================================================================================
SEcurities purchase AGREEMENT
between
hollywood media corp.
and
societe generale
and
VELOCITY investment partners ltd.
dated as of
April 25, 2001
================================================================================
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of April 25
2001, among HOLLYWOOD MEDIA CORP., a Florida corporation (the "Company"),
SOCIETE GENERALE, a bank organized under the laws of France ("SG"), and VELOCITY
INVESTMENT PARTNERS LTD., a company organized under the laws of the Cayman
Islands ("Velocity") (SG and Velocity together, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue and sell in the aggregate (a)
942,362 shares (the "Common Shares") of the Company's Common Stock (the "Common
Stock"), (b) warrants to purchase up to 451,086 shares of Common Stock pursuant
to the terms set forth in the "A" Warrants, the form of which is annexed hereto
as Exhibit A, and (c) warrants to acquire up to 1,098,129 shares of Common Stock
pursuant to the terms set forth in the "B" Warrants, the form of which is
annexed hereto as Exhibit B (the "A" Warrants and the "B" Warrants,
collectively, the "Warrants") on a private placement basis pursuant to an
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended, and the Purchasers desire to purchase the Common Shares and the
Warrants, on the terms and subject to the conditions set forth herein; and
WHEREAS, the registered holders of the Common Shares and the Warrants
will have registration rights with respect to such Common Shares and shares of
Common Stock and/or, if applicable, other securities issuable upon exercise of
the Warrants (such shares of Common Stock and/or, if applicable, other
securities, the "Warrant Shares") pursuant to the terms of the Registration
Rights Agreement between the Company and the Purchasers (the "Registration
Rights Agreement").
NOW THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions. The following terms shall have the
following respective meanings:
"Affiliate" of a Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first- mentioned Person. The term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Call Period" has the meaning set forth in Section 2.03.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock, of such Person.
"Closing" has the meaning set forth in Section 2.02.
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Authority" means any federal or state government or
political subdivision thereof and any agency or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Material Adverse Effect" has the meaning set forth in Section 3.01.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.
"Redemption Date" has the meaning set forth in Section 2.03.
"Redemption Price" has the meaning ascribed to such term in Section
2.03.
"Redemption Right" has the meaning set forth in Section 2.03.
"Reset Period" means the 20 Trading Day intervals beginning on each of
October 30, 2001, January 30, 2002, April 30, 2002 and July 30, 2002, or in the
event that a registration statement has not been declared effective with respect
to the resale of the shares of Common Stock underlying the Warrants by October
30, 2001, then the 20 Trading Day intervals beginning on the one month, four
month, seven month and ten month anniversaries of such date that a registration
statement with respect to the resale of the shares of the Common Stock
underlying the Warrants has been declared effective.
"SEC Reports" means, collectively, the Company's Annual Report on Form
10-K for the year ended December 31, 2000.
"Securities Act" means the Securities Act of 1933, as amended.
'Trading Days" means any day on which the principal market on which the
Common Stock trades is open.
"Transaction Documents" means, collectively, this Agreement, the
Registration Rights Agreement and the Warrants.
"United States" has the meaning ascribed to such term in Rule 902(p) of
Regulation S under the Securities Act.
2
"U.S. Person" has the meaning ascribed to such term in Rule 902(o) of
Regulation S under the Securities Act.
ARTICLE II
SALE AND PURCHASE
Section 2.01. Agreement to Sell and to Purchase; Purchase Price. On the
terms and subject to the conditions set forth in this Agreement, the Company
hereby agrees to issue and sell to the Purchasers, and each Purchaser, severally
and not jointly, hereby agrees to purchase from the Company, the number of
Common Shares set forth opposite such Purchaser's name on Annex A at the
purchase price set forth opposite such Purchaser's name on Annex A, payable in
immediately available funds to the Company (such purchase price with respect to
any Purchaser, the "Purchase Price").
Section 2.02. Closing. The closing of the sale and purchase of the
Common Shares and the Warrants (the "Closing") shall be deemed to take place as
of May 1, 2001; provided however that (A) SG shall pay $500,000 of its allocable
portion of the Purchase Price on May 15, 2001 (the "Deferred Purchase Price
Payment Date") against delivery of 110,866 shares of Common Stock as of such
date and (B) Velocity shall pay $250,000 of its allocable portion of the
Purchase Price on the Deferred Purchase Price Payment Date against delivery of
55,433 shares of Common Stock as of such date. At the Closing, the following
closing transactions shall take place, each of which shall be deemed to occur
simultaneously with the Closing: (i) the Company shall execute, issue and
deliver to each Purchaser certificates evidencing the Common Shares deliverable
to such Purchaser as set forth on Annex A (other than Common Shares deliverable
in respect of the Deferred Purchase Price Payment date which shall be
deliverable as of such date) in such denominations as such Purchaser shall
reasonably request; (ii) the Company shall execute, issue and deliver to each
Purchaser the number of "A" Warrants and "B" Warrants to purchase shares of
Common Stock deliverable to such Purchaser as set forth on Annex A; (iii) each
Purchaser shall pay the Purchase Price (other than amounts payable in respect of
the Deferred Purchase Price Payment Date which shall be delivered as of such
date) by wire transfer as set forth on Annex A to the account designated by the
Company in writing prior to the Closing; (iv) the Company shall pay the expenses
of the Purchasers set forth in Section 7.02 hereof by wire transfer to the
account designated by each Purchaser, in writing prior to the Closing; provided
that, if a Purchaser so elects, such expenses may be netted against payment of
its Purchase Price payable to the Company pursuant to clause (iii) above; (v)
the Company and the Purchasers shall execute and deliver the Registration Rights
Agreement; (vi) the Company shall deliver to the Purchasers a certificate
executed by the Secretary of the Company, signing in such capacity, dated the
date of the Closing (A) certifying that attached thereto are true and complete
copies of the resolutions duly adopted by the Board of Directors of the Company
authorizing the execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby (including, without
limitation, the issuance and sale of the Common Shares and the Warrants and the
reservation and issuance of the Warrant Shares upon exercise of the Warrants),
which authorization shall be in full force and effect on and as of the date of
such certificate, (B) certifying and attesting to the office, incumbency, due
authority and specimen signatures of each Person who executed any Transaction
Document for or on behalf of the Company and (C) certifying as to the accuracy
of the representations and warranties of the Company contained in the
Transaction Documents; (vii) W. Robert Shearer, Senior Vice President and
General Counsel to the Company, shall deliver to the Purchasers an opinion,
dated the date of the Closing and addressed to the Purchasers, covering
customary matters; and (viii) the Purchasers shall have received evidence
satisfactory to them indicating that availability under the Company's $6.0
million line of credit shall be reduced as a result of this transaction only to
the extent of the portion of the Purchase Price paid on the Deferred Purchase
Price Payment Date.
3
Section 2.03. Redemption (a) The Company shall have the right (the
"Redemption Right") from the first Trading Day of each Reset Period until the
fifth Trading Day of each such Reset Period (the "Call Period") to repurchase,
all, or less than all, of the Common Shares owned by any Purchaser (pro rata
between the Purchasers based upon their relative ownership at the time of
Closing) at $5.637 (the "Redemption Price"). The Company may exercise its
Redemption Right only if shares of Common Stock are issuable pursuant to the "B"
Warrants in respect of such Reset Period as of the date of delivery of the
notice of redemption.
(b) In order to exercise its Redemption Right, the Company
shall deliver to each Purchaser a notice of redemption setting forth the date of
redemption, which shall be five (5) Trading Days from the date of the notice
(the "Redemption Date") and shall be within the period specified in Section
2.03(a) above that the Redemption Right may be effected. Any such notice of
redemption shall be irrevocable. The Company shall pay the Redemption Price to
each Purchaser, in cash, on the Redemption Date. Notwithstanding the receipt of
such notice of redemption, each Purchaser shall be entitled to sell shares of
Common Stock at any time prior to the Redemption Date.
(c) In addition to the foregoing, if (i) the Company fails to
have a registration statement declared effective with respect to the resale of
the shares of Common Stock underlying the Warrants within eight (8) months of
the date of Closing; (ii) the Company has failed to timely deliver any Warrant
Shares to a Purchaser pursuant to an effective exercise of the Warrants, and
upon receipt of notice of the failure to deliver the Warrant Shares, has not
delivered such shares within five (5) days of receiving such notice; or (iii)
the Company has failed to remove a restrictive legend from any security within
15 days of when such legend may be removed pursuant to Section 5.02 hereof, then
each Purchaser may demand that the Company repurchase all, or less than all, of
the Common Shares owned by such Purchaser at $5.637 per share, which amount
shall be paid within five (5) Trading Days from when a Purchaser demands such
redemption.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchasers to purchase the Common
Shares and the Warrants, the Company hereby represents and warrants to the
Purchasers that on and as of the date hereof and on and as of the Deferred
Purchase Price Payment Date (such reaffirmation to be evidenced by acceptance of
the payments made by SG and Velocity as of such date):
Section 3.01. Organization and Standing. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority, and all authorizations, licenses,
permits and certifications necessary for it to own its properties and assets and
to carry on its business as it is now being conducted (and, to the extent
described therein, as described in the SEC Reports) and proposed to be
conducted. The Company and each of its subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which the
character of the properties owned or leased by it or the nature of its
businesses makes such qualification necessary, except where the failure to so
qualify or be in good standing would not have a material adverse effect on the
business, assets, operations, properties, condition (financial or otherwise) or
4
prospects of the Company and its subsidiaries, taken as a whole, or any adverse
effect on the Company's ability to consummate the transactions contemplated by,
or to execute, deliver and perform its obligations under, each of the
Transaction Documents (a "Material Adverse Effect").
Section 3.02. Securities of the Company. The authorized Capital Stock
of the Company consists of one hundred million shares of Common Stock and one
million shares of preferred stock; as of March 31, 2001, 25,161,532 shares of
common stock and no shares of preferred stock were outstanding and 1,450,000
shares of Common Stock were reserved for issuance upon exercise of outstanding
warrants. Except as set forth in the SEC Reports, the Company has no other
authorized, issued or outstanding equity securities or securities containing any
equity features, or any other securities convertible into, exchangeable for or
entitling any person to otherwise acquire any other securities of the Company
containing any equity features. The Company has no stock option, incentive or
similar plan other than the (1) 1993 Stock Option Plan under which 3,150,000
shares of Common Stock may be issued, (2) the Directors Plan, under which
100,000 shares of Common Stock may be issued, and (3) the 2000 Stock Incentive
Plan under which 1,250,000 shares of Common Stock may be issued. All of the
outstanding shares of Capital Stock of the Company have been duly and validly
authorized and issued, and are fully paid and nonassessable. The Common Shares
and the Warrants and all of the Warrant Shares have been duly and validly
authorized. When issued against payment therefor as provided in this Agreement,
the Common Shares and the Warrants will be validly issued and will constitute
valid and enforceable obligations of the Company, enforceable against the
Company in accordance with their respective terms (subject to the effects of
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity). When issued upon exercise of the Warrants (assuming payment of the
exercise price therefor), the Warrant Shares will be validly issued, fully paid
and nonassessable, free and clear of all preemptive rights, claims, liens,
charges, encumbrances and security interests of any nature whatsoever. A
sufficient number of shares of Common Stock has been duly reserved and will
remain available for issuance upon exercise of the Warrants. Except as set forth
in Schedule 3.02, this Section 3.02 and the SEC Reports, there are no
outstanding options, warrants, conversion rights, subscription rights,
preemptive rights, rights of first refusal or other rights or agreements of any
nature outstanding to subscribe for or to purchase any shares of Capital Stock
of the Company or any other securities of the Company of any kind binding on the
Company. Except as set forth in Schedule 3.02, neither the issuance of the
Common Shares or the Warrants nor the issuance of the Warrant Shares is subject
to any preemptive rights, rights of first refusal or other similar limitation.
Except as otherwise required by law, there are no restrictions upon the voting
or transfer of any shares of the Company's Capital Stock pursuant to the
Company's Certificate of Incorporation, bylaws or other documents. Except as
provided herein or in the other Transaction Documents, there are no agreements
or other obligations (contingent or otherwise) that may require the Company to
repurchase or otherwise acquire any shares of its Capital Stock.
Section 3.03. Authorization; Enforceability. The Company has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Transaction Documents to be executed, delivered or
performed by it and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of, and the consummation of the
transactions contemplated by, the Transaction Documents and such corporate
action remains in full force and effect. No other corporate proceeding on the
part of the Company is necessary, and no consent of any
5
shareholder of the Company is required, for the valid execution and delivery by
the Company of the Transaction Documents, and the performance and consummation
by the Company of the transactions contemplated by the Transaction Documents to
be performed by the Company. The Company has duly executed and delivered, or
concurrently herewith is executing and delivering, each of the Transaction
Documents. Assuming the due execution of this Agreement and the Registration
Rights Agreement by the Purchasers, this Agreement, the Registration Rights
Agreement, the Common Stock and the Warrants constitute the valid and binding
obligations of the Company, enforceable against the Company in accordance with
each of their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 3.04. No Violation; Consents.
(a) The execution, delivery and performance by the Company of
the Transaction Documents and the consummation of the transactions contemplated
thereby to be performed by the Company do not and will not (i) contravene the
applicable provisions of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or Governmental Authority to or by
which the Company or any of its subsidiaries or any of its respective property
or assets is bound, (ii) violate, result in a breach of or constitute (with due
notice or lapse of time or both) a default or give rise to an event of
acceleration under any contract, lease, loan or credit agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company is a party or by which it or any of its subsidiaries is bound or to
which any of its respective properties or assets is subject, nor result in the
creation or imposition of any lien, security interest, charge or encumbrance of
any kind upon any of the properties, assets or Capital Stock of the Company or
any of its subsidiaries, or (iii) violate any provision of the organizational
and other governing documents of the Company or any of its subsidiaries.
(b) No consent, approval, authorization or order of, or filing
or registration with, any court or Governmental Authority or other Person is
required to be obtained or made by the Company for the execution, delivery and
performance of the Transaction Documents or the consummation of any of the
transactions contemplated thereby (other than the registration of the resale of
the Common Shares and the Warrant Shares with the Commission and pursuant to any
state "blue sky" laws as contemplated by the Registration Rights Agreement),
except for those consents or authorizations previously obtained and those
filings previously made.
Section 3.05. Securities Act Representations. The Company has not
offered or sold and will not offer or sell any shares of its Capital Stock
(including any shares of Common Stock or any warrants) in this offering other
than the Common Shares and the Warrants. Assuming the accuracy of the
Purchasers' representations pursuant to Section 4.02 hereof, the sale of the
Common Shares and the Warrants hereunder is, and the issuance of the Warrant
Shares upon exercise of the Warrants will be, exempt from the registration
requirements of the Securities Act. Neither the Company, nor any of its
Affiliates, or, to its knowledge, any Person acting on its or their behalf has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the Common Shares, Warrants or Warrant Shares. Neither the Company,
6
nor any of its Affiliates, nor to its knowledge, any Person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security other than pursuant to this
Agreement under circumstances that would require registration under the
Securities Act of the Common Shares or Warrants to be issued under this
Agreement. The Company is eligible to use Form S-3 under the Securities Act to
file the Registration Statement (as defined in the Registration Rights
Agreement). The Company has not provided the Purchasers with any material
non-public information that, according to applicable law, rule or regulation,
should have been disclosed publicly by the Company.
Section 3.06. Solvency; No Default. (a) (a) The Company is, and upon
giving effect to the transactions contemplated hereby to be performed by it as
of the Closing will be, Solvent. "Solvent" means that, as of the date of
determination, (i) the then fair saleable value of the assets of the Company (on
a consolidated basis) exceeds the then total amount (on a consolidated basis) of
its debts and other liabilities, (including any guarantees and other contingent,
subordinated, unmatured or unliquidated liabilities whether or not reduced to
judgment, disputed or undisputed, secured or unsecured), (ii) the Company has
sufficient funds and cash flow to pay its liability on its existing debts as
they become absolute and matured, (iii) final judgments against the Company in
pending or, to the Company's knowledge, threatened actions for money damages
will not be rendered at a time when, or in an amount such that, the Company will
be unable to satisfy any such judgments promptly in accordance with their terms
(taking into account (a) the maximum reasonable amount of such judgments in any
such actions (other than amounts that would be remote), (b) the earliest
reasonable time at which such judgments would be rendered and (c) any reasonably
expected insurance recovery with respect thereto), and (iv) the Company does not
have unreasonably small capital with which to engage in its present business.
(b) The Company is not, and immediately after the consummation
of the transactions contemplated hereby to be performed by the Company will not
be, in default of (whether upon the passage of time, the giving of notice or
both) its organizational and other governing documents, or any provision of any
security issued by the Company, or of any agreement, instrument or other
undertaking to which the Company is a party or by which it or any of its
property or assets is bound, or the applicable provisions of any law, statute,
rule, regulation, order, writ, injunction, judgment or decree of any court or
Governmental Authority to or by which the Company or any of its property or
assets is bound, which default or violation, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 3.07. No Brokers. Other than amounts payable by the Company to
Cardinal Capital Management, Inc., no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, placement or similar fee or
other commission in connection with the transactions contemplated hereby based
on any agreement, arrangement or understanding with the Company.
Section 3.08. SEC Reports; Financial Condition; No Adverse Changes. (a)
(a) The audited consolidated financial statements of the Company and the related
notes thereto as of December 31, 2000 reported on by Arthur Andersen LLP,
independent accountants, copies of which have heretofore been furnished to the
Purchasers and are publicly available, present fairly the financial condition,
7
results of operations and cash flows of the Company (on a consolidated basis) at
such date and for the periods set forth therein (such audited consolidated
financial statements, collectively, the "Financial Statements"), copies of which
have heretofore been furnished to the Purchasers and are publicly available,
present fairly the financial condition, results of operations and cash flows of
the Company (on a consolidated basis) at such date and for the periods set forth
therein, subject to normal year end adjustments with respect to December 31,
2001 Financial Statements). The Financial Statements, including the related
schedules and notes thereto (if any), have been prepared in accordance with
generally accepted accounting principles as set forth in the opinions and
pronouncements of the Accounting Principles Board of American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board as in effect on the date of filing of such documents
with the Commission, applied on a consistent basis (except for changes concurred
in by the Company's independent public accountants) unless otherwise expressly
stated therein. Except as disclosed in the SEC Reports, during the period from
January 1, 2001 to and including the date hereof, there has been no sale,
transfer or other disposition by the Company of any material part of the
business, property or securities of the Company and no purchase or other
acquisition of any business, property or securities by the Company material in
relation to the financial condition of the Company.
(b) Except as are fully reflected or reserved against in the
Financial Statements and the notes thereto, there are no liabilities or
obligations with respect to the Company or any of its subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) that, either individually or in the aggregate, after taking into
account (a) the maximum reasonable amount of any liability that may arise on
account of any litigation or any other contingent liability or obligation (other
than amounts that would be remote), (b) the earliest reasonable time at which
any such liability or obligation may become due and (c) any reasonably expected
insurance recovery with respect thereto, could reasonably be expected to have a
Material Adverse Effect.
(c) Since December 31, 2000, except as set forth in the SEC
Reports, there has been no development or event, nor any prospective development
or event known to the Company or any of its subsidiaries, or any litigation,
proceeding or other action seeking an injunction or other restraining order,
damages or other relief from a court or administrative agency of competent
jurisdiction pending, threatened or, to the knowledge of the Company,
contemplated, or any action of any Governmental Authority, that has had or could
reasonably be expected to have a Material Adverse Effect.
Section 3.09. Use of Proceeds; Federal Regulations. No part of the net
proceeds from the sale of the Common Shares and the Warrants will be used in a
manner that would violate the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System. The Company will not use such proceeds
other than for or in connection with general working capital.
Section 3.10. Subsidiaries. As of the date hereof, the Company has no
subsidiaries other than those listed on Schedule 3.10 hereto.
8
Section 3.11. No Integrated Offering. Neither the Company nor any of
its Affiliates, nor to its knowledge any Person acting on its behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would require
registration under the Securities Act of the offer and sale of the Common Shares
and Warrants.
Section 3.12. No Litigation. Except as set forth on Schedule 3.12, no
litigation or claim (including those for unpaid taxes), or environmental
proceeding against the Company or any of its subsidiaries is pending, threatened
or, to the Company's best knowledge, contemplated that, if determined adversely,
would (after taking into consideration any reasonably expected insurance
recovery with respect thereto) have a Material Adverse Effect on the Company.
There is no action, suit or proceeding pending against the Company or any of its
subsidiaries seeking to restrain or enjoin the performance of, prevent the
consummation of, or otherwise challenge the Transaction Documents or the
transactions contemplated thereby.
Section 3.13. Environmental Matters. The Company and each of its
subsidiaries is in compliance in all material respects with all applicable state
and federal environmental laws, and no event or condition has occurred that may
interfere in any material respect with the compliance by the Company or any of
its subsidiaries with any environmental law or that may give rise to any
liability under any environmental law that, individually or in the aggregate,
would have a Material Adverse Effect.
Section 3.14. Intellectual Property. The Company (and/or its
subsidiaries) owns or has licenses to use certain patents, copyrights and
trademarks ("intellectual property") associated with its business. The Company
and its subsidiaries have all intellectual property rights that are needed to
conduct the business of the Company and its subsidiaries as it is now being
conducted as disclosed in the SEC Reports. The intellectual property rights that
the Company (and/or its subsidiaries) owns are valid and enforceable. The use of
such intellectual property by the Company (and/or its subsidiaries') does not
infringe upon or conflict with any right of any third party in any material
respect, and neither the Company nor any of its subsidiaries has received
notice, written or otherwise, of any such infringement or conflict. Except as
set forth in the SEC Reports, the Company has no knowledge of any infringement
of its (and/or its subsidiaries) intellectual property by any third party in any
material respect.
Section 3.15. Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. The Company has no reason to believe that it and its
subsidiaries will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.
Section 3.16. Related Party Transactions. Except as set forth in the
SEC Reports, none of the officers, directors, employees or 5% or greater
shareholders of the Company is presently a party to any transaction with the
Company or any of its subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or the advances of money or otherwise requiring
payments to or from any such officer, director, employee or shareholder or, to
the knowledge of the Company, any corporation, partnership, trust or other
9
entity in which any such officer, director, employee or shareholder has a
substantial interest or is an officer, director, trustee or partner.
Section 3.17. Permits. The Company and each of its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits except for such Company
Permits the failure of which to possess, or the cancellation or suspension of
which, would not, individually or in the aggregate, have a Material Adverse
Effect. To the best of its knowledge neither the Company nor any of its
subsidiaries is in material conflict with, or in material default or material
violation of, any of the Company Permits.
Section 3.18. Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
Section 3.19. Tax Returns. The Company has filed or caused to be filed
all Federal tax returns and all material state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable by it on such returns or on any assessments received by it,
except any such tax, the validity or amount of which is being contested in good
faith by appropriate proceedings and as to which the Company has set aside on
its books adequate reserves with respect thereto in accordance with generally
accepted accounting principles. Neither the Company nor its subsidiaries has
received any tax assessment, notice of audit, notice of proposed adjustment or
deficiency notice from any taxing authority.
Section 3.20. Disclosure. The statements contained in the SEC Reports
and the schedules, certificates and exhibits furnished to the Purchasers by or
on behalf of the Company in connection herewith do not contain any untrue
statement of a material fact and do not omit to state any material fact
necessary to make the statements herein or therein not misleading in light of
the circumstances under which they were made. The SEC Reports contain all
material information concerning the Company required to be set forth therein,
and no event or circumstance has occurred or exists since December 31, 2000,
that would require the Company to disclose such event or circumstance in order
to make the statements in the SEC Reports not misleading as of the date of the
Closing but that has not been so disclosed. The Company hereby acknowledges that
the Purchasers are and will be relying on the SEC Reports and the Company's
representations, warranties and covenants contained herein in making an
investment decision with respect to the Common Shares and the Warrants and will
be relying thereon (together with future reports filed with the Commission) in
10
connection with any transfer of Common Shares, Warrants and Warrant Shares or
any acquisition of Warrant Shares upon exercise of the Warrants.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser hereby acknowledges, represents, warrants and covenants,
severally and not jointly, to the Company that on and of the date hereof and on
and as of the Deferred Purchase Price Payment Date (such reaffirmation to be
evidenced by the payments made by SG and Velocity as of such date):
Section 4.01. Authorization; Enforceability; No Violations.
(a) Such Purchaser is duly organized, validly existing and in
good standing under the laws of its jurisdiction, has all requisite power and
authority to execute, deliver and perform the terms and provisions of this
Agreement and the Registration Rights Agreement and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby to be performed by it.
(b) The execution, delivery and performance by such Purchaser
of this Agreement and the Registration Rights Agreement and the consummation by
such Purchaser of the transactions contemplated hereby and thereby to be
performed by it do not and will not violate any provision of (i) such
Purchaser's organizational documents or (ii) any law, statute, rule, regulation,
order, writ, injunction, judgment or decree to which such Purchaser is subject.
Such Purchaser has duly executed and delivered this Agreement and has executed
and delivered, or concurrently herewith is executing and delivering, the
Registration Rights Agreement. Assuming the due execution hereof and thereof by
the Company, each of this Agreement and the Registration Rights Agreement
constitutes the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
Section 4.02. Securities Act Representations; Legends.
(a) Such Purchaser understands that: (i) the offering and sale
of the Common Shares and the Warrants to be issued and sold hereunder is
intended to be exempt from the registration requirements of the Securities Act;
(ii) neither the Common Shares or the Warrants nor the Warrant Shares have been
registered under the Securities Act or any other applicable securities laws and
such securities may be resold only if registered under the Securities Act and
any other applicable securities laws or if an exemption from such registration
requirements is available; and (iii) the Company is required to register any
resale of the Common Shares, the Warrants or the Warrant Shares under the
Securities Act and any other applicable securities laws only to the extent
provided in the Registration Rights Agreement.
(b) The Common Shares and the Warrants to be acquired by such
Purchaser pursuant to this Agreement and the Warrant Shares issuable upon
exercise of the Warrants are being acquired for its own account, for investment
purposes, and not with a view to, or for sale in connection with, any
11
distribution thereof (other than the resale of Common Shares and Warrant Shares
pursuant to an effective registration statement as contemplated by the
Registration Rights Agreement) in violation of the Securities Act or any other
securities laws that may be applicable.
(c) Such Purchaser is not an affiliate (as such term is
defined in the Securities Act) of the Company.
(d) Such Purchaser (i) has sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of its investment in the Common Shares and the Warrants and is capable
of bearing the economic risks of such investment, including a complete loss of
its investment in the Common Shares and the Warrants; (ii) believes that its
investment in the Common Shares and the Warrants are suitable for it based upon
its objectives and financial needs, and such Purchaser has adequate means for
providing for its current financial needs and business contingencies and has no
present need for liquidity of investment with respect to the Common Shares and
the Warrants; (iii) has no present plan, intention or understanding and has made
no arrangement to sell the Common Shares, the Warrants or the Warrant Shares at
any predetermined time or for any predetermined price; (iv) has not purchased,
sold or entered into any put option, short position or similar arrangement with
respect to the Common Stock, and will not, for so long as it owns any Common
Shares, Warrants or Warrant Shares, purchase, sell or enter into any such put
option, short position or similar arrangement in any manner that violates the
provisions of the Securities Act or the Exchange Act.
(e) No oral or written statements or representations have been
made to such Purchaser by or on behalf of the Company in connection with the
offering and sale of the Common Shares and the Warrants hereunder other than
those set forth in the SEC Reports, or as set forth herein or in the other
Transaction Documents, and such Purchaser is not subscribing for the Common
Shares and the Warrants as a result of, or in response to, any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or presented at any seminar
or meeting.
(f) Such Purchaser acknowledges that the Securities Act
restricts the transferability of securities, such as the Common Shares, Warrants
and Warrant Shares, issued in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereunder, and
that, subject to Section 5.02 hereof, the certificates representing the Common
Shares, the Warrants and the Warrant Shares will bear a legend in substantially
the following form, by which such Purchaser and each subsequent holder of such
securities will be bound:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (AND AS OF THE DATE OF
ORIGINAL ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, ANY
UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUCH SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE OR ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE
12
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A) TO HOLLYWOOD
MEDIA CORP. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO RULE 144
UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT. THE HOLDER OF THIS CERTIFICATE AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY OR ANY SECURITY ISSUED UPON CONVERSION HEREOF IS
TRANSFERRED (UNLESS SUCH SECURITY IS TRANSFERRED PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT) A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY PROPOSED TRANSFER PURSUANT TO
CLAUSES (B), (C) OR (D) ABOVE, THE COMPANY MAY REQUIRE THAT THE TRANSFEROR
FURNISH IT WITH AN OPINION OF COUNSEL CONFIRMING THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE RESPECTIVE MEANINGS ASSIGNED
TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
Section 4.03. No Brokers. No broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, placement or similar fee or
other commission in connection with the transactions contemplated hereby based
on any agreement, arrangement or understanding with such Purchaser.
Section 4.04. No Influence on Business. Each Purchaser covenants and
agrees, severally and not jointly, with the Company that it does not presently
intend to: (a) in any manner exercise or attempt to exercise a controlling
influence over the management or policies of the Company or attempt to influence
the business activities or decisions or the Company; (b) propose a director or
slate of directors to serve on the board of directors of the Company; (c) have
or seek to have a representative of such Purchaser be appointed to serve as a
director of the Company or participate as an observer at meetings of the board
of directors (or committees thereof) or have or seek to have any employee or
representative of such Purchaser serve as an officer, agent or employee of the
Company; (d) attempt to influence the dividend policies or practices of the
Company; (e) solicit or participate in soliciting proxies with respect to any
matter presented to the shareholders of the Company; (f) dispose or threaten to
dispose of the Common Shares, Warrants or Warrant Shares to any third party in
any manner as a condition to specific action or non-action by the Company; or
(g) enter into any joint venture, enterprise or undertaking of any kind with the
Company.
Section 4.05. Limitations on Resales.
(a) SG covenants and agrees, that it (together with its
Affiliates) will not transfer the Common Shares or the Warrants to any Person
(together with such Person's Affiliates), other than the Company or Affiliates
of SG, in a transaction or series of transactions, in an aggregate principal
amount in excess of such principal amount as would be convertible or exercisable
13
at the date of transfer into in excess of 2% of the issued and outstanding
shares of Common Stock of the Company. SG further covenants and agrees,
severally and not jointly, that it will not knowingly transfer to any Person
(together with such Person's Affiliates), other than the Company or Affiliates
of SG, in a transaction or series of transactions, Warrant Shares in an
aggregate amount in excess of 2% of the issued and outstanding shares of Common
Stock of the Company (based upon the number of shares of Common Stock of the
Company issued and outstanding on the applicable date of transfer); in
furtherance thereof, SG covenants and agrees that it shall not during any five
(5) consecutive trading days transfer Warrant Shares in secondary market
transactions in which the identity of the acquiror is not known to SG in an
amount in excess of 2% of the issued and outstanding shares of Common Stock of
the Company (based upon the number of shares of Common Stock of the Company
issued and outstanding on the applicable date of transfer). SG covenants and
agrees that the foregoing transfers to third parties shall be made in bona fide,
arms-length transactions and that upon any such transfer, it will not retain the
power to control the disposition of the securities transferred or, in the case
of Warrant Shares, to direct the voting with respect thereto.
(b) SG covenants and agrees that it (together with its
Affiliates) will not, on any day during the twenty (20) Trading Days prior to,
or any day of ,any Reset Period, sell or otherwise transfer shares of Common
Stock in an aggregate amount equal to more than fifteen percent (15%) of the
average daily trading volume of the Common Stock during the fifteen (15) Trading
Days preceding such forty (40) Trading Day period.
(c) Velocity covenants and agrees that it (together with its
Affiliates) will not, on any day during the twenty (20) Trading Days prior to,
or any day of, any Reset Period, sell or otherwise transfer shares of Common
Stock in an aggregate amount equal to more than ten percent (10%) of the average
daily trading volume of the Common Stock during the fifteen (15) Trading Days
preceding such forty (40) Trading Day period.
ARTICLE V
COVENANTS
Section 5.01. Limitation on Issuance of Securities.
(a) The Company will not make any offer to sell, solicit any
offer to buy, agree to sell or sell any security or right to acquire any
security, except at such time and in such manner so as not to cause the loss of
any of the exemptions for the offer and sale of the Common Shares or the
Warrants hereunder and for the issuance of the Warrant Shares upon exercise of
the Warrants from the registration requirements under the Securities Act or
under the securities or "blue sky" laws of any jurisdiction in which such offer,
sale or issuance is made.
(b) In addition to the foregoing limitation on the issue of
securities, for a period commencing on the date of the Closing and ending four
(4) months after a registration statement relating to the resale of the Common
Shares and Warrant Shares is declared effective, without obtaining the prior
written consent of the Purchasers, the Company will not (1) issue a floating
convertible or similar security that provides for a minimum conversion price
less than $4.5099 or (2) issue common stock or securities convertible into
common stock in a capital raising transaction at a price that is less than 90%
14
of the then existing Market Price at the time of issuance. For purposes of the
foregoing "Market Price" means the lesser of (i) the ten (10) day average
closing price preceding the closing or (ii) the closing price on the closing
date of such transaction. Notwithstanding the foregoing, the Company shall be
able to issue any such securities in connection with strategic transactions to a
strategic investor and in connection with any exercise by Viacom, Inc. of its
participation rights related to this transaction or any other such strategic
transaction.
(c) Each Purchaser, until 12 months following the
effectiveness of the Registration Statement, shall have the right to
participate, up to the amount such Purchaser invested at the Closing (the
"Participation Interest"), in issuances by the Company for capital raising
purposes of equity securities (or securities convertible into or exercisable
for, equity securities) other than bona fide underwritten offerings registered
under the Securities Act or issuances of securities in connection with strategic
transactions to a strategic investor. In the event the Company proposes to issue
a security to which the Purchasers would be entitled to participate pursuant to
the foregoing, the Company shall notify each Purchaser in writing at least 15
days prior to the issuance date of the proposed issuance date, the terms of such
offering and such Purchaser's Participation Interest up to which it is entitled
to participate. In order to participate in such offering, a Purchaser must
notify the Company in writing at least ten (10) days prior to the designated
issuance date and specify the amount of securities, up to its pro rata amount,
that it wishes to purchase. If a Purchaser does not so notify the Company, the
Company may issue such securities on the terms set forth in the notice to such
Purchaser. In the event the terms of the offer are subsequently varied by the
Company, the Company must then again notify such Purchaser as set forth above.
Section 5.02. Transfer Restrictions; Delivery of Warrant Shares.
(a) Each Purchaser acknowledges that any proposed offer, sale,
pledge or other transfer of Common Shares, Warrants or Warrant Shares prior to
the date that is two (2) years from the Closing (or such other date as may be
required pursuant to Rule 144 under the Securities Act (or similar successor
provision) as in effect from time to time), in the absence of registration under
the Securities Act, is limited. Accordingly, prior to such passage of time or
such registration, the Common Shares, the Warrants or the Warrant Shares may be
offered, sold, pledged or otherwise transferred only (i) to the Company, (ii) in
an offshore transaction in accordance with Rule 904 under the Securities Act,
(iii) pursuant to any other exemption from registration provided by the
Securities Act, (iv) pursuant to Rule 144 under the Securities Act or (v)
pursuant to an effective registration statement under the Securities Act; in the
case of any transfer pursuant to clause (ii), (iii) or (iv), the Company shall
be entitled to receive an opinion of the selling Purchaser's counsel, in form
and substance reasonably satisfactory to the Company, to the effect that
registration is not required in connection with such disposition. Any Common
Shares or Warrants sold to the Company may not be reissued or resold.
(b) The Company agrees to issue certificates representing the
Common Shares, Warrants or Warrant Shares without the legend referenced in
Section 4.02(a) above at such time as (i) the holder thereof is permitted to
dispose of such Common Shares, Warrants or Warrant Shares pursuant to Rule 144
(k) under the Securities Act (to the extent applicable), (ii) such Common
Shares, Warrants or Warrant Shares are sold to a purchaser or purchasers who (in
15
the opinion of counsel to the seller or such purchaser(s), in form and substance
reasonably satisfactory to the Company) are able to dispose of such securities
publicly without registration under the Act and such legend is no longer
required to be included on the certificates representing the Common Shares,
Warrants or Warrant Shares or (iii) such Common Shares, Warrants or Warrant
Shares are sold or are available for resale pursuant to an effective
registration statement under the Securities Act.
(c) In the alternative to physical delivery of certificates
for Warrant Shares, if delivery of the Warrant Shares pursuant to any conversion
thereunder may be effectuated by electronic book-entry through The Depositary
Trust Company ("DTC"), delivery of Warrant Shares pursuant to such conversion
shall, if requested by the relevant Purchaser (or holder of Warrant Shares),
settle by book-entry transfer through DTC by the third trading day following the
date of exercise of the Warrants pursuant to the terms thereof, as appropriate.
The parties agree to coordinate with DTC to accomplish this objective.
Section 5.03. Rules 144; Current Information. For so long as any Common
Shares, Warrants or Warrant Shares are outstanding, the Company will (i) cause
its Common Stock to continue to be registered under Section 12 of the Exchange
Act, file all reports required to be filed by it under the Securities Act and
the Exchange Act and will take such further actions as any Purchaser may
reasonably request, all to the extent required from time to time to enable a
Purchaser to sell Common Shares, Warrants and Warrant Shares without
registration under the Securities Act pursuant to the safe harbors and
exemptions provided by Rule 144 under the Securities Act (to the extent
applicable), as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission, and (ii) furnish each
Purchaser with all reports, proxy statements and registration statements that
the Company files with the Commission or distributes to its securityholders
pursuant to the Securities Act and the Exchange Act at the times of such filings
and distributions (unless such documents are available electronically from the
Commission or elsewhere without charge and within a period reasonably
contemporaneous with the filing thereof with the Commission, in which case such
documents need not be provided to any Purchaser). Upon the request of a
Purchaser, the Company will deliver to such Purchaser a written statement as to
whether it has complied with the foregoing requirements.
Section 5.04. Reservation of Warrant Shares. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, sufficient shares of Common Stock to
provide for the issuance of the Warrant Shares in an amount equal to the balance
of the Warrant Shares not then yet issued.
Section 5.05. Publicity. The Company shall, no later than 10 business
days after the Closing, (i) file a Form 8-K or Form 10-Q with the Commission
disclosing the transactions contemplated by this Agreement (attaching the
Transaction Documents as exhibits thereto), (ii) publicly announce the Company's
financial results for the three months ended March 31, 2001, and (iii) at its
option, at any time issue a press release with respect to the Transaction
Documents, in a form which has been reviewed and is reasonably acceptable to the
Purchasers.
16
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification. In consideration of the Purchasers'
execution and delivery of this Agreement, the Registration Rights Agreement and
in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless the
Purchasers and all of their partners, officers, directors, employees, members
and any of the foregoing persons' agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from and
against any and all losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Indemnitee is
a party to the action or which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out of any
cause of action, suit or claim brought or made against such Indemnitee by a
third party and arising out of or resulting from the breach by the Company of
any representation, warranty or covenant in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby.
Notwithstanding the foregoing, Indemnified Liabilities shall not include any
liability of any Indemnitee to the extent arising out of such Indemnitee's
breach of the Transaction Documents, willful misconduct or fraudulent action(s).
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Article VII
shall be the same as those set forth in Section 4 of the Registration Rights
Agreement, including, without limitation, those procedures with respect to the
settlement of claims and Company's right to assume the defense of claims.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Press Releases and Disclosure. No party hereto shall
issue any press release or make any other public disclosure related to this
Agreement or any of the transactions contemplated hereby without the prior
written approval of the other party hereto, except as may be necessary or
appropriate in the opinion of the party seeking to make disclosure to comply
with the requirements of applicable law or stock exchange rules. If any such
press release or public disclosure is so required, the party making such
disclosure shall consult with the other party prior to making such disclosure,
and the parties shall use all reasonable efforts, acting in good faith, to agree
upon a text for such disclosure that is satisfactory to all parties.
Section 7.02. Expenses. Except as otherwise expressly provided for
herein, the Company will pay all of SG's and Velocity's attorneys' fees and
expenses incurred in connection with the negotiation of the Transaction
Documents, subject to a maximum of $32,000 ($5,000 of which was previously paid
by the Company) and $10,000, respectively. The expenses of SG and Velocity shall
be payable at the Closing (and on the Deferred Purchase Price Payment Date, as
applicable) and may be netted, to the extent payable pursuant to
17
the preceding sentence, against the Purchase Price otherwise payable to the
Company by SG and Velocity.
Section 7.03. Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
that are given with respect to this Agreement shall be in writing and shall be
personally served or deposited in the mail, registered or certified, return
receipt requested, postage prepaid or delivered by reputable air courier service
with charges prepaid, or transmitted by hand delivery, telegram, telex or
facsimile, addressed as set forth below, or to such other address as such party
shall have specified most recently by written notice: (i) if to the Company, to:
Hollywood Media Corp., 2255 Glades Rd., Ste. 237W, Boca Raton, Florida,
Attention: Mitchell Rubenstein, Chairman and CEO, Facsimile No.: (561) 998-2974,
with copies (which shall not constitute notice) to: Hollywood Media Corp., 2255
Glades Rd., Ste. 237W, Boca Raton, Florida, Attention: W. Robert Shearer, Senior
Vice President and General Counsel, Facsimile No.: (561) 998-2974; and (ii) if
to any Purchaser at the address of such Purchaser set forth on Annex A. Notice
shall be deemed given on the date of service or transmission if personally
served or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given on the third business day following the
date mailed or on the next business day following delivery of such notice to a
reputable air courier service.
Section 7.04. Entire Agreement. This Agreement (together with the other
Transaction Documents and all other documents delivered pursuant hereto and
thereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
Section 7.05. Amendment and Waiver. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing executed by the
party against which such amendment, modification or waiver is sought to been
enforced. Waivers may be made in advance or after the right waived has arisen or
the breach or default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
Section 7.06. Assignment; No Third Party Beneficiaries. This Agreement
and the rights, duties and obligations hereunder may not be assigned or
delegated by the Company or any Purchaser without the prior written consent of
the other parties hereto; provided that each Purchaser may assign or delegate
its rights, duties and obligations hereunder to any Affiliate of such Purchaser.
Except as provided in the preceding sentence, any purported assignment or
delegation of rights, duties or obligations hereunder made without the prior
written consent of the other party hereto shall be void and of no effect. This
Agreement and the provisions hereof shall be binding upon and shall inure to the
benefit of each of the parties and their respective successors and permitted
assigns. This Agreement is not intended to confer any rights or benefits on any
Persons other than as set forth above.
18
Section 7.07. Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
Section 7.08. Further Assurances. Each party hereto, upon the request
of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement.
Section 7.09. Titles and Headings. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
Section 7.11. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, all of which taken
together shall constitute one and the same instrument.
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
HOLLYWOOD MEDIA CORP.
By:
-------------------------------------------
Name:
Title:
SOCIETE GENERALE
By:
-------------------------------------------
Name:
Title:
VELOCITY INVESTMENT PARTNERS LTD.
By:
-------------------------------------------
Name:
Title:
20
Annex A
-------
Purchasers
----------
- ----------------------------------------------------- ------------------------------------------------ ---------------------------
Shares of Common Stock/Warrants Purchased from Aggregate
Purchaser Name the Company Purchase Price
and Notice Address Paid at Closing
- ----------------------------------------------------- ------------------------------------------------ ---------------------------
576,504 Common Shares $2,600,000
Societe Generale 273,562 "A" Warrant Shares
c/o SG Cowen Securities Corporation 658,878 "B" Warrant Shares
1221 Avenue of the Americas
New York, NY 10020
Attn: Guillaume Pollet
Facsimile No.: (212) 278-5467
Telephone No.: (212) 278-5260
with a copy to:
- --------------
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: J. Eric Maki
Facsimile No.: (212) 755-7306
Telephone No.: (212) 326-3780
- ----------------------------------------------------- ------------------------------------------------ ---------------------------
Velocity Investment Partners Ltd. 365,858 Common Shares $1,650,000
333 West Wacker Drive 177,524 "A" Warrant Shares
Suite 1410 439,251"B" Warrant Shares
Chicago, IL 60606
Attn: Richard Marks or John Ziegelman
Facsimile No.: 312-236-3030
Telephone No.: 312-236-4411
- ----------------------------------------------------- ------------------------------------------------ ---------------------------