchased 6,672,031 shares of Hollywood
Media's common stock, representing approximately 30% of our outstanding common
stock, in exchange for $5,303,030 in cash and $100,000,000 of advertising,
promotion, content and advertising sales support over a seven-year term pursuant
to an Advertising and Promotion Agreement and a Content Agreement. Hollywood
Media also issued to Viacom a Warrant to purchase an additional 1,178,892 shares
of our Common Stock for an aggregate exercise price of $10,937,002. Viacom
exercised the warrant in full during March 2000. Half of the warrant exercise
price was payable in cash and half was payable in additional advertising and
promotion under the Advertising and Promotion Agreement during year 2000.
Hollywood Media also entered into a Content License Agreement, an
Investor's Rights Agreement, and a Voting Agreement with Viacom, which contain,
among other things, transfer restrictions, standstill provisions, preemptive
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rights, registration rights and voting rights, some provisions of which are
highlighted below.
o Advertising and Promotion Agreement: Viacom agreed to provide
Hollywood Media with an aggregate of $70 million in
advertising and promotion of the Hollywood.com and
Broadway.com web sites over a seven-year term across its full
range of CBS media properties.
o Content License Agreement: Viacom agreed to provide Hollywood
Media with an aggregate of $30 million in value over a
seven-year term to be allocated in Hollywood Media's
discretion to the license of content, advertising sales or
additional advertising and promotion of the Hollywood.com and
Broadway.com websites. Hollywood Media receives $4.3 million
in value during each of the first six years of the term and
$4.2 million in value during the last year of the term.
o Investor's Rights Agreement: The Investor's Rights Agreement
between Hollywood Media and Viacom sets forth various rights
and obligations of the parties related to Viacom's ownership
of Hollywood Media's common stock, including Viacom's
registration rights with respect to the common stock,
Hollywood Media's right of first refusal with respect to
transfers by Viacom of Hollywood Media's common stock,
standstill provisions to which Viacom is bound, and preemptive
rights of Viacom with respect to certain issuances of common
stock and other securities by Hollywood Media.
Registration Rights. Viacom has the right to initiate up to
four registrations under the Securities Act of 1933 of the
common stock that it acquired from Hollywood Media. The
Investor's Rights Agreement contains various restrictions on
the timing of such registrations. In addition, Viacom has
"piggyback" registration rights allowing it to include the
shares of common stock that it acquires from Hollywood Media
in registrations of Hollywood Media's common stock initiated
by Hollywood Media or other shareholders. The Company will pay
all expenses associated with any such registrations other than
underwriters' fees or commissions relating to the sale of the
common stock.
Transfer Restrictions; Right of First Refusal. If Viacom
proposes to transfer any shares of common stock during the
seven-year period ending on January 3, 2007, other than to
certain affiliates or in a bona fide public distribution
pursuant to an effective registration statement, Hollywood
Media has the right to purchase the shares on the same terms
on which Viacom proposes to transfer them to a third party.
The Company's right of first refusal will terminate (a) at
such time as Mitchell Rubenstein, Hollywood Media's Chairman
of the Board and Chief Executive Officer, and Laurie S.
Silvers, Hollywood Media's Vice Chairman of the Board and
President, have sold more than 60% of the common stock owned
by them as of January 3, 2000 or (b) at any time after January
3, 2003 if Viacom owns less than 15% of Hollywood Media's
outstanding common stock (other than as a result of transfers
by Viacom of at least half of the common stock acquired by it
from Hollywood Media).
Standstill Provisions. During the seven-year period ending on
January 3, 2007, Viacom agrees that, except as contemplated by
the Investor's Rights Agreement, it will not, directly or
indirectly, do any of the following:
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(1) acquire or propose to acquire any securities of
Hollywood Media if, after giving effect thereto,
Viacom and its affiliates beneficially own in excess
of 34.8% of Hollywood Media's outstanding common
stock;
(2) solicit proxies or become a participant in a
solicitation of proxies or consents with respect to
any securities of Hollywood Media or initiate or
encourage the submission of any stockholder proposal
or election contest with respect to Hollywood Media;
(3) take any action for the purpose of convening a
meeting of the shareholders of Hollywood Media or
initiate any process to solicit or obtain consents of
shareholders in lieu of a meeting;
(4) except as may be required by applicable law, make any
public announcement or disclosure in respect in
respect of any plan, contract or arrangement relating
to the acquisition of capital stock of Hollywood
Media or a merger, sale of assets or other
extraordinary corporate transaction relating to
Hollywood Media;
(5) deposit capital stock of Hollywood Media into a
voting trust or subject capital stock of Hollywood
Media to voting agreements, or grant a proxy or
power-of-attorney with respect to any capital stock
of Hollywood Media to any person not designated by
Hollywood Media who is not an officer, director or
employee of Viacom or its affiliates;
(6) form or in any way participate in a group for the
purpose of acquiring, holding, voting or disposing of
securities of Hollywood Media; or
(7) disclose publicly any intention or arrangement
inconsistent with the foregoing or enter into any
discussions or understandings with any third party
with a view to encouraging any action prohibited with
the foregoing.
If Hollywood Media's Board of Directors approves or recommends
to its shareholders for approval any transaction in which a
party (other than Hollywood Media's existing large
shareholders) would acquire at least 50% of Hollywood Media's
outstanding common stock, then the restrictions described
above would not apply during the pendency of the transaction
and would cease upon the consummation of the transaction.
Preemptive Rights. During the seven-year period ending on
January 3, 2007, Viacom has a preemptive right to purchase a
pro rata portion of shares of common stock or securities
convertible into common stock issued by Hollywood Media. The
number of shares that Viacom is entitled to purchase is equal
to the total shares to be issued by Hollywood Media multiplied
by a percentage determined by dividing the number shares of
Hollywood Media common stock then owned by Viacom by the total
shares of common stock outstanding. If Viacom elects to
exercise this right, it will purchase the shares for cash and
otherwise on the same terms as Hollywood Media has agreed to
issue the shares. This preemptive right does not apply to
certain issuances of shares by Hollywood Media, including
issuances in connection with any merger, acquisition or
similar transaction by or involving Hollywood Media or
issuances to directors, officers, employees, contractors,
advisors or consultants of Hollywood Media in the ordinary
course of business.
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o Voting Agreement: The Voting Agreement provides that Viacom
has the right to nominate for election to Hollywood Media's
Board of Directors, a number of individuals equal to the
product of Viacom's percentage ownership of Hollywood Media's
common stock and the total number of members of the Board of
Directors (rounded down to the nearest whole number), and the
parties to such agreement agree to vote in favor of such
nominees. In addition, as long as the Advertising and
Promotion Agreement and the Content Agreement remain in
effect, Viacom shall have the right to designate at least one
nominee to the Board of Directors.
KA Investments LDC. In September 1998 Hollywood Media sold an aggregate
of 250 shares of its convertible preferred stock for an aggregate purchase price
of $2,500,000, all of which have since been converted into shares of common
stock. In connection with the private placement, Hollywood Media entered into a
Convertible Preferred Stock Purchase Agreement and a Registration Rights
Agreement with KA Investments LDC. Hollywood Media was unable to register the
underlying shares of common stock issuable to KA Investments within the time
period required by the Registration Rights Agreement and was therefore obligated
to make payments to KA Investments specified in the Registration Rights
Agreement. Hollywood Media satisfied these payment obligations by agreeing to
pay KA Investments $75,000 in cash and to issue it 35,000 shares of common
stock. The 35,000 shares of common stock were issued on July 5, 2001 and are
registered in this prospectus.
HOW THE SHARES MAY BE DISTRIBUTED
The selling shareholders may sell their shares of common stock from
time to time in various ways and at various prices. Some of the methods by which
the selling shareholders may sell their shares include:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o privately negotiated transactions;
o block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by
that broker or dealer for the selling shareholder's account
under this prospectus;
o sales under Rule 144 rather than by using this prospectus;
o a combination of any of these methods of sale; and
o any other legally permitted method.
The applicable sales price may be affected by the type of transaction.
The selling shareholders may also pledge their shares as collateral for
a margin loan under their customer agreements with their brokers. If there is a
default by the selling shareholders, the brokers may offer and sell the pledged
shares.
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Brokers or dealers may receive commissions or discounts from the
selling shareholders (or, if the broker-dealer acts as agent for the purchaser
of the shares, from that purchaser) in amounts to be negotiated. These
commissions may exceed those customary in the types of transactions involved.
We cannot estimate at the present time the amount of commissions or
discounts, if any, that will be paid by the selling shareholders in connection
with sales of the shares.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. The
selling shareholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares of common stock. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling shareholders. In addition, Societe Generale and KA
Investments LDC has each advised us that:
o it purchased the shares in the ordinary course of business;
and
o at the time of the purchase of the shares to be resold, it had
no agreements or understandings, directly or indirectly, with
any person to distribute the shares.
In addition, the selling shareholders may enter into option,
derivative, hedging or short transactions with respect to the shares, and any
related offers or sales of shares may be made under this prospectus, subject to
certain limitations set forth in agreements between the selling shareholders and
Hollywood Media. For example, the selling shareholders may:
o enter into transactions involving short sales of the shares by
broker-dealers in the course of hedging the positions they
assume with the selling shareholders;
o sell shares short itself and deliver the shares registered
hereby to settle such short sales or to close out stock loans
incurred in connection with its short positions;
o write call options, put options or other derivative
instruments (including exchange-traded options or privately
negotiated options) with respect to the shares, or which it
settles through delivery of the shares;
o enter into option transactions or other types of transactions
that require the selling shareholder to deliver shares to a
broker, dealer or other financial institution, who may then
resell or transfer the shares under this prospectus; or
o loan the shares to a broker, dealer or other financial
institution, who may sell the loaned shares.
These option, derivative, hedging and short transactions may require
the delivery to a broker, dealer or other financial institution of shares
offered under this prospectus, and that broker, dealer or other financial
institution may resell those shares under this prospectus.
Under the securities laws of certain states, the shares may be sold in
those states only through registered or licensed broker-dealers. In addition,
the shares may not be sold unless the shares have been registered or qualified
for sale in the relevant state or unless the shares qualify for an exemption
from registration or qualification.
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We have agreed to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to the selling shareholders. We have agreed to indemnify the selling
shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Certain of the selling shareholders have also agreed to indemnify us,
our directors, officers, agents and representatives against certain liabilities,
including certain liabilities under the Securities Act.
The selling shareholders and other persons participating in the
distribution of the shares offered under this prospectus are subject to the
applicable requirements of Regulation M promulgated under the Exchange Act in
connection with sales of the shares.
We have agreed with the selling shareholders to keep the registration
statement of which this prospectus is a part effective until all the shares
registered under the registration statement have been resold.
OUR CAPITAL STOCK
Shares authorized and outstanding
Our third amended and restated articles of incorporation authorize us
to issue up to 100,000,000 shares of common stock, par value $.01 per share, and
1,000,000 shares of preferred stock, par value $.01 per share. As of September
30, 2001, 27,060,604 shares of common stock were outstanding and no shares of
preferred stock were outstanding. The transfer agent for our common stock is
American Stock Transfer & Trust Company, New York, New York.
Rights of holders of our common stock
Each share of common stock entitles the holder to one vote on all
matters submitted to a vote of the shareholders. The holders of common stock are
entitled to receive dividends, when, as and if declared by the Board of
Directors in its discretion, from legally available funds. Upon our liquidation
or dissolution, the holders of common stock will be entitled to share
proportionately in our legally available assets, after all our debts and
liabilities and the liquidation preference of any outstanding shares of our
preferred stock are paid.
The common stock has no preemptive rights and no subscription,
redemption or conversion privileges. The common stock does not have cumulative
voting rights, which means that the holders of a majority of the outstanding
shares of common stock voting for the election of directors will be able to
elect all members of the Board of Directors. A majority vote will also be
sufficient for other actions that require the vote or concurrence of
shareholders. All of our outstanding shares of common stock are, and the shares
to be sold in this offering will be, when issued and paid for, fully paid and
nonassessable.
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Preferred stock issuable without approval by holders of our common stock
Authority of board of directors to issue preferred stock. Without any
further vote or action by our shareholders, the Board of Directors has the
authority to issue up to 1,000,000 shares of preferred stock in one or more
series and to determine the number of shares in a series and the voting powers,
preferences and relative rights and restrictions of each series, including the
dividend rights and dividend rate, the terms of redemption (including sinking
fund provisions), redemption price or prices, the conversion rights, and the
liquidation preferences of the shares of each series.
Effects of issuance of preferred stock on holders of our common stock.
The issuance of preferred stock by the Board of Directors could result in a
class of securities outstanding that has preferences with respect to voting
rights and dividends, and/or in liquidation, over our common stock. These shares
may also be convertible into common stock, and then would enjoy all of the
rights of common stock. The specific preferential rights of our various current
types of preferred stock are described below.
Previously issued series of preferred stock. We previously designated
various series of preferred stock, including Series A, Series B, Series C,
Series D-1 and Series D-2. All of the previously issued shares of Series A,
Series B, Series C, Series D-1 and Series D-2 Preferred Stock have been
converted into shares of our common stock and therefore are no longer
outstanding.
In conjunction with the original issuance of the Series A Preferred
Stock, we and certain holders of our common stock (Mitchell Rubenstein, Laurie
S. Silvers, Martin H. Greenberg and Asbury Park Press, Inc.) agreed that one
nominee of Tekno Simon, LLC, the holder of the Series A Preferred Stock, would
be appointed to the Board of Directors. These shareholders agreed to vote their
shares for election of this nominee. The current nominee is Deborah J. Simon,
who was first appointed to the Board of Directors in November 1996.
Anti-Takeover provisions
We have various measures in place that could discourage, delay or
prevent a change in control even if the holders of our common stock would prefer
a change. These measures include:
o Power to issue blank check preferred stock. Our Third Amended
and Restated Articles of Incorporation authorize the issuance
of "blank check" preferred stock with designations, rights and
preferences as may be determined from time to time by our
Board of Directors.
o Shareholders' rights plan. In August 1996, we adopted a
shareholders' Rights Plan entitling each share of our common
stock to certain rights. On October 18, 1999, we amended the
shareholders' Rights Plan. Pursuant to the terms of the
original shareholders' Rights Plan, the Board of Directors of
Hollywood Media declared a dividend of one right for each
share of common stock outstanding as of September 4, 1996.
Pursuant to the terms of the shareholders' Rights Plan, as
amended, each Right now entitles the registered holder to
purchase from us one one-thousandth (1/1,000) of a share of a
new series of preferred shares, designated as Series E Junior
Preferred Stock, at a price of $100.00 per one one-thousandth
(1/1,000) of a share, subject to certain adjustments. The
description and terms of the Rights and the shareholders'
Rights Plan, as amended, are set forth in an Amended and
Restated Rights Agreement between Hollywood Media and American
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Stock Transfer & Trust Company, as Rights Agent, dated as of
August 23, 1996. The Series E Junior Preferred Stock is
non-redeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock,
subordinate to any other series of Hollywood Media's preferred
stock. The Series E Junior Preferred Stock may not be issued
except upon exercise of Rights. Each share of the Series E
Junior Preferred Stock will be entitled to receive when, as
and if declared, a quarterly dividend in an amount equal to
the greater of $0.001 per share and 1,000 times the cash
dividends declared on Hollywood Media's common stock. In
addition, the Series E Junior Preferred Stock is entitled to
1,000 times any non-cash dividends (other than dividends
payable in equity securities) declared on the common stock, in
like kind. In the event of liquidation, the holders of Series
E Junior Preferred Stock will be entitled to receive for each
share, a liquidation payment in an amount equal to the greater
of $1,000 or 1,000 times the payment made per share of common
stock. Each share of Series E Junior Preferred Stock will have
1,000 votes, voting together with the common stock. In the
event of any merger, consolidation or other transaction in
which common stock is exchanged, each share of Series E Junior
Preferred Stock will be entitled to receive 1,000 times the
amount received per share of common stock. The rights of
Series E Junior Preferred Stock as to dividends, liquidation
and voting are protected by anti-dilution provisions.
Fractions of shares of Series E Junior Preferred Stock (other
than fractions that are integral multiples of one
one-thousandth (1/1,000) of a share) may, at the election of
Hollywood Media, be evidenced by depositary receipts.
Hollywood Media may also issue cash in lieu of fractional
shares which are not integral multiples of one one-thousandth
(1/1,000) of a share. The terms of the amended shareholders'
Rights Plan grant Hollywood Media's Board of Directors the
option, after any person or group acquires beneficial
ownership of 15% or more of the voting stock but before there
has been a 50% acquisition, to exchange each then valid Right
(which would exclude Rights held by the Acquiring Person (as
defined in the Amended and Restated Rights Agreement) that
have become void) for that number of shares of Hollywood
Media's common stock having a fair market value on the date of
such 15% acquisition equal to the excess of (i) the value of
the shares of Preferred Stock issuable upon exercise of the
Right in the event of such acquisition over (ii) the exercise
price of the Right, in each case as adjusted. These rights may
cause substantial dilution to a person or group that attempts
to acquire us in a manner or on terms not approved by the
Board of Directors. The shareholders' Rights Plan is intended
to encourage a person interested in acquiring us to negotiate
with, and to obtain the approval of, the Board of Directors.
The shareholders' Rights Plan, however, may discourage a
future acquisition of us, including an acquisition in which
our shareholders might otherwise receive a premium for their
shares.
o Florida laws. Florida has enacted legislation that may deter
or frustrate takeovers of Florida corporations. We are subject
to several anti-takeover provisions under Florida law that
apply to public corporations organized under Florida law
unless the corporation has elected to opt out of those
provisions in its articles of incorporation or its bylaws. We
have not elected to opt out of these provisions. The Florida
Business Corporation Act prohibits the voting of shares in a
publicly held Florida corporation that are acquired in a
"control share acquisition" unless the board of directors
approves the control share acquisition or the holders of a
majority of the corporation's voting shares approve the
granting of voting rights to the acquiring party. A "control
share acquisition" is defined as an acquisition that
-26-
immediately thereafter entitles the acquiring party, directly
or indirectly, to vote in the election of directors within any
of the following ranges of voting power: (i) 1/5 or more but
less than 1/3; (ii) 1/3 or more but less than a majority; and
(iii) a majority or more. There are some exceptions to the
"control share acquisition" rules. The Florida Business
Corporation Act also contains an "affiliated transaction"
provision that prohibits a publicly held Florida corporation
from engaging in a broad range of business combinations or
other extraordinary corporate transactions with an "interested
shareholder" unless (i) the transaction is approved by a
majority of disinterested directors before the person becomes
an interested shareholder; (ii) the corporation has not had
more than 300 shareholders of record during the past three
years; (iii) the interested shareholder has owned at least 80%
of the corporation's outstanding voting shares for at least
five years; (iv) the interested shareholder is the beneficial
owner of at least 90% of the outstanding voting shares
(excluding shares acquired directly from the corporation in a
transaction not approved by a majority of the disinterested
directors); (v) consideration is paid to the holders of the
corporation's shares equal to the highest amount per share
paid by the interested shareholder for the acquisition of the
corporation's shares in the last two years or fair market
value, and other specified conditions are met; or (vi) the
transaction is approved by the holders of two-thirds of the
voting shares other than those owned by the interested
shareholder. An "interested shareholder" is defined as a
person who, together with affiliates and associates,
beneficially owns more than 10% of a company's outstanding
voting shares. The Florida Business Corporation Act defines
"beneficial ownership" in more detail.
LEGAL OPINION
Melissa H. Siesel, Associate General Counsel of Hollywood Media, is
giving an opinion regarding the validity of the offered shares.
EXPERTS
The audited financial statements incorporated by reference in this prospectus
from Hollywood Media's Annual Report on Form 10-K/A for the year ended December
31, 2000 have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (SEC). You may
read and copy any report or document we file at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. You may also inspect our filings at the regional offices of the SEC
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site located at http://www.sec.gov.
-27-
Quotations for the prices of our common stock appear on the Nasdaq
National Market, and reports, proxy statements and other information about us
can also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" some of the documents
we file with it into this prospectus, which means that we can disclose important
information to you by referring you to those documents. The documents
incorporated by reference are considered to be part of this prospectus, and
later information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the following filings into this prospectus:
(a) Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2000;
(b) Our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2001;
(c) Our Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2001; and
(d) all other reports filed by the Registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, since the end of the fiscal year covered by
the Annual Report referred to in (a) above.
We also incorporate by reference into this prospectus any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended:
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act with respect to the common stock covered by this prospectus.
This prospectus, which is a part of the registration statement, does not contain
all the information set forth in, or annexed as exhibits to, the registration
statement, as permitted by the SEC's rules and regulations. For further
information with respect to us and the common stock offered under this
prospectus, please refer to the registration statement, including the exhibits.
Copies of the registration statement, including exhibits, may be obtained from
the SEC's public reference facilities listed above upon payment of the fees
prescribed by the SEC, or may be examined without charge at these facilities.
Statements concerning any document filed as an exhibit are not necessarily
complete and, in each instance, we refer you to the copy of the document filed
as an exhibit to the registration statement. You should assume that the
information appearing in this prospectus is accurate as of the date of this
prospectus only. Our business, financial position and results of operations may
have changed since that date.
We will provide, without charge, to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of any or all of
the information incorporated by reference in this prospectus. Exhibits to any of
the documents, however, will not be provided unless such exhibits are
specifically incorporated by reference into such documents. The requests should
be addressed to: Investor Relations Department, Hollywood Media Corp., 2255
Glades Road, Suite 237 West, Boca Raton, Florida 33431, telephone number (561)
998-8000.
Prospective investors should only rely on the information incorporated
by reference or provided in this prospectus or any supplement. We have not
authorized anyone else to provide prospective investors with different or
additional information. This prospectus is not an offer to sell nor is it
seeking an offer to by these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the information in this
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prospectus or any supplement is accurate as of any date other than the date on
the front of those documents, regardless of the time of the delivery of this
prospectus or any sale of these securities. Our business, financial position and
results of operations may have changed since that date.
-29-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
Hollywood Media Corp. estimates that its expenses in connection with
this registration statement will be as follows:
Securities and Exchange Commission registration fee...$ 5,144.33
Legal fees and expenses............................... 10,000
Accounting fees and expenses.......................... 140,000
Miscellaneous......................................... 5,000
-----------
Total........................................ $160,144.33
===========
Item 15. Indemnification of Directors and Officers.
-----------------------------------------
Hollywood Media has authority under Section 607.0850 of the Florida
Business Corporation Act (the "FBCA") to indemnify its directors and officers to
the extent provided for in the FBCA. Hollywood Media's Third Amended and
Restated Articles of Incorporation provide that Hollywood Media shall indemnify
and may insure its officers and directors to the fullest extent permitted by
law. Hollywood Media may from time to time enter into agreements with each of
its directors and executive officers wherein it may agree to indemnify each of
them to the fullest extent permitted by law.
The provisions of the FBCA that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (b) deriving an improper personal
benefit from a transaction, (c) voting for or assenting to an unlawful
distribution, and (d) willful misconduct or conscious disregard for the best
interests of Hollywood Media in a proceeding by or in the right of Hollywood
Media to procure a judgment in its favor or in a proceeding by or in the right
of a shareholder. The statute does not affect a director's responsibilities
under any other law, such as the federal securities laws. The effect of the
foregoing is to require Hollywood Media to indemnify the officers and directors
of Hollywood Media for any claim arising against such persons in their official
capacities if such person acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling Hollywood
Media pursuant to the foregoing provisions, Hollywood Media has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Pursuant to certain registration rights agreements, each of Hollywood
Media and certain of the selling shareholders has agreed to indemnify the others
and their directors, officers, agents and representatives (and with respect to
the indemnification by Hollywood Media, any underwriters) against certain civil
liabilities that may be incurred in connection with this offering, including
certain liabilities under the Securities Act.
Item 16. Exhibits.
--------
Exhibit
Number Description of Exhibit
------ ----------------------
3.1 Third Amended and Restated Articles of Incorporation(1)
3.2 Bylaws(2)
4.1 Form of Common Stock Certificate(2)
4.2 Rights Agreement dated as of August 23, 1996 between Hollywood Media
and American Stock Transfer & Trust Company, as Rights Agent(4)
5.1 Opinion and Consent of Counsel*
10.1 Securities Purchase Agreement dated as of April 25, 2001 between
Hollywood Media Corp., Societe Generale and Velocity Investment
Partners Ltd. (3)
10.2 Registration Rights Agreement dated as of May 1, 2001 between Hollywood
Media Corp., Societe Generale and Velocity Investment Partners Ltd. (3)
10.3 "A" Warrant issued to Societe Generale(3)
10.4 "B" Warrant issued to Societe Generale(3)
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Counsel (included in the opinion filed as Exhibit 5.1 to
this registration statement)
24.1 Power of Attorney (included on signature pages to the registration
statement as originally filed)
---------------------------------------
* Filed as an exhibit to this Amendment No. 1 to Form S-3.
(1) Incorporated by reference from the exhibit filed with Hollywood Media's
Annual Report on Form 10-K for the year ended December 31, 2000.
(2) Incorporated by reference from the exhibit filed with Hollywood Media's
Registration Statement on Form SB-2 (No. 33-69294).
(3) Incorporated by reference from the exhibits to Hollywood Media's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2001.
(4) Incorporated by reference from exhibit 1 to Hollywood Media's Current
Report on Form 8-K filed on October 20, 1999.
Item 17. Undertakings.
------------
(a) Rule 415 Offering. The undersigned Registrant hereby
undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
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(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act.
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Hollywood Media pursuant to the foregoing provisions, or otherwise, Hollywood
Media has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Hollywood
Media of expenses incurred or paid by a director, officer, or controlling person
of Hollywood Media in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, Hollywood Media will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(c) Filings Incorporating Subsequent Exchange Act Documents by
Reference. The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of Hollywood
Media's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
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(ii) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Boca Raton, State of Florida, on this 2nd day of
November, 2001.
HOLLYWOOD MEDIA CORP.
By: /s/ Mitchell Rubenstein
---------------------------
Mitchell Rubenstein
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Mitchell Rubenstein Chairman of the Board, and November 2, 2001
------------------------------------ Chief Executive Officer
Mitchell Rubenstein (Principal executive, financial and
accounting officer)
* Vice Chairman of the Board, November 2, 2001
------------------------------------- President and Secretary
Laurie S. Silvers
* Chief Executive Officer of November 2, 2001
------------------------------------- Tekno Books and Director
Dr. Martin H. Greenberg
* Director November 2, 2001
-------------------------------------
Harry T. Hoffman
* Director November 2, 2001
-------------------------------------
Jules L. Plangere, Jr.
* Director November 2, 2001
-------------------------------------
Mitchell Semel
*By Mitchell Rubenstein as attorney-in-fact.
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EXHIBIT INDEX
-------------
Exhibit
Number Description of Exhibit
------ ----------------------
5.1 Opinion and Consent of Counsel
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Counsel (included in the opinion filed as Exhibit 5.1 to
this registration statement)
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