SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Byron Preiss Multimedia Company, Inc.
(Name of Issuer)
Common Stock, Par Value $.001 Per Share
(Title of Class of Securities)
740445 10 1
(CUSIP Number)
Philippe P. Dauman, Esq.
Viacom Inc.
1515 Broadway
New York, New York 10036
Telephone: (212) 258-6000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications)
March 22, 1995
(Date of Event which Requires Filing of this Statement)
-------------------------------------------------------
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with this statement /X/.
1
<PAGE>
CUSIP No. 740445 10 1
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
VIACOM INTERNATIONAL INC.
- ------------------------------------------------------------------------------
I.R.S. Identification No. 04-2980402
- ------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
|_| (a)------------------------------------------------------------------
|_| (b)------------------------------------------------------------------
------------------------------------------------------------------
(3) SEC Use Only---------------------------------------------------------
- ------------------------------------------------------------------------------
(4) Sources of Funds (See Instructions) WC
---------------------------------
- ------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e).-----------------------------------------------------------------
(6) Citizenship or Place of Organization Delaware
-------------------------------
Number of (7) Sole Voting Power------------------------------------------
Shares
Beneficially (8) Shared Voting Power 1,179,441*
Owned by --------------------------------------
Each (9) Sole Dispositive Power------------------------------------
Reporting
Person (10) Shared Dispositive Power 1,179,441*
With ---------------------------------
(11) Aggregate Amount Beneficially Owned by Each
Reporting Person 1,179,441*
---------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)---------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
20.0%
--------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions) CO
-----------------------
* Includes 315,000 shares to be acquired pursuant to the Warrant and 12,066
shares to be acquired pursuant to the Additional Warrant. See Item 3.
2
<PAGE>
CUSIP No. 740445 10 1
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
VIACOM INC.
- -----------------------------------------------------------------------------
IRS IDENTIFICATION No. 04-2949533
- -----------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
|_| (a)-----------------------------------------------------------------
|_| (b)-----------------------------------------------------------------
-----------------------------------------------------------------
(3) SEC Use Only--------------------------------------------------------
- -----------------------------------------------------------------------------
(4) Sources of Funds (See Instructions) WC**
--------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e).
- -----------------------------------------------------------------------------
(6) Citizenship or Place of Organization Delaware
------------------------------
Number of (7) Sole Voting Power-------------------------------------
Shares
Beneficially (8) Shared Voting Power 1,179,441*
Owned by --------------------------------
Each (9) Sole Dispositive Power--------------------------------
Person
With (10) Shared Dispositive Power 1,179,441*
-----------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting
Person 1,179,441*
----------------------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)-----------------------------------------------------------
------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
20.0%
-----------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions) CO
------------------------
* Includes 315,000 shares to be acquired pursuant to the Warrant and 12,066
shares to be acquired pursuant to the Additional Warrant. See Item 3.
** Working Capital of Viacom International Inc.
3
<PAGE>
CUSIP No. 740445 10 1
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
SUMNER M. REDSTONE
- ------------------------------------------------------------------------------
S.S. No. ###-##-####
- ------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
|_| (a)------------------------------------------------------------------
|_| (b)------------------------------------------------------------------
------------------------------------------------------------------
(3) SEC Use Only--------------------------------------------------------
(4) Sources of Funds (See Instructions) WC**
--------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e).
- -----------------------------------------------------------------------------
(6) Citizenship or Place of Organization United States
-----------------------------
Number of (7) Sole Voting Power-------------------------------------
Shares
Beneficially (8) Shared Voting Power 1,179,441*
Owned by --------------------------------
Each (9) Sole Dispositive Power -------------------------------
Person
With (10) Shared Dispositive Power 1,179,441*
-----------------------------
(11) Aggregate Amount Beneficially Owned by Each
Reporting Person 1,179,441*
---------------------------------------------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)-----------------------------------------------------------
------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
20.0%
-----------------------------------------------------------------------
(14) Type of Reporting Person (See Instructions) IN
------------------------
* Includes 315,000 shares to be acquired pursuant to the Warrant and 12,066
shares to be acquired pursuant to the Additional Warrant. See Item 3.
** Working Capital of Viacom International Inc.
4
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this Statement on Schedule 13D
relates is the common stock, $.001 par value per share (the "Common Stock"), of
Byron Preiss Multimedia Company, Inc.(the "Issuer"), a New York corporation,
with its principal executive offices located at 24 West 25th Street, New York,
New York 10010.
Item 2. Identity and Background.
This Statement is being filed by Mr. Sumner M. Redstone, Viacom Inc.
("Viacom") and Viacom International Inc. ("Viacom International").
Viacom International is a Delaware corporation with its principal office at
1515 Broadway, New York, New York 10036. Viacom International is engaged in the
entertainment and communications businesses. All of its common stock is held by
Viacom Inc.
Viacom is a Delaware corporation with its principal office at 1515
Broadway, New York, New York 10036. Viacom is a diversified entertainment,
publishing and communications company. As of March 15, 1995, National
Amusements, Inc., a Maryland corporation ("NAI"), owned approximately 61% of the
issued and outstanding shares of Class A Common Stock, par value $.01 per share,
of Viacom ("Viacom Class A Common Stock") and approximately 26% of the issued
and outstanding shares of Viacom Class A Common Stock and Class B Common Stock,
par value $.01 per share, of Viacom ("Viacom Class B Common Stock") on a
combined basis.
NAI has its principal office at 200 Elm Street, Dedham, Massachusetts
02026. NAI's principal businesses are owning and operating movie theaters in the
United States and United Kingdom and holding the common stock of Viacom. 91.7%
of the issued and outstanding shares of capital stock of NAI are owned by Mr.
Sumner M. Redstone, directly or as trustee of various trusts.
Sumner M. Redstone is an individual whose business address is c/o National
Amusements, Inc., 200 Elm Street, Dedham, Massachusetts 02026. Mr. Redstone's
principal occupation is Chairman of the Board, President and Chief Executive
Officer of NAI and Chairman of the Board of Viacom. Mr. Redstone is a citizen of
the United States.
5
<PAGE>
The directors and executive officers of Viacom International and Viacom are
set forth on Schedules I and II, respectively, attached hereto. Schedules I and
II set forth the following information with respect to each such person:
(a) Name;
(b) Residence or business address; and
(c) Present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted.
During the last five years, none of Mr. Sumner M. Redstone, Viacom, Viacom
International nor any person named in Schedules I and II attached hereto has
been (a) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
All of the directors and executive officers of Viacom and Viacom
International are citizens of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
As of March 22, 1995, Viacom International and the Issuer executed a
Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which
Viacom International paid to the Issuer $5,964,000 in consideration for (i)
852,375 shares of Common Stock (the "Shares") (ii) a warrant (the "Warrant") to
purchase 315,000 shares (the "Warrant Shares") of Common Stock at an exercise
price of $7.00 per share of Common Stock and (iii) an additional warrant (the
"Additional Warrant") to purchase up to an aggregate of a number of shares of
Common Stock (the "Additional Warrant Shares") equal to, at any time, 20% of the
shares of Common Stock issuable upon the exercise of stock options (x) granted
pursuant to the Issuer's 1993 Stock Option Plan, as such plan may be amended
from time to time and (y) granted to employees not pursuant to any stock option
plan, at an exercise price of $7.00 per share of Common Stock. The Stock
Purchase Agreement is attached hereto as Exhibit 1. The Warrant Agreement and
Certificate (the "Warrant Agreement") relating to the Warrant is attached hereto
as Exhibit 2. The Warrant Agreement and Certificate relating to the Additional
Warrant (the "Additional Warrant Agreement") is attached hereto as Exhibit 3.
6
<PAGE>
Item 4. Purpose of Transaction.
Viacom International purchased the shares of Common Stock, the Warrant and
the Additional Warrant for investment purposes. Pursuant to the Stock Purchase
Agreement, for so long as Viacom International holds at least 5% of the total
issued and outstanding shares of Common Stock on a fully diluted basis, the
Issuer may not pay cash dividends to its shareholders without the consent of
Viacom International, which consent may not be unreasonably withheld. Viacom
International has agreed that it will not purchase any additional Common Stock,
except from certain majority stockholders of the Issuer (the "Majority
Stockholders") pursuant to the Shareholders Agreement (as defined below), if
after such acquisition Viacom International and its affiliates, in the
aggregate, would be the beneficial owners of Common Stock in excess of 25% of
the total issued and outstanding Common Stock on a fully diluted basis. Such
restriction does not apply to actions taken by the Company which cause Viacom
International to be in violation of such restriction. Further, such restriction
will terminate in the event that (i) the Majority Stockholders increase their
aggregate ownership of Common Stock by 10% on a fully diluted basis from the
date of the Stock Purchase Agreement, (ii) a third party (other than Viacom
International or any of the Majority Stockholders) acquires 5% or more of the
total issued and outstanding Common Stock on a fully diluted basis by
transactions on the open market or (iii) a third party acquires 10% or more of
the total issued and outstanding Common Stock on a fully diluted basis directly
from the Company. Pursuant to a Shareholders Agreement (the "Shareholders
Agreement") among the Issuer, Viacom International and the Majority
Stockholders, the Majority Stockholders have agreed to cause the Board of
Directors of the Issuer to be expanded from five directors to six directors and
to elect a nominee of Viacom International to the Issuer's Board. If Viacom
International or the Majority Stockholders propose to sell any of their
respective shares of Common Stock pursuant to a bona fide third party offer,
each of Viacom International, on the one hand, and the Majority Stockholders, on
the other hand, shall be required to offer the other party the opportunity to
purchase such shares of Common Stock on the same terms and conditions as the
offer by the third party. Pursuant to a Registration Rights Agreement (the
"Registration Rights Agreement") between the Issuer and Viacom International,
Viacom International has been granted certain demand and "piggy-back"
registration rights with respect to the Shares, the Warrant Shares and the
Additional Warrant Shares which are exercisable at the time of any such
registration. The demand registration rights are not exercisable until eighteen
months from the date of the Registration Rights Agreement.
7
<PAGE>
The descriptions of the Stock Purchase Agreement, the Warrant, the
Additional Warrant, the Shareholders Agreement and the Registration Rights
Agreement contained in this Schedule 13D are qualified in all respects by
reference to the terms of the Stock Purchase Agreement, the Warrant, the
Additional Warrant, the Shareholders Agreement and the Registration Rights
Agreement, copies of which are attached as Exhibits 1 through 5 hereto.
Item 5. Interest in Securities of the Issuer.
Viacom International beneficially owns 1,179,441 shares of Common Stock,
which represents approximately 20.0% of the shares of Common Stock outstanding.
Such shares of Common Stock consist of:
o 852,375 shares of Common Stock held directly by Viacom International over
which Viacom International has voting and dispositive power;
o 315,000 shares of Common Stock issuable pursuant to the Warrant (See Item
3 above). The Warrant does not entitle Viacom International to vote on any
matter submitted to a vote of the Issuer's shareholders.
o 12,066 shares of Common Stock currently issuable pursuant to the
Additional Warrant (See Item 3 above). The Additional Warrant does not entitle
Viacom International to vote on any matter submitted to a vote of the Issuer's
shareholders.
Through its ownership of all of the issued and outstanding shares of common
stock of Viacom International, Viacom may also be considered to be a beneficial
owner of such 1,179,441 shares of Common Stock, and may be deemed to share with
Viacom International voting power and dispositive power with respect to all of
such shares of Common Stock.
Through its ownership of approximately 61% of the issued and outstanding
shares of Viacom Class A Common Stock and approximately 26% of the issued and
outstanding shares of Viacom Class A and Class B Common Stock on a combined
basis, NAI may also be considered to be a beneficial owner of such 1,179,441
shares of Common Stock, and may be deemed to share with Viacom and Viacom
International voting power and dispositive power with respect to all of such
shares of Common Stock.
Through his ownership, directly or as trustee of various trusts, of
approximately 91.7% of the issued and outstanding shares of common stock of NAI,
Mr. Sumner M. Redstone may also be considered to be a beneficial owner of such
1,179,441 shares of Common Stock, and may be deemed to share with Viacom, Viacom
8
<PAGE>
International and NAI voting power and dispositive power with respect to all of
such shares of Common Stock.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Except for the Stock Purchase Agreement, Warrant Agreement, Additional
Warrant Agreement, Shareholders Agreement and Registration Rights Agreement (as
described in Items 3 and 4 above), neither Viacom International, Viacom, Mr.
Sumner M. Redstone nor any of the persons named in Item 2 has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or loss, or the giving or withholding of proxies.
Item 7. Material to Be Filed as Exhibits.
99.1 Stock Purchase Agreement
99.2 Warrant Agreement
99.3 Additional Warrant Agreement
99.4 Shareholders Agreement
99.5 Registration Rights Agreement
99.6 Limited Power of Attorney
99.7 Agreement among Viacom International Inc.,
Viacom Inc. and Sumner M. Redstone pursuant to
Rule 13d-1(f)(1)(iii).
Signature
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this Statement is true, complete and
correct.
March 31, 1995 VIACOM INTERNATIONAL INC.
By: /s/ Michael D. Fricklas
--------------------------------
Name: Michael D. Fricklas
Title: Senior Vice President,
Deputy General Counsel
VIACOM INC.
By: /s/ Michael D. Fricklas
-------------------------------
Name: Michael D. Fricklas
Title: Senior Vice President,
Deputy General Counsel
*
----------------------------------
Sumner M. Redstone,
Individually
*By /s/ Michael D. Fricklas
------------------------------
Michael D. Fricklas
Attorney-in-Fact
under the Limited Power of
Attorney filed as Exhibit 99.6
hereto
9
<PAGE>
<TABLE>
Schedule I
Executive Officers
<CAPTION>
<S> <C> <C> <C>
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
Sumner M. Redstone* Viacom Inc. and Chairman of the Board of National Amusements, Inc.
Viacom International Inc. Viacom Inc. and Viacom 200 Elm Street
1515 Broadway International Inc.; Dedham, MA 02026
New York, NY 10036 Chairman of the Board and Viacom Inc. and Viacom
President, Chief International Inc.
Executive Officer of 1515 Broadway
National Amusements, Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Frank J. Biondi, Jr.* Viacom Inc. and President, Chief Viacom Inc. and Viacom
Viacom International Inc. Executive Officer of International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Vaughn A. Clarke Viacom Inc. and Viacom Sr. VP, Treasurer of Viacom Inc. and Viacom
International Inc. Viacom Inc. and Viacom International Inc.
1515 Broadway International Inc. 1515 Broadway
New York, NY 10036 New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Philippe P. Dauman* Viacom Inc. and Executive VP, General Viacom Inc. and Viacom
Viacom International Inc. Counsel, Chief International Inc.
1515 Broadway Administrative Officer 1515 Broadway
New York, NY 10036 and Secretary of Viacom New York, NY 10036
Inc. and Viacom
International Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
* Director
10
<PAGE>
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
Thomas E. Dooley Viacom Inc. and Viacom Executive VP, Finance, Viacom Inc. and Viacom
International Inc. Corporate Development and International Inc.
1515 Broadway Communications of Viacom 1515 Broadway
New York, NY 10036 Inc. and Viacom New York, NY 10036
International Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Michael D. Fricklas Viacom Inc. and Viacom Sr. VP, Deputy General Viacom Inc. and Viacom
International Inc. Counsel and Assistant International Inc.
1515 Broadway Secretary of Viacom Inc. 1515 Broadway
New York, NY 10036 and Viacom International New York, NY 10036
Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Rudolph L. Hertlein Viacom Inc. and Viacom Sr. VP of Viacom Inc. and Viacom Inc. and Viacom
International Inc. Viacom International Inc. International Inc.
1515 Broadway 1515 Broadway
New York, NY 10036 New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Edward D. Horowitz Viacom Inc. and Viacom Sr. VP, Technology of Viacom Inc. and Viacom
International Inc. Viacom Inc. and Viacom International Inc.
1515 Broadway International Inc.; 1515 Broadway
New York, NY 10036 Chairman, Chief Executive New York, NY 10036
Officer of Viacom
Interactive Media
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Kevin C. Lavan Viacom Inc. and Viacom Sr. VP, Controller and Viacom Inc. and Viacom
International Inc. Chief Accounting Officer International Inc.
1515 Broadway of Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Henry Leingang Viacom Inc. and Viacom Sr. VP, Chief Information Viacom Inc. and Viacom
International Inc. Officer of Viacom Inc. International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
11
<PAGE>
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
William A. Roskin Viacom Inc. and Viacom Sr. VP, Human Resources Viacom Inc. and Viacom
International Inc. and Administration of International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
George S. Smith, Jr. Viacom Inc. and Viacom Sr. VP, Chief Financial Viacom Inc. and Viacom
International Inc. Officer of Viacom Inc. International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Mark M. Weinstein Viacom Inc. and Viacom Sr. VP, Government Viacom Inc. and Viacom
International Inc. Affairs of Viacom Inc. International Inc.
1515 Broadway and Viacom Internaitonal 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
DIRECTORS
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Steven R. Berrard Blockbuster Entertainment President and Chief Blockbuster Entertainment
Group Executive Officer of the Group
One Blockbuster Plaza Blockbuster Entertainment One Blockbuster Plaza
Fort Lauderdale, FL 33301 Group Fort Lauderdale, FL 33301
- ------------------------------ ---------------------------- --------------------------- ----------------------------
William C. Ferguson NYNEX Corporation Chairman of the Board and NYNEX Corporation
335 Madison Avenue Chief Executive Officer 335 Madison Avenue
New York, NY 10017 of NYNEX Corporation New York, NY 10017
- ------------------------------ ---------------------------- --------------------------- -----------------------------
H. Wayne Huizenga Blockbuster Entertainment Vice Chairman of Viacom Blockbuster Entertainment
Group Inc.; Chairman of the Group
One Blockbuster Plaza Board and Chief Executive One Blockbuster Plaza
Fort Lauderdale, FL 33301 Officer of Blockbuster Fort Lauderdale, FL 33301
Entertainment Group;
Chairman of the Board of
Huizenga Holdings, Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
12
<PAGE>
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
George D. Johnson, Jr. Blockbuster Entertainment President -- Domestic Blockbuster Entertainment
Group Consumer Division of the Group
One Blockbuster Plaza Blockbuster Entertainment One Blockbuster Plaza
Fort Lauderdale, FL 33301 Group Fort Lauderdale, FL 33301
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Ken Miller C.S. First Boston Vice Chairman of C.S. C.S. First Boston
Park Avenue Plaza First Boston Park Avenue Plaza
55 East 52nd Street 55 East 52nd Street
New York, NY 10055 New York, NY 10055
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Shari Redstone National Amusements, Inc. Executive Vice President National Amusements, Inc.
200 Elm Street of National Amusements, 200 Elm Street
Dedham, MA 02026 Inc. Dedham, MA 02026
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Brent D. Redstone 31270 Eagle Crest Lane Self-Employed
Evergreen, CO 80439
[Residence]
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Frederic V. Salerno NYNEX Corporation Vice Chairman--Finance NYNEX Corporation
335 Madison Avenue and Business Development 335 Madison Avenue
New York, NY 10017 of NYNEX Corporation New York, NY 10017
- ------------------------------ ---------------------------- --------------------------- ----------------------------
William Schwartz Yeshiva University Vice President for Yeshiva University
2495 Amsterdam Avenue Academic Affairs (chief 2495 Amsterdam Avenue
New York, NY 10033 academic officer) of New York, NY 10033
Yeshiva University
- ------------------------------ ---------------------------- --------------------------- ----------------------------
13
<PAGE>
Schedule II
Executive Officers
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
Sumner M. Redstone* Viacom Inc. and Chairman of the Board of National Amusements, Inc.
Viacom International Inc. Viacom Inc. and Viacom 200 Elm Street
1515 Broadway International Inc.; Dedham, MA 02026
New York, NY 10036 Chairman of the Board and Viacom Inc. and Viacom
President, Chief International Inc.
Executive Officer of 1515 Broadway
National Amusements, Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
H. Wayne Huizenga* Blockbuster Entertainment Vice Chairman of Viacom Blockbuster Entertainment
Group Inc.; Chairman of the Group
One Blockbuster Plaza Board and Chief Executive One Blockbuster Plaza
Fort Lauderdale, FL 33301 Officer of Blockbuster Fort Lauderdale, FL 33301
Entertainment Group;
Chairman of the Board of
Huizenga Holdings, Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Frank J. Biondi, Jr.* Viacom Inc. and President, Chief Viacom Inc. and Viacom
Viacom International Inc. Executive Officer of International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Vaughn A. Clarke Viacom Inc. and Viacom Sr. VP, Treasurer of Viacom Inc. and Viacom
International Inc. Viacom Inc. and Viacom International Inc.
1515 Broadway International Inc. 1515 Broadway
New York, NY 10036 New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
* Director
14
<PAGE>
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
Philippe P. Dauman* Viacom Inc. and Executive VP, General Viacom Inc. and Viacom
Viacom International Inc. Counsel, Chief International Inc.
1515 Broadway Administrative Officer 1515 Broadway
New York, NY 10036 and Secretary of Viacom New York, NY 10036
Inc. and Viacom
International Inc.
- ----------------------------- ---------------------------- --------------------------- ----------------------------
Thomas E. Dooley Viacom Inc. and Viacom Executive VP, Finance, Viacom Inc. and Viacom
International Inc. Corporate Development and International Inc.
1515 Broadway Communications of Viacom 1515 Broadway
New York, NY 10036 Inc. and Viacom New York, NY 10036
International Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Michael D. Fricklas Viacom Inc. and Viacom Sr. VP, Deputy General Viacom Inc. and Viacom
International Inc. Counsel and Assistant International Inc.
1515 Broadway Secretary of Viacom Inc. 1515 Broadway
New York, NY 10036 and Viacom International New York, NY 10036
Inc.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Rudolph L. Hertlein Viacom Inc. and Viacom Sr. VP of Viacom Inc. and Viacom Inc. and Viacom
International Inc. Viacom International Inc. International Inc.
1515 Broadway 1515 Broadway
New York, NY 10036 New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Edward D. Horowitz Viacom Inc. and Viacom Sr. VP, Technology of Viacom Inc. and Viacom
International Inc. Viacom Inc. and Viacom International Inc.
1515 Broadway International Inc.; 1515 Broadway
New York, NY 10036 Chairman, Chief Executive New York, NY 10036
Officer of Viacom
Interactive Media
- ------------------------------ ---------------------------- --------------------------- ----------------------------
* Director
15
<PAGE>
============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
Kevin C. Lavan Viacom Inc. and Viacom Sr. VP, Controller and Viacom Inc. and Viacom
International Inc. Chief Accounting Officer International Inc.
1515 Broadway of Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Henry Leingang Viacom Inc. and Viacom Sr. VP, Chief Information Viacom Inc. and Viacom
International Inc. Officer of Viacom Inc. International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
William A. Roskin Viacom Inc. and Viacom Sr. VP, Human Resources Viacom Inc. and Viacom
International Inc. and Administration of International Inc.
1515 Broadway Viacom Inc. and Viacom 1515 Broadway
New York, NY 10036 International Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
George S. Smith, Jr. Viacom Inc. and Viacom Sr. VP, Chief Financial Viacom Inc. and Viacom
International Inc. Officer of Viacom Inc. International Inc.
1515 Broadway and Viacom International 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Mark M. Weinstein Viacom Inc. and Viacom Sr. VP, Government Viacom Inc. and Viacom
International Inc. Affairs of Viacom Inc. International Inc.
1515 Broadway and Viacom Internaitonal 1515 Broadway
New York, NY 10036 Inc. New York, NY 10036
- ------------------------------ ---------------------------- --------------------------- ----------------------------
DIRECTORS
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Steven R. Berrard Blockbuster Entertainment President and Chief Blockbuster Entertainment
Group Executive Officer of the Group
One Blockbuster Plaza Blockbuster Entertainment One Blockbuster Plaza
Fort Lauderdale, FL 33301 Group Fort Lauderdale, FL 33301
- ------------------------------ ---------------------------- --------------------------- ----------------------------
William C. Ferguson NYNEX Corporation Chairman of the Board and NYNEX Corporation
335 Madison Avenue Chief Executive Officer 335 Madison Avenue
New York, NY 10017 of NYNEX Corporation New York, NY 10017
- ------------------------------ ---------------------------- --------------------------- ----------------------------
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============================== ============================ =========================== ============================
Name and Address
of Corporation or
Business or Principal Occupation Other Organization in
Name Residence Address or Employment Which Employed
============================== ============================ =========================== ============================
George D. Johnson, Jr. Blockbuster Entertainment President -- Domestic Blockbuster Entertainment
Group Consumer Division of the Group
One Blockbuster Plaza Blockbuster Entertainment One Blockbuster Plaza
Fort Lauderdale, FL 33301 Group Fort Lauderdale, FL 33301
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Ken Miller C.S. First Boston Vice Chairman of C.S. C.S. First Boston
Park Avenue Plaza First Boston Park Avenue Plaza
55 East 52nd Street 55 East 52nd Street
New York, NY 10055 New York, NY 10055
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Shari Redstone National Amusements, Inc. Executive Vice President National Amusements, Inc.
200 Elm Street of National Amusements, 200 Elm Street
Dedham, MA 02026 Inc. Dedham, MA 02026
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Brent D. Redstone 31270 Eagle Crest Lane Self-Employed
Evergreen, CO 80439
[Residence]
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Frederic V. Salerno NYNEX Corporation Vice Chairman--Finance NYNEX Corporation
335 Madison Avenue and Business Development 335 Madison Avenue
New York, NY 10017 of NYNEX Corporation New York, NY 10017
- ------------------------------ ---------------------------- --------------------------- ----------------------------
William Schwartz Yeshiva University Vice President for Yeshiva University
2495 Amsterdam Avenue Academic Affairs (chief 2495 Amsterdam Avenue
New York, NY 10033 academic officer) of New York, NY 10033
Yeshiva University
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
17
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EXHIBIT INDEX
Exhibit No. Description Page No.
99.1 Stock Purchase Agreement
99.2 Warrant Agreement
99.3 Additional Warrant Agreement
99.4 Shareholders Agreement
99.5 Registration Rights Agreement
99.6 Limited Power of Attorney
99.7 Agreement among Viacom
International
Inc., Viacom Inc. and Sumner M.
Redstone pursuant to
Rule 13d-1(f)(1)(iii).
Exhibit 99.1
STOCK PURCHASE AGREEMENT
Between
BYRON PREISS MULTIMEDIA COMPANY, INC.
and
VIACOM INTERNATIONAL INC.
Dated as of March 22, 1995
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 22, 1995 (this "Agreement"), by
and between BYRON PREISS MULTIMEDIA COMPANY, INC., a New York corporation (the
"Company") and VIACOM INTERNATIONAL INC., a Delaware corporation ("Buyer").
RECITALS
WHEREAS, Buyer desires to acquire, and the Company desires to issue and
sell to Buyer, shares of the Company's common stock, par value $.001 per share
("Common Stock") and warrants to purchase shares of the Common Stock, upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF SHARES; CLOSING
SECTION 1.01. Purchase and Sale. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as defined in Section 1.02) the
Company will sell and Buyer will purchase:
(i) 852,375 newly issued unregistered shares of Common Stock (the
"Common Shares");
(ii) 315,000 warrants to purchase an aggregate of 315,000 unregistered
shares of Common Stock (the "Warrants"); and
(iii) a number of warrants to purchase up to an aggregate of a number
of unregistered shares of Common Stock (the "Exercise Warrants") equal to,
at any time, 20% of the shares of Common Stock issuable upon the exercise
of stock options (x) granted pursuant to the Company's 1993 Stock Option
Plan as such plan is amended (the "1993 Plan") and (y) granted to employees
not pursuant to any stock option plan.
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The Common Shares and the Warrants will represent, immediately following
the issuance thereof, 20% of the total issued and outstanding shares of Common
Stock on a fully diluted basis (excluding all employee stock options). The
Common Shares, Warrants and Exercise Warrants will represent, immediately
following the issuance thereof, at least 20% of the total issued and outstanding
shares of Common Stock on a fully diluted basis (including all stock options).
The Common Shares, the Warrants and the Exercise Warrants shall collectively be
referred to herein as the "Securities." The aggregate purchase price to be paid
by the Buyer for the Common Shares, the Warrants and the Exercise Warrants shall
be $5,964,000 and shall be referred to herein as the "Purchase Price."
SECTION 1.02. Closing; Payment of Purchase Price. The closing (the
"Closing") of the transactions contemplated by this Agreement shall take place
at the offices of Buyer, 1230 Avenue of the Americas, New York, New York 10020,
on the date hereof, or at such other place or time as the Company and Buyer may
mutually agree (the date and time of the Closing being herein referred to as the
"Closing Date").
SECTION 1.03. Deliveries by the Company. At the Closing, the Company will
deliver or cause to be delivered to Buyer the following:
1. A stock certificate representing the Common Shares and warrants
representing the Warrants and the Exercise Warrants with all necessary stock
issuance or transfer stamps affixed thereto, duly completed and registered in
the name of Buyer on the stock transfer book of the Company;
2. A legal opinion substantially to the effect set forth in Annex I hereto;
3. A duly executed stockholder agreement (the "Stockholders Agreement") in
substantially the form set forth as Exhibit A hereto (the "Stockholders
Agreement");
4. Duly executed Warrant Agreements (the "Warrant Agreements"), in
substantially the forms set forth as Exhibit B-1 and B-2 hereto;
5. A duly executed Registration Rights Agreement, (the "Registration Rights
Agreement"), in substantially the form set forth as Exhibit D hereto;
6. A duly executed Software Development Agreement (the "Software
Development Agreement"), in substantially the form set forth as Exhibit E
hereto;
7. A copy of a duly executed amendment to the employment agreement between
the Company and Byron Preiss (the "Amendment"), in substantially the form set
forth as Exhibit F hereto;
8. Evidence that the Company has applied for a key man life insurance
policy (the "Insurance Policy") insuring the life of Byron Preiss, of which the
Company will be the beneficiary, in an aggregate total amount equal to $2.95
million;
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9. A copy of a duly executed amendment to the Agreement, dated April 1,
1994, between the Company and each of Byron Preiss Visual Publications, Inc. and
Byron Preiss Electronic Books, Inc., in substantially the form set forth as
Exhibit G hereto; and
10. Evidence that the Common Shares and the Common Stock underlying the
Warrants and the Exercise Warrants have been listed for trading on the Boston
Stock Exchange and The NASDAQ Stock Market.
SECTION 1.04. Deliveries by Buyer. At the Closing, Buyer will deliver or
cause to be delivered to the Company the following:
1. $5,964,000 in cash by wire transfer of immediately available funds in
accordance with the Company's instructions, which shall be given to Buyer in
writing no later than 3 business days prior to the Closing Date;
2. The opinions, certificates, and other documents contemplated by Section
5.03;
3. A duly executed Stockholders Agreement;
4. A duly executed Registration Rights Agreement; and
5. A duly executed Software Development Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
SECTION 2.01. Organization and Qualification. The Company (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization; (ii) has all requisite
power and authority to carry on its business as it is now conducted and to own,
lease and operate the properties it now owns, leases or operates at the places
currently located and in the manner currently used and operated and (iii) is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary, except where the failure to so qualify or license would not have a
material adverse effect on the Company. The Company has delivered to Buyer true
and complete copies of its Certificate of Incorporation and By-laws, each as
amended through and in effect on the date hereof.
SECTION 2.02. Authorization and Validity of Agreement. The Company has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors and by all other necessary
21
<PAGE>
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and is a valid and binding obligation of
the Company, enforceable in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
SECTION 2.03. Capitalization. (a) The Common Shares and the Warrants will
represent, immediately following the issuance thereof, 20% of the total issued
and outstanding shares of Common Stock on a fully diluted basis (excluding all
employee stock options). The Common Shares, Warrants and Exercise Warrants will
represent, immediately following the issuance thereof, at least 20% of the total
issued and outstanding shares of Common Stock on a fully diluted basis
(including all stock options). The Exercise Warrants will represent, at any
time, at least 20% of the total shares of Common Stock issuable upon the
exercise of stock options granted (x) pursuant to the 1993 Plan and (y) to
employees not pursuant to a stock option plan. On the date hereof, the
authorized capital stock of the Company consists of (i) 30,000,000 shares of
Common Stock and (ii) 5,000,000 shares of blank check preferred stock, par value
$.001 per share (the "Preferred Stock"). As of the close of business on March
20, 1995: (i) 3,409,500 shares of Common Stock were issued and outstanding,
60,333 shares were reserved for issuance upon exercise of outstanding stock
options, 1,260,000 shares were received for issuance upon exercise of
outstanding warrants and no shares were held by the Company in its treasury and
(ii) none of the shares of Preferred Stock were issued and outstanding. All
issued and outstanding shares of Common Stock have been validly issued and are
fully paid and non assessable, are not subject to and have not been issued in
violation of any preemptive rights and have not been issued in violation of any
federal or state securities laws. All outstanding warrants and all other
securities, evidencing the right to purchase, or convertible into, any shares of
Common Stock have been validly issued and are validly outstanding. All shares of
Common Stock into or for which any security or warrant is convertible or
exercisable, upon conversion or exercise in accordance with its terms, will be
validly issued, fully paid and non-assessable. The respective rights,
preferences, privileges, limitations and restrictions of Common Stock, and
Preferred Stock are as set forth in the Company's Certificate of Incorporation.
On the date hereof, there are no issued or outstanding bonds, debentures, notes
or other indebtedness of the Company which have the right to vote (or which are
convertible into other securities having the right to vote) on any matters on
which stockholders of the Company may vote ("Voting Debt"). Except as set forth
in the Prospectus (as hereinafter defined), there are not as of the date hereof
any outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements of any character to or by which the Company
is a party or is bound which, directly or indirectly, obligate the Company to
issue, deliver or sell or cause to be issued, delivered or sold any shares of
Common Stock, Preferred Stock or any other capital stock, equity interest or
Voting Debt of the Company or any securities convertible into, or exercisable or
exchangeable for, or evidencing the right to subscribe for any such shares,
interests or Voting Debt or obligating the Company to grant, extend or enter
into any such subscription, option, warrant, call or right. Since the close of
business on March 20, 1994, no shares of capital stock of the Company have been
issued or have been transferred from the Company's treasury. Except as set forth
in the Prospectus or on Schedule 2.03 hereto, the Company has not adopted,
authorized or assumed any plans, arrangements or practices for the benefit of
its officers, employees or directors which require or permit the issuance, sale,
purchase or grant of any capital stock, other equity interests or Voting Debt of
22
<PAGE>
the Company or any other securities convertible into, or exercisable or
exchangeable for, any such stock, interests or Voting Debt or any phantom
shares, phantom equity interests or stock or equity appreciation rights. Except
as set forth in the Prospectus or on Schedule 2.03 hereto, there are not as of
the date hereof any outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or other agreements of any character that, directly
or indirectly, (x) call for or relate to the sale, pledge, transfer or other
disposition by the Company of any shares of capital stock, or other equity
interests or any Voting Debt of the Company or (y) relate to the voting or
control of such capital stock, or other equity interests or Voting Debt.
(b) The Securities, upon issuance and delivery in accordance with the terms
and conditions of this Agreement and the shares of Common Stock issuable upon
conversion of the Warrants and the Exercise Warrants, will be duly authorized,
validly issued, fully paid and non-assessable, will be free of any liens,
claims, charges, security interests, pledges, voting or shareholder agreements
(except as contemplated hereby) or encumbrances of any kind whatsoever, will not
be issued in violation of any preemptive rights and will vest in Buyer full
rights with respect thereto, including, to the extent the Securities have voting
rights, the right to vote such Securities on all matters properly presented to
the stockholders of the Company.
SECTION 2.04. Subsidiaries. The Company does not have any subsidiaries. The
Company does not have any affiliated companies and does not otherwise own or
control, directly or indirectly, any equity or other ownership interest in any
corporation, joint venture, limited partnership, association or other business
entity other than as described in the Prospectus.
SECTION 2.05. Reports and Financial Statements. The Company has heretofore
made available to Buyer true and complete copies of all reports, registration
statements, definitive proxy statements and other documents (in each case
together with all amendments and supplements thereto) filed by the Company with
the Securities and Exchange Commission (the "Commission") since May 11, 1994
(such reports, registration statements, definitive proxy statements and other
documents, together with any amendments and supplements thereto, are sometimes
collectively referred to as the "Company Commission Filings" and the prospectus
of the Company dated May 11, 1994 is referred to herein as the "Prospectus").
The Company Commission Filings constitute all of the documents (other than
preliminary materials) that the Company was required to file with the Commission
since such date. As of their respective dates, each of the Company Commission
Filings complied in all material respects with the applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations under each such Act, and none of the Company Commission Filings
contained as of such date any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. When filed with the Commission, the financial statements
included in the Company Commission Filings complied as to form in all material
respects with the applicable rules and regulations of the Commission and were
23
<PAGE>
prepared in accordance with generally accepted accounting principles (as in
effect from time to time) applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto), and such financial
statements fairly present in all material respects the financial position of the
Company as at the dates thereof and the results of its operations and its cash
flows for the periods then ended, subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit adjustments. Since
September 30, 1994, except as disclosed in the Company Commission Filings filed
with the Commission prior to the date hereof, the Company has not incurred any
liability or obligation of any kind, outside of the ordinary course of business
which, in any case or in the aggregate, is material to the business, assets,
results of operations or financial condition of the Company.
SECTION 2.06. No Undisclosed Liabilities. Except for liabilities and
obligations incurred in the ordinary course of business since September 30,
1994, as of the date hereof, (i) the Company does not have any material
liabilities or obligations (absolute, accrued, contingent or otherwise) and (ii)
to the Company's knowledge, there has not been any aspect of the prior or
current conduct of the business of the Company which may form the basis for any
claim by any third party which if asserted could result in any such material
liabilities or obligations, which are not fully reflected, reserved against or
disclosed in the consolidated balance sheet of the Company included in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994.
SECTION 2.07. No Approvals or Notices Required; No Conflict with
Instruments. Except as described on Schedule 2.07, the execution and delivery by
the Company of this Agreement do not, and the performance by the Company of its
obligations hereunder and the consummation of the transactions contemplated
hereby will not:
(i) conflict with or violate the Certificate of Incorporation or
By-laws of the Company;
(ii) require any consent, approval, order or authorization of or other
action by any Governmental Entity (as defined in clause (v) of this Section
2.07) (a "Government Consent") or any registration, qualification,
declaration or filing with or notice to any Governmental Entity (a
"Governmental Filing"), in each case on the part of or with respect to the
Company, the absence or omission of which would, either individually or in
the aggregate, have a material adverse effect on the transactions
contemplated hereby or on the business, assets, results of operations or
financial condition of the Company;
(iii) require any consent by or approval of (a "Contract Consent") or
notice to (a "Contract Notice") any other person or entity (other than a
Governmental Entity), the absence or omission of which would, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of the Company;
(iv) conflict with, result in any violation or breach of or default
(with or without notice or lapse of time, or both) under, or give rise to a
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<PAGE>
right of termination, cancellation or acceleration of any obligation or the
loss of any material benefit under or the creation of any lien, security
interest, pledge, charge, claim, option, right to acquire, restriction on
transfer, voting restriction or agreement, or any other restriction or
encumbrance of any nature whatsoever on any material assets pursuant to
(any such conflict, violation, breach, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation") any
"Contract" (which term shall mean and include any note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument, employee benefit plan or practice, or other material
agreement, obligation, commitment or concession of any nature) to which the
Company is a party, by which the Company or any of its assets or properties
is bound or affected or pursuant to which the Company is entitled to any
rights or benefits, except for such Violations which would not, either
individually or in the aggregate, have a material adverse effect on the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of the Company; or
(v) result in a Violation of, under or pursuant to any law, rule,
regulation, order, judgment or decree applicable to the Company or by which
any of its properties or assets are bound or affected. As used herein, the
term "Governmental Entity" means and includes any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign.
SECTION 2.08. Absence of Certain Changes or Events. Except as otherwise
disclosed in the Company Commission Filings (not including any Exhibits thereto)
filed with the Commission prior to the date hereof, during the period commencing
on September 30, 1994 and ending on the date of this Agreement, there has not
been any material adverse change in, and no event has occurred and no condition
exists which, individually or together with other events or conditions, has had
or, insofar as can reasonably be foreseen, is likely to have, a material adverse
effect on, the business, assets, results of operations, condition (financial or
other) of the Company.
SECTION 2.09. Legal Proceedings. Except as set forth in the Prospectus or
on Schedule 2.09 hereto, there is no suit, action or proceeding pending or, to
the knowledge of the Company, any investigation pending or any suit, action,
proceeding or investigation threatened against, involving or affecting the
Company, or any of its properties or rights, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against the Company, which
does or would likely (i) result in the modification, termination, suspension,
impairment or reformation of any material contract to which the Company is a
party; (ii) materially adversely affect the manner in which the Company conducts
its business; (iii) adversely affect the ability of the Company to consummate
any of the transactions contemplated hereby; or (iv) have a material adverse
effect on the business, assets, results of operations or condition (financial or
other) of the Company.
SECTION 2.10. Licenses; Compliance With Regulatory Requirements . The
Company holds all licenses, franchises, ordinances, authorizations, permits,
certificates, variances, exemptions, orders and approvals, domestic or foreign
25
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(collectively, the "Licenses") which are material to the operation of the
business of the Company, except for such Licenses which the failure to hold
would not have a material adverse effect on the business, assets, results of
operations, condition (financial or otherwise) of the Company. The Company is in
substantial compliance with, and has conducted its business so as to comply
with, the terms of their respective Licenses and with all applicable laws,
rules, regulations, ordinances and codes, domestic or foreign, including laws,
rules, regulations, ordinances and codes relating to the protection of the
environment, except where the failure so to comply has not had, either
individually or in the aggregate, a material adverse effect on the business,
assets, results of operations, condition (financial or other) of the Company. To
the knowledge of the Company, the Company has not engaged in any activity that
would cause revocation or suspension of any such material Licenses. No action or
proceeding looking to or contemplating the revocation or suspension of any of
such material Licenses is pending or, to the knowledge of the Company,
threatened.
SECTION 2.11. Intellectual Property
(a) As set forth in this Agreement "Intellectual Property" means all
copyrights, copyright registrations, copyright registration applications,
patents, patent registrations, patent registration applications, trade or
service marks, trade or service mark registrations or applications, trade names,
trade name registrations, trade name registration applications, logo types,
processes, inventions, designs, technical data, trade secrets, know-how,
formulae, software, source code and documentation and all tangible embodiments
thereof (in whatever form or medium) applied for, issued to or owned by the
Company or which are licensed and franchised to the Company, or in which the
Company has a material interest and all similar intellectual property rights
(whether or not any registration or filing has been made in respect thereto).
The Company has all necessary software, copyrights and other rights to publish
its existing titles, subject to the term of the licenses granted to the Company
with respect to such titles. Schedule 2.11 hereto sets forth, in all material
respects, a true, complete and correct list of (i) all significant titles (both
published, unpublished and in process) and primary licensors which are material
to the Company, (ii) significant patents, patent applications, trade or service
marks, trade or service mark registration applications, trade names, trade name
registrations, trade name registration applications, applied for, issued to or
owned by the Company or which are licensed or franchised to the Company, or in
which the Company has a material interest and which are material to the business
of the Company, (iii) each material license agreement in respect of Intellectual
Property pursuant to which the Company has granted or licensed rights, (iv) for
primary titles or imprints in existences as of the date hereof, each material
registration with, material filing in or material issuance by a governmental
agency or authority of the Untied States, or of any of the states thereof, or of
foreign jurisdictions by the Company or any of its employees or consultants with
respect thereto, and (v) each agreement with a third party pursuant to which
each such third party is developing in excess of 50% of any title.
(b) Except as set forth on Schedule 2.11 hereto,
(i) subject to and/or with the exception of advance royalty
obligations and any other contractual restrictions, the Company owns,
has the right to use, sell, license, prepare derivative works for, or
26
<PAGE>
dispose of all Intellectual Property required for or incident to the
development, manufacture, operation and sale of all products and
services in the manner currently sold by the Company free and clear of
any material rights, liens or claims of others, and has the right to
bring actions for the infringement or misappropriation of the
Intellectual Property;
(ii) the Company owns or has the current right to use all
software and/or programs of others required for the conduct of its
business;
(iii) the execution, delivery and performance of this Agreement
and the consummation of the agreements contemplated herein will not
breach, violate or conflict with any material instrument or agreement
governing any Intellectual Property right, will not cause the
forfeiture or termination of any Intellectual Property right or in any
way materially exclude the right of the Company to use, sell, license
or dispose of or to bring any action for the infringement of, any
material Intellectual Property right;
(iv) the manufacture, marketing, modification, license, sale or
use of the Intellectual Property used by the Company in connection
with the conduct or operation of the Company's business does not
violate any license or agreement with any third party or infringe any
license or agreement with any third party or infringe any proprietary
right or interest of any other party, there are no pending or, to the
Company's knowledge, threatened claims or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any
Intellectual Property that is required in connection with the conduct
or operation of the Company's business, nor is there any reasonable
basis for any such claim, nor has the Company received any written
notice asserting that any Intellectual Property right, or the proposed
use, sale, license or disposition thereof by it conflicts or will
conflict with the rights of any other party, nor is there any
reasonable basis for any such assertion; (v) the Company has taken
reasonably prudent measures to protect confidential Intellectual
Property of the Company; all persons engaged or employed by the
Company in any capacity having access to or knowledge of the
Intellectual Property of a confidential nature that is necessary or
required or otherwise used for or in connection with the conduct or
operation of the Company's business have entered into appropriate
non-disclosure agreements with the Company;
(vi) the Company has not disposed of or permitted to lapse any
material rights to the use of any Intellectual Property or any other
tangible asset of material value to the Company's business which
disposal or lapse would likely have a material adverse effect on the
Company;
(vii) no person (except for employees of the Company whose rights
are limited to those which are for the benefit of the Company) has any
current, conditional or contingent right to have available to it any
Intellectual Property of the Company (including, without limitation,
source codes in respect of software) which is generally not available
27
<PAGE>
to the public and/or which is or ought reasonably to be considered
confidential or proprietary information.
(c) Except as disclosed under "Risk Factors -- Software Technology; Lack of
Patent Protection and Clearance of Rights; Trademarks" in the Prospectus, the
Company currently possesses all material licenses and sublicenses required to
operate the business of the Company.
(d) Except as disclosed in the Company Commission Filings, to the Company's
knowledge, there are no infringers of the Intellectual Property and the Company
has not learned of or communicated with any third party considered by the
Company actually or possibly to be infringing any of the Intellectual Property.
(e) All payments, including maintenance fees, and all filing and
registrations (including but not limited to such filings as may be made to
render a trademark registration incontestable) have been made with respect to
the Intellectual Property which are required to be made so as to maintain the
Intellectual Property in full force and effect.
SECTION 2.12. Brokers or Finders. Except as set forth on Schedule 2.12, no
agent, broker, investment banker, financial advisor or other person or entity is
or will be entitled, by reason of any agreement, act or statement by the Company
or any of its directors, officers, employees or affiliates, to any financial
advisory, broker's, finder's or similar fee or commission, to reimbursement of
expenses or to indemnification or contribution in connection with any of the
transactions contemplated by this Agreement, and the Company hereby covenants
and agrees to indemnify and hold Buyer harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions,
expenses or claims for indemnification or contribution asserted by any person
listed on Schedule 2.12.
SECTION 2.13. Tax Matters. Except as set forth on Schedule 2.13 hereto, to
the knowledge of the Company (i) there has been duly filed by or on behalf of
the Company, or filing extensions from the appropriate federal, state, foreign
and local Governmental Entities have been obtained with respect to, all material
federal, state, foreign and local tax returns and reports required to be filed
on or prior to the date hereof, (ii) payment in full or adequate provision for
the payment of all taxes required to be paid in respect of the periods covered
by such tax returns and reports has been made (except in respect of state, local
and foreign taxes which are in the aggregate immaterial in amount) and (iii) a
reserve which the Company reasonably believes to be adequate has been set up for
the payment of all such taxes anticipated to be payable in respect of periods
through the date hereof. None of the federal income tax returns required to be
filed by or on behalf of the Company under the Internal Revenue Code of 1986, as
amended, or any predecessor statute (the "Company Returns") are currently under
examination by the Internal Revenue Service ("IRS"). There have not been any
deficiencies or assessments asserted in writing by the IRS with respect to the
Company Returns. The Company has not with regard to any assets or property held,
acquired or to be acquired by the Company, filed a consent pursuant to Section
341(f) of the Code or any predecessor statute. For the purpose of this
Agreement, the term "tax" (including, with correlative meaning, the terms
"taxes" and "taxable") shall include all material federal, state, local and
foreign income, profits, franchise, gross receipts, payroll, sales, employment,
28
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use, property, withholding, excise and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts.
SECTION 2.14. Employees. (a) No employee, consultant or agent of the
Company is, or to the Company's knowledge, will be, based upon the business and
activities taken or proposed to be taken by the Company, in violation of any
term of any employment contract, confidentiality or non-disclosure agreement or
any other contract, agreement, commitment or understanding relating to the
relationship of such employee, consultant or agent with the Company or any other
party which violation would have a material adverse impact on the business or
properties of the Company.
(b) Each significant employee or consultant of the Company with access to
confidential or proprietary information of the Company has executed an agreement
obligating such employee, consultant, contractor or agent to hold confidential
the Company's proprietary information.
(c) There is no strike, labor dispute or union organization activity
pending or threatened between the Company and its employees. None of the
Company's employees belongs to any union or collective bargaining unit.
(d) Except as described in the Prospectus or as listed on Schedule 2.14
hereto, the Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement.
(e) The Company is not aware that any officer or key employee intends to
terminate employment with the Company.
(f) Except as disclosed on Schedule 2.14, the Company is not a party to, or
obligated or bound under, any conciliation agreement, letter of commitment,
consent decree, order, or other agreement or obligation with any Government
Entity with regard to its employees, or its employment or hiring practices, or
to health and safety standards applicable to employees.
SECTION 2.15. Compliance with Charter and Contracts. (a) The Company is not
in violation of any term of its charter, or by-laws, which violation would have
a material adverse effect on the Company.
(b) The Company has filed with the Commission copies of all agreements,
leases, license agreements and other material contracts to which the Company is
a party or may be bound that, after consultation with its legal counsel, the
Company reasonably believes are required to be filed under the Securities Act
and the Exchange Act. Except as set forth in Schedule 2.15 hereto, each of such
agreements, leases, license agreements and contracts is in full force and effect
(other than those which have expired or terminated pursuant to their terms or by
mutual agreement of the Company and each other party thereto since the filing
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thereof), and (i) neither the Company, or to the Company's knowledge, any other
party thereto, has materially breached or is in default thereunder, (ii) no
event has occurred which, with the passage of time or the giving of notice,
would constitute such a material breach or default, (iii) no claim of material
default thereunder has, to the Company's knowledge, been asserted or threatened
and (iv) neither the Company, or to the Company's knowledge, any other party
thereto is seeking the renegotiation thereof or substitute performance
thereunder, except where such material breach or default, or attempted
renegotiation or substitute performance, individually or in the aggregate, would
not have a material adverse effect on the business, assets, results of
operations, condition (financial or other) of the Company.
SECTION 2.16. Transactions with Related Parties. Except as disclosed in the
Prospectus or as set forth in Schedule 2.16, the Company has not engaged in any
transaction which involves an amount in excess of $25,000, with an employee,
officer or director of the Company or any affiliate of such employee, officer or
director. For purposes of this section an "affiliate" as to any Person means
another Person which controls, is controlled by or is under common control with
such Person. "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental body or other entity, of whatever nature.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company as follows:
SECTION 3.01. Organization and Authority. Buyer (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and (ii) has all requisite
corporate power and authority to conduct its business as it is now being
conducted and to enter into this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated hereby. The execution,
delivery and performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding obligation of Buyer, enforceable
in accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
SECTION 3.02. No Approvals or Notices Required; No Conflict with
Instruments. The execution and delivery by Buyer of this Agreement do not, and
the performance by Buyer of its obligations hereunder and the consummation of
the transactions contemplated hereby will not:
(i) conflict with or violate the Certificate of Incorporation, as
amended, or By-laws, as amended, of Buyer;
(ii) require any Government Consent or Governmental Filing, in
each case on the part of or with respect to Buyer, the absence or
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omission of which would, either individually or in the aggregate, have
a material adverse effect on the transactions contemplated hereby;
(iii) require, on the part of Buyer any Contract Consent or
Contract Notice, the absence or omission of which would, either
individually or in the aggregate, have a material adverse effect on
the transactions contemplated hereby;
(iv) conflict with or result in any Violation of any Contract to
which Buyer is a party, or by which Buyer or any of its assets or
properties is bound or affected, except for such Violations which
would not, either individually or in the aggregate, have a material
adverse effect on the transactions contemplated hereby; or
(v) result in a Violation of, under or pursuant to any law, rule,
regulation, order, judgment or decree applicable to Buyer or by which
any of its properties or assets are bound or affected, except for such
Violations which would not, either individually or in the aggregate,
have a material adverse effect on the transactions contemplated
hereby.
SECTION 3.03. Investment Purpose. Buyer is acquiring the Shares solely for
the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof in any transaction which would be in
violation of the securities laws of the United States of America or any state
thereof, except that nothing contained in this Agreement shall restrict Buyer's
right to sell such Shares in a registered offering pursuant to the registration
rights provided for pursuant to the Registration Rights Agreement. Buyer
understands that the certificate representing the Shares will contain a legend
stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and such shares
may not be sold or transferred unless such sale or transfer
will be effected in accordance with the registration
requirements of the Securities Act of 1933, as at that time
amended, or in accordance with any exemption from the
registration requirements of such Act, which may then be
available thereto."
Buyer understands and acknowledges that the Securities are not registered
under the Securities Act and that the Company will deliver unlegended
certificates in exchange for the certificate bearing such legend only in the
event that (i) Buyer transfers shares represented by such certificate pursuant
to and in the manner provided for in an effective registration statement
covering the transfer or sale of such shares or (ii) Buyer shall have delivered
to the Company a letter from the staff of the Commission, or an opinion of
counsel in form and substance satisfactory to the Company, to the effect that
the Shares in question may be transferred without registration under the
Securities Act.
SECTION 3.04 Litigation. There is no suit, action or proceeding pending or
to the knowledge of the Buyer, any investigation pending or any suit, action,
proceeding or investigation threatened against, involving or affecting the
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Buyer which would (i) adversely affect or seek to prevent the consummation of
any of the transactions contemplated hereby or (ii) have a material adverse
effect on the business, assets, results of operations or condition (financial or
other) of the Buyer.
SECTION 3.05 Accredited Investor. Buyer is an "accredited investor" as such
term is defined in Rule 501 of Regulation D, as promulgated under the Securities
Act.
ARTICLE IV.
POST-CLOSING COVENANTS
SECTION 4.01. Confidentiality. Each party shall, and shall use its
reasonable efforts to cause its affiliates, directors, officers, agents,
advisors, employees and authorized representatives (collectively, "Agents") to,
(i) hold in confidence all confidential information obtained by it from the
disclosing party or such disclosing party's Agents pursuant to this Agreement
(unless such information (a) is or becomes generally available to the public or
the publishing industry other than as a result of wrongful acts of the
non-disclosing party, (b) is in the possession of the non-disclosing party or
its Agents prior to such disclosure (not by unlawful means), (c) is disclosed to
the non-disclosing party or its Agents on a non-confidential basis by a person
other than the disclosing party or its Agents that, to the non-disclosing
party's knowledge, is not restricted from disclosing such information to the
non-disclosing party by any contractual, fiduciary or other legal obligation or
(d) is developed by the non-disclosing party without the benefit of the
confidential information) and (ii) use all such data and information for the
purpose of consummating the transactions contemplated hereby, except, that the
parties may disclose such information (x) as required by law or securities
market rule or regulation or (y) in connection with legal proceedings relating
to or arising out of the transactions contemplated hereby. In the event a party
is required by clauses (x) and (y) of the preceding sentence to disclose any
confidential information of the disclosing party such non-disclosing party will
(i) promptly notify the disclosing party of the existence, terms and
circumstances surrounding such a request, (ii) consult with the disclosing party
on the advisability of taking legally available steps to resist or narrow such
request, and (iii) if disclosure of such information is required, furnish only
such portion of the information as it is legally compelled to disclose and
exercise its reasonable best efforts to obtain, at the disclosing party's
expense, an order or other reliable assurance that confidential treatment will
be accorded to such portion of the disclosed information that the disclosing
party may designate. In the event this Agreement is terminated, each party shall
within three business days return or destroy (and certify to the other party the
destruction of), if so requested by the other party, all nonpublic documents
obtained from such other party in connection with the transactions contemplated
hereby and any copies thereof which may have been made by such first party and
shall use its reasonable efforts to cause its Agents to whom such documents were
furnished promptly to return or destroy (and certify to the other party the
destruction of) such documents and any copies thereof any of them may have made.
SECTION 4.02. Public Announcements. Neither Buyer nor the Company shall
(and each such party shall use its reasonable efforts to cause its subsidiaries,
affiliates, directors, officers, employees and authorized representatives not
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to), issue any press release, make any public announcement or furnish any
written statement to its employees or stockholders generally concerning the
transactions contemplated by this Agreement without the consent of the other
party (which consent shall not be unreasonably withheld), except to the extent
required by applicable law or the applicable requirements of applicable stock
exchange rules (including The NASDAQ Stock Market) (and in either such case such
party shall, to the extent consistent with timely compliance with such
requirement, consult with the other party prior to making the required release,
announcement or statement).
SECTION 4.03. Distribution Agreement. The Company and Buyer shall negotiate
in good faith to enter into distribution arrangements (subject to any
appropriate limitations) pursuant to which Buyer will distribute certain
discrete products of the Company, on such terms and conditions as may be
mutually acceptable.
SECTION 4.04. Key Man Life Insurance. The Company will use its best efforts
to prosecute the application for the Insurance Policy and cause such Insurance
Policy to be obtained. The Company will maintain the key man life insurance
policy, insuring the life of Byron Preiss in the amount of $1,700,000, of which
the Company is the beneficiary for $1,000,000, until the Insurance Policy has
been obtained.
SECTION 4.05. Dividends. As long as Buyer holds at least 5% of the total
issued and outstanding shares of Common Stock of the Company on a fully diluted
basis, the Company may not pay cash dividends to its shareholders without
Buyer's consent, which consent, cannot be unreasonably withheld.
SECTION 4.06. Additional Warrants. If the Company enters into an agreement
with Baseline Publishing Inc. ("Baseline") pursuant to which the Company issues
shares of Common Stock, the Company and the Buyer shall enter into a Warrant
Agreement substantially in the form of Exhibit B-1 hereto containing an exercise
price of $7.00 per share of Common Stock, pursuant to which the Buyer will be
granted warrants to purchase shares of Common Stock in an amount equal to 20% of
the shares of Common Stock issued to Baseline.
SECTION 4.07. Purchase Restrictions. Buyer agrees that from the date hereof
until 30 months from the date hereof, it will not acquire directly or
indirectly, by any means other than pursuant to Section 1 of the Stockholders
Agreement, any additional shares of Common Stock, if after such acquisition
Buyer and Buyer's affiliates, in the aggregate, would be the beneficial owners
of Common Stock in excess of 25% of the total issued and outstanding Common
Stock of the Company on a fully diluted basis; provided, however, Buyer shall
not be in breach or in default of this Section 4.07 if any action taken by the
Company (including without limitation, share repurchase programs and the
declaration of a dividend by the Company payable at the election of security
holders of the Company either in cash or in Common Stock) shall cause Buyer to
own more than 25% of the total issued and outstanding Common Stock on a fully
diluted basis. Notwithstanding anything contained herein, the restriction
contained in this Section 4.07 shall no longer be applicable and Buyer shall not
be restricted from acquiring any additional shares of Common Stock by virtue
hereof if any of the following events shall occur: (i) the Group (as such term
is defined in the Stockholders Agreement) increases its ownership of Common
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Stock such that, in the aggregate, it owns 10% more of the total issued and
outstanding Common Stock of the Company on a fully diluted basis than it does on
the date hereof; (ii) a third party (other than Buyer or any member of the
Group) acquires 5% or more of the total issued and outstanding Common Stock on a
fully diluted basis by transactions over any securities exchange or
over-the-counter market; or (iii) a third party (other than Buyer or any member
of the Group) acquires 10% or more of the total issued and outstanding Common
Stock on a fully diluted basis directly from the Company.
ARTICLE V.
INDEMNIFICATION
SECTION 5.01. Survival. The representations and warranties made by the
Company in Sections 2.12 and 2.13 shall survive the Closing until the expiration
of the statute of limitations period applicable to claims that may be asserted
against the Company in respect of the matters covered thereby; the
representations and warranties of the Company in Sections 2.01, 2.02 and 2.03
shall survive indefinitely; all other representations and warranties of the
parties contained in this Agreement shall survive the Closing for a period of 25
months from the Closing Date, in each case regardless of any investigation that
may have been or may be made at any time by or on behalf of the Company or
Buyer. The covenants and agreements of the parties contained in this Agreement
that contemplate actions to be taken (a) prior to the Closing shall not survive
the Closing and (b) after the Closing shall survive until such actions shall
have been taken or performed substantially in accordance with the terms of the
applicable covenant or agreement.
SECTION 5.02. Indemnification Relating to this Agreement. (a) The Company
shall indemnify Buyer, any of the Buyer's controlling persons, and each of
Buyer's directors, officers, shareholders, affiliates, employees, agents,
successors and permitted assigns, from and against any and all losses,
liabilities, claims, damages, obligations, liens, assessments, judgments,
awards, fines, interest, penalties, costs and expenses (including reasonable
attorneys' fees and expenses) ("Losses") resulting or arising from:
1. any breach by the Company of any representation or
warranty of the Company set forth in this Agreement or in any
agreement, certificate or other document executed by the Company
and delivered to Buyer pursuant to the provisions of this
Agreement; and
2. any failure of the Company to comply with any covenant or
agreement of the Company set forth in this Agreement.
(b) Buyer shall indemnify the Company, and each director, employee, agent,
officer, employee, agent, successor and assign of the Company, from and against
all Losses resulting or arising from:
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1. any breach by Buyer of any representation or warranty of
Buyer set forth in this Agreement or in any agreement,
certificate or other document executed by Buyer delivered to the
Company pursuant to the provisions of this Agreement;
2. any failure of Buyer to comply with any covenant or
agreement of Buyer set forth in this Agreement.
SECTION 5.03. Indemnification Procedures.
(a) Procedures for Indemnification of Third Party Claims.
(i) If a party entitled to indemnification under Section 5.02 (an
"Indemnitee") shall receive notice or otherwise learn of the assertion by a
Person who is not a party to this Agreement, of any claim or of the commencement
or threat by any such Person of any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court or other Governmental Agency
(a "Third Party Claim") with respect to which the other party may be obligated
to provide indemnification pursuant to Section 5.02 (an "Indemnifying Party"),
such Indemnitee shall give such Indemnifying Party written notice thereof
promptly after becoming aware of such Third Party Claim; provided that the
failure of any Indemnitee to give notice as provided in this Section 5.03(a)
shall not relieve the related Indemnifying Party of its obligations under this
Article VII, except to the extent that such Indemnifying Party is prejudiced by
such failure to give notice. Such notice shall describe the Third Party Claim in
reasonable detail and, if ascertainable, shall indicate the amount (estimated if
necessary) of the Loss that has been or may be sustained by such Indemnitee.
(ii) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third Party Claim. Within 30 days of the receipt of
notice from an Indemnitee in accordance with Section 5.03(a)(i) (or sooner, if
the nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election shall
specify any reservations or exceptions. If the Indemnifying Party assumes the
defense of a Third Party Claim, the Indemnitee shall be kept reasonably informed
with respect to, and shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement thereof,
but the fees and expenses of such separate counsel shall be the expense of such
Indemnitee unless (x) the Indemnifying Party agrees in advance to pay such fees
and expenses or (y) the Indemnitee shall have been advised by its counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party, in which case the
fees and expenses of such separate counsel shall be borne by the Indemnifying
Party. If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in this Section 7.03(a)(ii), such Indemnitee may defend or seek to
compromise or settle such Third Party Claim at the expense of the Indemnifying
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Party. Unless waived, neither an Indemnifying Party nor an Indemnitee shall
consent to entry of any judgment or enter into any settlement of any Third Party
Claim which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee, in the case of a consent or settlement
by an Indemnifying Party, or the Indemnifying Party, in the case of a consent or
settlement by the Indemnitee, of a written release from all liability in respect
of such Third Party Claim.
(iii) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the related Indemnitee shall make
available to such Indemnifying Party (in a manner that will not unreasonably
interfere with the conduct of the Indemnitee's business) any personnel or any
books, records or other documents within its control or which it otherwise has
the ability to make available that are necessary or appropriate for such
defense, settlement or compromise, and shall otherwise cooperate (in a manner
that will not unreasonably interfere with the conduct of the Indemnitee's
business) in the defense, settlement or compromise of such Third Party Claim.
(iv) Notwithstanding anything in this Section 5.03(a) to the contrary,
(A) neither an Indemnifying Party nor an Indemnitee shall, without the written
consent of the other party, settle or compromise or consent to the entry of any
judgment with respect to any action or Third Party Claim if the effect thereof
is to admit any criminal liability by, or to permit any injunctive relief or
other order providing non-monetary relief to be entered against, the other party
and (B) neither an Indemnifying Party nor an Indemnitee may settle or compromise
any claim without the consent of the other (which consent shall not be
unreasonably withheld). Subject to clause (A) of this paragraph (iv), if an
Indemnifying Party notifies the related Indemnitee in writing of such
Indemnifying Party's desire to settle or compromise a Third Party Claim on the
basis set forth in such notice (provided that such settlement or compromise
includes as an unconditional term thereof the giving by the claimant or
plaintiff of a written release of the Indemnitee from all liability in respect
thereof) and the Indemnitee shall notify the Indemnifying Party in writing that
such Indemnitee declines to accept any such settlement or compromise, such
Indemnitee may continue to contest such Third Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole expense. In
such event, the obligation of such Indemnifying Party to such Indemnitee with
respect to such Third Party Claim shall be equal to (1) the reasonable costs and
expenses of such Indemnitee prior to the date such Indemnifying Party notifies
such Indemnitee of the offer to settle or compromise (to the extent such costs
and expenses are otherwise indemnifiable hereunder) plus (2) the lesser of (x)
the amount of any offer of settlement or compromise which such Indemnitee
declined to accept and (y) the actual out-of-pocket amount such Indemnitee is
obligated to pay subsequent to such date as a result of such Indemnitee's
continuing to contest such Third Party Claim.
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(v) In the event of payment by an Indemnifying Party to any Indemnitee
in connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third Party Claim against any claimant or plaintiff asserting
such Third Party Claim or against any other Person. Such Indemnitee shall
cooperate with such Indemnifying Party in a reasonable manner, and at the cost
and expense of such Indemnifying Party, in prosecuting any subrogated right or
claim.
(b) Other Procedures for Indemnification.
(i) Any claim on account of a Loss which does not result from a Third
Party Claim shall be asserted by written notice given by the Indemnitee to the
related Indemnifying Party. Such Indemnifying Party shall have a period of 30
days after the receipt of such notice within which to respond thereto. If such
Indemnifying Party does not respond within such 30 day period, such Indemnifying
Party shall be deemed to have refused to accept responsibility to make payment.
If such Indemnifying Party does not respond within such 30 day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue such
remedies as may be available to such party under applicable law.
(ii) If the amount of any liability shall, at any time subsequent to
the payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(c) Notwithstanding anything to the contrary contained herein, to the
extent that an Indemnified Party receives proceeds from insurance policies for
Losses incurred, the liability of the Indemnifying Party shall be reduced by the
amount of insurance proceeds received.
(d) Notwithstanding anything to the contrary contained herein, except with
respect to a breach of Section 2.03 or Section 4.05 herein as to which this
Section 5.03(d) shall not apply, (i) no party shall have any obligation under
the Indemnification provisions set forth herein, unless and until and only to
the extent that the aggregate of all Losses for which any such party is
responsible under such indemnification provision exceeds the amount of $125,000
and (ii) the liability of the Company under such indemnification provisions
shall not be in excess of the consideration actually received by the Company
pursuant to Section 1.01 hereof. Notwithstanding the foregoing, however, no
individual claim for Losses for an amount less than $1,000 shall be subject to
indemnification hereunder.
(e) The parties agree that the Losses which would result to Buyer from a
breach by the Company of the covenant contained in Section 4.05 herein would be
an amount equal to the amount of dividends paid in violation of such covenant.
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SECTION 5.04. Remedies Cumulative. The remedies provided in this Article
VII shall be cumulative and shall not preclude assertion by an Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.01. Further Assurances. From and after the Closing Date, each of
the Company and Buyer shall, at any time and from time to time, make, execute
and deliver, or cause to be made, executed and delivered, such instruments,
agreements, consents and assurances and take or cause to be taken all such
actions as may reasonably be requested by the other party hereto to effect the
purposes and intent of this Agreement.
SECTION 6.02. Expenses. Except as otherwise provided herein, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall occur.
SECTION 6.03. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given on (i) the day on which
delivered personally or by telecopy (with prompt confirmation by mail) during a
business day to the appropriate location listed as the address below, (ii) three
business days after the posting thereof by United States registered or certified
first class mail, return receipt requested, with postage and fees prepaid or
(iii) one business day after deposit thereof for overnight delivery. Such
notices, requests, demands, waivers or other communications shall be addressed
as follows:
(a) if to the Company to:
Byron Preiss Multimedia Company, Inc.
24 West 25th Street
New York, New York 10010
Attn: Byron Preiss, President
Telecopy No.: (212) 627-2788
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with a copy to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Robert Lawrence, Esq.
Telecopy No.: (212) 245-3009
(b) if to Buyer, to:
Simon & Schuster, Inc.
1230 Avenue of the Americas
New York, New York 10020
Attn: Mitchell Haber, Senior VP Corporate Development
Telecopy No.: (212) 632-8082
with a copy to:
Simon & Schuster, Inc.
1230 Avenue of the Americas
New York, New York 10020
Attn: Mark Morrill, General Counsel
Telecopy No.: (212) 698-7171
with a copy to:
Viacom Inc.
1515 Broadway
New York, New York 10036
Attn: Office of General Counsel
Telecopy No.: (212) 846-1428
or to such other person or address as any party shall specify by notice in
writing to the other party.
SECTION 6.04. Entire Agreement. This Agreement (including the Exhibits,
Annexes and other documents referred to herein) constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings, oral
and written, between the parties with respect to the subject matter hereof.
SECTION 6.05. Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, benefits or obligations hereunder may be assigned by any
party without the prior written consent of the other party; provided, however,
that Buyer may, without such consent, assign this Agreement to any wholly-owned
subsidiary or affiliate (as such term is defined in the Securities Act) of
Buyer, but such assignment shall not relieve Buyer of its obligations hereunder
in the event such assignee fails to perform such obligations. Subject to the
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preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties or their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, other than rights conferred upon Indemnified Parties under Article
VII.
SECTION 6.06. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 6.07. Extension; Waiver. The Company or Buyer may, to the extent
legally allowed, (i) extend the time specified herein for the performance of any
of the obligations of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, (iii) waive compliance by the other party
with any of the agreements or covenants of such other party contained herein or
(iv) waive any condition to such waiving party's obligation to consummate the
transactions contemplated hereby or to any of such waiving party's other
obligations hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Any such extension or waiver by any party shall
be binding on such party but not on the other party entitled to the benefits of
the provision of this Agreement affected unless such other party also has agreed
to such extension or waiver. No such waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to comply
strictly with the provisions of this Agreement. The failure of any party to
insist on strict compliance with this Agreement or to assert any of its rights
or remedies hereunder or with respect hereto shall not constitute a waiver of
such rights or remedies. Whenever this Agreement requires or permits consent or
approval by any party, such consent or approval shall be effective if given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 6.07.
SECTION 6.08. Interpretation. When a reference is made in this Agreement to
Sections, Articles, Exhibits, Annexes or Schedules, such reference shall be to a
Section, Article, Exhibit, Annex or Schedule (as the case may be) of this
Agreement unless otherwise indicated. When a reference is made in this Agreement
to a "party" or "parties", such reference shall be to a party or parties to this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The use of any gender
herein shall be deemed to be or include the other genders and the use of the
singular herein shall be deemed to be or include the plural (and vice versa),
wherever appropriate. The use of the words "hereof", "herein", "hereunder" and
words of similar import shall refer to this entire Agreement, and not to any
particular article, section, subsection, clause, paragraph or other subdivision
of this Agreement, unless the context clearly indicates otherwise.
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SECTION 6.09. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.
SECTION 6.10. Applicable Law. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof.
SECTION 6.11. Schedules. Information set forth on any Schedule to this
Agreement shall be deemed to be incorporated by reference into every other
Schedule to this Agreement to the extent applicable.
SECTION 6.12. Severability. In the event that any provision hereof shall be
held to be invalid or unenforceable, the same shall not affect in any respect
whatsoever the validity or enforceability of the remaining severable provision
hereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provisions were not contained herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BYRON PREISS MULTIMEDIA COMPANY, INC.
By: /s/ Byron Preiss
--------------------------------
Name: Byron Preiss
Title: President
VIACOM INTERNATIONAL INC.
By: /s/ Rudolph L. Hertlein
--------------------------------
Name: Rudolph L. Hertlein
Title: Senior Vice President
Corporate Development
Exhibit 99.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SUCH MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THIS
WARRANT OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933, AS AMENDED.
BYRON PREISS MULTIMEDIA COMPANY, INC.
WARRANT AGREEMENT AND CERTIFICATE
Dated: March 22, 1995
315,000 Warrants to Purchase 315,000 Shares of Common Stock
VOID AFTER 5:00 P.M., NEW YORK LOCAL TIME
May 11, 1999
Holder: Viacom International Inc.
1515 Broadway
New York, New York 10036
FOR VALUE RECEIVED, BYRON PREISS MULTIMEDIA COMPANY, INC., a New York
corporation, (hereinafter referred to as the "Company") hereby certifies that
VIACOM INTERNATIONAL INC. (hereinafter referred to as "VIACOM"), its successors
and assigns, for value received, are entitled to purchase from the Company at
any time after March 22, 1995 and before 5:00 P.M. New York local time on May
11, 1999, 315,000 Warrants (hereinafter referred to as the "Warrants") of the
Company (the number and character of such Warrants being subject to adjustment
as provided herein), to purchase 315,000 shares of Common Stock of the Company,
at the purchase price of $7.00 per share of Common Stock purchased (hereinafter
referred to as the "Exercise Price"). This Warrant was issued pursuant to a
certain Stock Purchase Agreement dated as of March 22, 1995, between the Company
and VIACOM providing for the issuance of an aggregate number of Warrants
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<PAGE>
entitling VIACOM to purchase an aggregate of 315,000 shares of the Common Stock
of the Company, $.001 par value.
1. EXERCISE OF WARRANTS. Upon presentation and surrender of this
Warrant Agreement and Certificate (the "Warrant Certificate"), with the attached
Purchase Form duly executed, at the principal office of the Company at 24 West
25th Street, New York, New York 10010, together with a certified or bank
cashier's check payable to the Company in the amount of the Exercise Price,
multiplied by the number of shares of the Company's Common Stock being purchased
(the "Shares"), the Company shall deliver to the holder hereof, as promptly as
practicable, certificates representing the Shares being purchased. This Warrant
may be exercised in whole or in part; and, in case of exercise hereof in part
only, the Company, upon surrender hereof, will deliver to the holder a new
Warrant Certificate or Warrant Certificates of like tenor entitling said holder
to purchase the number of Warrants as to which this Warrant Certificate has not
been exercised.
2. EXCHANGE AND TRANSFER. This Warrant, (a) at any time prior to the
exercise hereof, upon presentation and surrender to the Company, may be
exchanged for another Warrant of like tenor in the name of such holder,
exercisable for the same aggregate number of Shares of Common Stock as the
Warrant surrendered, and (b) may not be sold, transferred, hypothecated, or
assigned, except to affiliates of the Purchaser.
3. RIGHTS AND OBLIGATIONS OF WARRANT HOLDERS. The holder of this
Warrant Certificate shall not, solely by virtue hereof, be entitled to any
rights of a stockholder of the Company, either at law or in equity; provided,
however, in the event that any certificate representing shares of the Company's
Common Stock is issued to the holder hereof upon exercise of some or all of the
Warrants represented hereby, such holder shall, for all purposes, be deemed to
have become the holder of record of such stock on the date on which this Warrant
Certificate, together with a duly executed Purchase Form, was surrendered and
payment of the purchase price was made, irrespective of the date of delivery of
such share certificate. The rights of the holder of this Warrant Certificate are
limited to those expressed herein and the holder of this Warrant Certificate, by
his acceptance hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Warrant Certificate, including, without limitation,
all the obligations imposed upon the holder hereof by Section 5. In addition,
the holder of this Warrant Certificate, by accepting the same, agrees that the
Company may deem and treat the person in whose name this Warrant Certificate is
registered as the absolute, true and lawful owner for all purposes whatsoever,
and neither the Company nor the warrant agent shall be affected by any notice to
the contrary.
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4. SHARES OF COMMON STOCK ISSUED UPON EXERCISE OF THE WARRANTS. The
Company covenants and agrees that all shares of Common Stock delivered upon
exercise of this Warrant Certificate will, upon delivery, be duly and validly
authorized and issued, fully-paid and non-assessable, except as provided in
Section 630 of the New York Business Corporation Law. In addition, the Company
agrees at all times to reserve and keep available an authorized number of shares
of its Common Stock sufficient to permit the exercise in full of all outstanding
Warrants. The Company is under no obligation to register the Underlying Shares,
except pursuant to the terms of the Registration Rights Agreement (as defined
herein).
5. DISPOSITION OF WARRANTS; INVESTMENT INTENT. The holder of this
Warrant Certificate and any transferee hereof, by their acceptance hereof,
hereby agrees that no public distribution of the Warrants or the shares
underlying same (the "Underlying Shares") will be made in violation of the
provisions of the Securities Act of 1933, as amended, or the Rules and
Regulations promulgated thereunder (such Act and Rules and Regulations being
hereinafter referred to as the "Act"). The holder of this Warrant, by acceptance
hereof, represents and warrants that this Warrant and any security issuable upon
the exercise or conversion hereof, has been and will be acquired for investment
only and not with a view to, or for sale in connection with, a distribution
thereof and not with a view to their resale, and that this Warrant and any
security issuable upon conversion hereof has been and will be acquired for the
holder's own account and not with a view to their distribution among others, and
that no other person has any direct or indirect beneficial interest in this
Warrant or any security issuable upon conversion hereof. The holder of this
Warrant is an "accredited investor" as such term is defined in Rule 501 of
Regulation D, as promulgated under the Act. The holder of this Warrant and any
such transferee hereof further agrees that if any distribution of any of the
Warrants is proposed to be made by them, that such action shall be taken only
after submission to the Company of an opinion of counsel, reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed distribution will not be in violation of the Act or of applicable
state law. Furthermore, it shall be a condition to the transfer of the Warrants
that any transferee thereof deliver to the Company his or its written agreement
to accept and be bound by all of the terms and conditions of this Warrant
Certificate. Unless the Underlying Shares shall become registered under the Act,
upon the exercise of this Warrant, stock certificates evidencing shares of the
Company's Common Stock issued in exchange for this Warrant, shall bear a legend
substantially similar to the following:
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"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Act"), have been acquired for investment,
and may not be sold, pledged, hypothecated or otherwise
transferred unless a registration statement under the
Act is in effect with regard thereto or unless an
exemption from such registration is available."
6. ADJUSTMENT. Subject and pursuant to the provisions of this Section
6, the Exercise Price and number of shares of Common Stock subject to a Warrant
shall be subject to adjustment from time to time as hereinafter set forth:
(a) If the Company shall at any time subdivide its outstanding
shares of Common Stock by recapitalization, reclassification or split-up
thereof, or if the Company shall declare a stock dividend or distribute shares
of Common Stock to its shareholders, the number of shares of Common Stock
subject to this Warrant immediately prior to such subdivision shall be
proportionately increased, and if the Company shall at any time combine the
outstanding shares of common stock by recapitalization, reclassification or
combination thereof, the number of shares of Common Stock subject to each
Warrant immediately prior to such combination shall be proportionately
decreased. Any such adjustment and adjustment to the Exercise Price pursuant to
Section 6(c) shall be effective at the close of business on the effective date
of such subdivision or combination or, if any adjustment is the result of a
stock dividend or distribution, then the effective date for such adjustment
based thereon shall be the record date therefor. No such adjustment shall be
required with respect to Common Stock issued upon the exercise of any warrants
(including the Warrant), the conversion of any securities of the Company
convertible into Common Stock, or the issuance of any such warrants or
convertible securities.
(b) If the Company after the date hereof shall distribute to all
of the holders of its shares of Common Stock any securities or other assets
(other than a distribution made as a dividend payable out of earnings or out of
any earned surplus legally available for dividends under the laws of the
jurisdiction of incorporation of the Company or the payment of cash), the Board
of Directors shall be required to make such equitable adjustment in the Exercise
Price in effect immediately prior to the record date of such distribution as may
be necessary to preserve to the holder of each Warrant rights substantially
proportionate to those enjoyed hereunder by such holder immediately prior to the
happening of such distribution. Any such adjustment shall become effective as of
the day following the record date for such distribution.
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(c) Whenever the number of shares of Common Stock purchasable
upon the exercise of a Warrant is adjusted, as provided in Section 6(a), the
Exercise Price shall be adjusted (to the nearest cent) by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, (x), the
numerator, of which shall be the number of shares of Common Stock purchasable
upon the exercise of each warrant immediately prior to such adjustment, and (y),
the denominator, of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.
(d) In case of any reclassification or change of the outstanding
shares of Common Stock, other than a change covered by Section 6(a) hereof or
which solely affects the par value of such shares of Common Stock, or in the
case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in a reclassification or
capital reorganization of the outstanding shares of Common Stock), or in the
case of a voluntary or involuntary dissolution, liquidation or winding up of the
Company or any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, in connection with which
the Company is dissolved, the holder of each Warrant shall have the right
thereafter (after the commencement of and until the expiration of the right of
exercise of such warrant) to receive upon the exercise thereof, for the same
aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property receivable
upon such reclassification, capital reorganization, merger or consolidation, or
upon the voluntary or involuntary dissolution, liquidation or winding up of the
Company or the dissolution following any sale or other transfer, by a holder of
the number of shares of common stock of the Company obtainable upon exercise of
such Warrant immediately prior to such event; and if any reclassification also
results in a change in shares of Common Stock covered by Section 6(a) and this
adjustment shall be made pursuant to both Section 6(a) and this Section 8(d).
The provisions of this Section 6(d) shall similarly apply to successive
reclassifications, or capital reorganizations, mergers or consolidations, sales
or other transfers.
(e) If the Company after the date hereof shall take any action
affecting the shares of its Common Stock, other than action described in this
Section 6, which, in the opinion of the Board of Directors of the Company, would
materially affect the rights of the holder of a Warrant, the Exercise Price and
the number of shares of Common Stock obtainable upon exercise of such Warrant
shall be adjusted in such manner, if any, and at such time as the Board of
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<PAGE>
Directors of the Company, in good faith, may determine to be equitable in the
circumstances.
(f) The form of Warrant Certificate need not be changed because
of any change pursuant to this Section 6 and Warrant Certificate issued after
such change may state the same Exercise Price and the same number of shares as
is stated in the Warrant Certificates initially issued pursuant to this
Agreement. However, the Company may, at any time in its sole discretion (which
shall be conclusive), make any change in the form of Warrant Certificate that
the Company may deem appropriate and that does not affect the substance thereof;
and any Warrant Certificate thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant Certificate or otherwise,
may be in the form as so changed.
(g) Notwithstanding any provision contained herein to the
contrary, unless otherwise determined by the Company's Board of Directors, none
of the adjustments provided for herein shall be made until the cumulative
adjustments in the Exercise Price amount to $.05 or more.
7. SURVIVAL. The various rights and obligations of the holder hereof
and of the Company as set forth in Section 5 hereof shall survive the exercise
of the Warrants represented hereby and the surrender of this Warrant
Certificate, and upon the surrender of this Warrant Certificate and the exercise
of all of the Warrants represented hereby, the Company shall, if requested,
deliver to the holder hereof its written acknowledgement of its continuing
obligations under said Section.
8. NOTICE. All notices required by this Warrant Certificate to be
given or made by the Company shall be given or made by first class mail, postage
prepaid, addressed to the registered holder hereof at the address of such holder
as shown on the books of the Company.
9. LOSS OR DESTRUCTION. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of this Warrant Certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant Certificate of like tenor.
10. REDEMPTION. The Warrants represented by this Warrant Certificate
are subject to redemption by the Company at $.05 per Warrant on thirty (30)
days' prior written notice if the closing bid price of the Company's Common
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<PAGE>
Stock, as reported on the National Association of Securities Dealers Automated
Quotation System for fifteen (15) consecutive trading days, ending within
fifteen (15) days of the notice of redemption of the Warrants, is in excess of
$9.00 per share. The Company shall promptly notify VIACOM of such redemption by
mailing notice of the redemption to VIACOM. In the event that the Company
exercises the right to redeem the Warrants, such Warrants will be exercisable
until the close of business on the date set for redemption (the "Redemption
Date") fixed in such notice. If any Warrant called for redemption is not
exercised by the Redemption Date, it will cease to be exercisable and VIACOM
will be entitled only to the redemption price of $.05 per Warrant, without
interest, and the right to receive the redemption price of $.05 per Warrant
shall itself expire one (1) year from the Redemption Date.
11. REGISTRATION RIGHTS. The Underlying Shares shall be entitled to
registration under the Act, pursuant to the terms of that certain Registration
Rights Agreement of even date herewith between the Company and VIACOM.
BYRON PREISS MULTIMEDIA COMPANY, INC.
By: /s/ Byron Preiss
--------------------------------------
BYRON PREISS
Title: President
A T T E S T :
By: /s/ James Dellomo
---------------------
James Dellomo
Chief Financial Officer
48
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PURCHASE FORM
-------------------, 1995
TO: BYRON PREISS MULTIMEDIA COMPANY, INC.
The undersigned hereby irrevocably elects to exercise the attached Warrant
to the extent of ----------- shares of the Common Stock of Byron Preiss
Multimedia Company, Inc., and hereby makes payment of $------------ in payment
of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
(Please typewrite or print in block letters)
Address:
VIACOM INTERNATIONAL INC.
By:
Exhibit 99.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SUCH MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THIS
WARRANT OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933, AS AMENDED.
BYRON PREISS MULTIMEDIA COMPANY, INC.
WARRANT AGREEMENT AND CERTIFICATE
Dated: March 22, 1995
Warrants to Purchase Shares of Common Stock
VOID AFTER 5:00 P.M., NEW YORK LOCAL TIME
May 11, 1999
Holder: VIACOM INTERNATIONAL INC.
1515 Broadway
New York, New York 10036
FOR VALUE RECEIVED, BYRON PREISS MULTIMEDIA COMPANY, INC., a New York
corporation, (hereinafter referred to as the "Company") hereby certifies that
VIACOM INTERNATIONAL INC. (hereinafter referred to as "VIACOM"), its successors
and assigns, for value received, are entitled to purchase from the Company at
any time after March 22, 1995 and before 5:00 P.M. New York local time on May
11, 1999, Warrants (hereinafter referred to as the "Warrants") of the Company
(the number and character of such Warrants being subject to adjustment as
provided herein), to purchase such number of shares of Common Stock, par value
$.001 per share, of the Company, at the purchase price of $7.00 per share of
Common Stock purchased (hereinafter referred to as the "Exercise Price"), equal
to twenty percent (20%) of the number of shares of Common Stock issued by the
Company (i) pursuant to the Plan (as defined herein), or (ii) other options
issued by the Company outside of the Plan. This Warrant is issued pursuant to
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Section 1.01 (iii) of that certain Stock Purchase Agreement dated as of March
22, 1995, between the Company and Viacom.
1. EXERCISE OF WARRANTS. The purpose of the Warrants is to enable
Viacom to maintain its percentage ownership in the Company, in the event that
options are issued and exercised under (i) the Company's 1993 Stock Option Plan,
as such plan may be amended from time to time (the "Plan") or (ii) outside the
Plan. Upon the issuance of any shares pursuant to options granted under the Plan
or otherwise (the "Exercised Shares"), Viacom shall be entitled to exercise
Warrants representing twenty percent (20%) of the Exercised Shares. Upon
presentation and surrender of this Warrant Agreement and Certificate (the
"Warrant Certificate"), with the attached Purchase Form duly executed, at the
principal office of the Company at 24 West 25th Street, New York, New York
10010, together with a certified or bank cashier's check payable to the Company
in the amount of the Exercise Price, multiplied by the number of shares of the
Company's Common Stock being purchased (the "Shares"), the Company shall deliver
to the holder hereof, as promptly as practicable, certificates representing the
Shares being purchased. This Warrant may be exercised in whole or in part; and,
in case of exercise hereof in part only, the Company, upon surrender hereof,
will deliver to the holder a new Warrant Certificate or Warrant Certificates of
like tenor entitling said holder to purchase the number of Warrants as to which
this Warrant Certificate has not been exercised.
2. EXCHANGE AND TRANSFER. This Warrant, (a) at any time prior to the
exercise hereof, upon presentation and surrender to the Company, may be
exchanged for another Warrant of like tenor in the name of such holder,
exercisable for the same aggregate number of Shares of Common Stock as the
Warrant surrendered, and (b) may not be sold, transferred, hypothecated, or
assigned except to affiliates of the Purchaser.
3. RIGHTS AND OBLIGATIONS OF WARRANT HOLDERS. The holder of this
Warrant Certificate shall not, solely by virtue hereof, be entitled to any
rights of a stockholder of the Company, either at law or in equity; provided,
however, in the event that any certificate representing shares of the Company's
Common Stock is issued to the holder hereof upon exercise of some or all of the
Warrants represented hereby, such holder shall, for all purposes, be deemed to
have become the holder of record of such stock on the date on which this Warrant
Certificate, together with a duly executed Purchase Form, was surrendered and
payment of the purchase price was made, irrespective of the date of delivery of
such share certificate. The rights of the holder of this Warrant Certificate are
limited to those expressed herein and the holder of this Warrant Certificate, by
his acceptance hereof, consents to and agrees to be bound by and to comply with
all the provisions of this Warrant Certificate, including, without limitation,
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<PAGE>
all the obligations imposed upon the holder hereof by Section 5. In addition,
the holder of this Warrant Certificate, by accepting the same, agrees that the
Company may deem and treat the person in whose name this Warrant Certificate is
registered as the absolute, true and lawful owner for all purposes whatsoever,
and neither the Company nor the warrant agent shall be affected by any notice to
the contrary.
4. SHARES OF COMMON STOCK ISSUED UPON EXERCISE OF THE WARRANTS. The
Company covenants and agrees that all shares of Common Stock delivered upon
exercise of this Warrant Certificate will, upon delivery, be duly and validly
authorized and issued, fully-paid and non-assessable, except as provided in
Section 630 of the New York Business Corporation Law. In addition, the Company
agrees at all times to reserve and keep available an authorized number of shares
of its Common Stock sufficient to permit the exercise in full of all outstanding
Warrants. The Company is under no obligation to register the Underlying Shares,
except pursuant to the terms of the Registration Rights Agreement (as defined
herein).
5. DISPOSITION OF WARRANTS; INVESTMENT INTENT. The holder of this
Warrant Certificate and any transferee hereof, by their acceptance hereof,
hereby agrees that no public distribution of the Warrants or the shares
underlying same (the "Underlying Shares") will be made in violation of the
provisions of the Securities Act of 1933, as amended, or the Rules and
Regulations promulgated thereunder (such Act and Rules and Regulations being
hereinafter referred to as the "Act"). The holder of this Warrant, by acceptance
hereof, represents and warrants that this Warrant and any security issuable upon
the exercise or conversion hereof, has been and will be acquired for investment
only and not with a view to, or for sale in connection with, a distribution
thereof and not with a view to their resale, and that this Warrant and any
security issuable upon conversion hereof has been and will be acquired for the
holder's own account and not with a view to their distribution among others, and
that no other person has any direct or indirect beneficial interest in this
Warrant or any security issuable upon conversion hereof. The holder of this
Warrant is an "accredited investor" as such term is defined in Rule 501 of
Regulation D, as promulgated under the Act. The holder of this Warrant and any
such transferee hereof further agrees that if any distribution of any of the
Warrants is proposed to be made by them, that such action shall be taken only
after submission to the Company of an opinion of counsel, reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed distribution will not be in violation of the Act or of applicable
state law. Furthermore, it shall be a condition to the transfer of the Warrants
that any transferee thereof deliver to the Company his or its written agreement
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<PAGE>
to accept and be bound by all of the terms and conditions of this Warrant
Certificate. Unless the Underlying Shares shall become registered under the Act,
upon the exercise of this Warrant, stock certificates evidencing shares of the
Company's Common Stock issued in exchange for this Warrant, shall bear a legend
substantially similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), have been acquired for investment, and may not be
sold, pledged, hypothecated or otherwise transferred unless a
registration statement under the Act is in effect with regard
thereto or unless an exemption from such registration is
available."
6. ADJUSTMENT. Subject and pursuant to the provisions of this Section
6, the Exercise Price and number of shares of Common Stock subject to a Warrant
shall be subject to adjustment from time to time as hereinafter set forth:
(a) If the Company shall at any time subdivide its outstanding
shares of Common Stock by recapitalization, reclassification or split-up
thereof, or if the Company shall declare a stock dividend or distribute shares
of Common Stock to its shareholders, the number of shares of Common Stock
subject to this Warrant immediately prior to such subdivision shall be
proportionately increased, and if the Company shall at any time combine the
outstanding shares of common stock by recapitalization, reclassification or
combination thereof, the number of shares of Common Stock subject to each
Warrant immediately prior to such combination shall be proportionately
decreased. Any such adjustment and adjustment to the Exercise Price pursuant to
Section 6(c) shall be effective at the close of business on the effective date
of such subdivision or combination or, if any adjustment is the result of a
stock dividend or distribution, then the effective date for such adjustment
based thereon shall be the record date therefor. No such adjustment shall be
required with respect to Common Stock issued upon the exercise of any warrants
(including the Warrant), the conversion of any securities of the Company
convertible into Common Stock, or the issuance of any such warrants or
convertible securities.
(b) If the Company after the date hereof shall distribute to all
of the holders of its shares of Common Stock any securities or other assets
(other than a distribution made as a dividend payable out of earnings or out of
any earned surplus legally available for dividends under the laws of the
jurisdiction of incorporation of the Company or the payment of cash), the Board
of Directors shall be required to make such equitable adjustment in the Exercise
Price in effect immediately prior to the record date of such distribution as may
be necessary to preserve to the holder of each Warrant rights substantially
proportionate to those enjoyed hereunder by such holder immediately prior to the
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<PAGE>
happening of such distribution. Any such adjustment shall become effective as of
the day following the record date for such distribution.
(c) Whenever the number of shares of Common Stock purchasable
upon the exercise of a Warrant is adjusted, as provided in Section 6(a), the
Exercise Price shall be adjusted (to the nearest cent) by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, (x), the
numerator, of which shall be the number of shares of Common Stock purchasable
upon the exercise of each warrant immediately prior to such adjustment, and (y),
the denominator, of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.
(d) In case of any reclassification or change of the outstanding
shares of Common Stock, other than a change covered by Section 6(a) hereof or
which solely affects the par value of such shares of Common Stock, or in the
case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in a reclassification or
capital reorganization of the outstanding shares of Common Stock), or in the
case of a voluntary or involuntary dissolution, liquidation or winding up of the
Company or any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, in connection with which
the Company is dissolved, the holder of each Warrant shall have the right
thereafter (after the commencement of and until the expiration of the right of
exercise of such warrant) to receive upon the exercise thereof, for the same
aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property receivable
upon such reclassification, capital reorganization, merger or consolidation, or
upon the voluntary or involuntary dissolution, liquidation or winding up of the
Company or the dissolution following any sale or other transfer, by a holder of
the number of shares of common stock of the Company obtainable upon exercise of
such Warrant immediately prior to such event; and if any reclassification also
results in a change in shares of Common Stock covered by Section 6(a) and this
adjustment shall be made pursuant to both Section 6(a) and this Section 8(d).
The provisions of this Section 6(d) shall similarly apply to successive
reclassifications, or capital reorganizations, mergers or consolidations, sales
or other transfers.
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(e) If the Company after the date hereof shall take any action
affecting the shares of its Common Stock, other than action described in this
Section 6, which, in the opinion of the Board of Directors of the Company, would
materially affect the rights of the holder of a Warrant, the Exercise Price and
the number of shares of Common Stock obtainable upon exercise of such Warrant
shall be adjusted in such manner, if any, and at such time as the Board of
Directors of the Company, in good faith, may determine to be equitable in the
circumstances.
(f) The form of Warrant Certificate need not be changed because
of any change pursuant to this Section 6 and Warrant Certificate issued after
such change may state the same Exercise Price and the same number of shares as
is stated in the Warrant Certificates initially issued pursuant to this
Agreement. However, the Company may, at any time in its sole discretion (which
shall be conclusive), make any change in the form of Warrant Certificate that
the Company may deem appropriate and that does not affect the substance thereof;
and any Warrant Certificate thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant Certificate or otherwise,
may be in the form as so changed.
(g) Notwithstanding any provision contained herein to the
contrary, unless otherwise determined by the Company's Board of Directors, none
of the adjustments provided for herein shall be made until the cumulative
adjustments in the Exercise Price amount to $.05 or more.
7. SURVIVAL. The various rights and obligations of the holder hereof
and of the Company as set forth in Section 5 hereof shall survive the exercise
of the Warrants represented hereby and the surrender of this Warrant
Certificate, and upon the surrender of this Warrant Certificate and the exercise
of all of the Warrants represented hereby, the Company shall, if requested,
deliver to the holder hereof its written acknowledgement of its continuing
obligations under said Section.
8. NOTICE. All notices required by this Warrant Certificate to be
given or made by the Company shall be given or made by first class mail, postage
prepaid, addressed to the registered holder hereof at the address of such holder
as shown on the books of the Company.
9. LOSS OR DESTRUCTION. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
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of this Warrant Certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant Certificate of like tenor.
10. REGISTRATION RIGHTS. The Underlying Shares shall be entitled to
registration under the Act, pursuant to the terms of that certain Registration
Rights Agreement of even date herewith between the Company and Viacom.
BYRON PREISS MULTIMEDIA COMPANY, INC.
By: /s/ Byron Preiss
---------------------------------------
BYRON PREISS
Title: President
A T T E S T :
By: /s/ James Dellomo
-------------------------
James Dellomo
Chief Financial Officer
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PURCHASE FORM
------------------------, 1995
TO: BYRON PREISS MULTIMEDIA COMPANY, INC.
The undersigned hereby irrevocably elects to exercise the attached
Warrant to the extent of---------- shares of the Common Stock of Byron Preiss
Multimedia Company, Inc., and hereby makes payment of $------------- in payment
of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
(Please typewrite or print in block letters)
Address:
VIACOM INTERNATIONAL INC.
By:
Exhibit 99.4
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT (the "Agreement"), dated as of March 22, 1995,
by and among Byron Preiss ("Preiss"), Martin L. Berman, Phyllis Berman, Steven
C. Berman, Alison A. Berman Lifetime Income Trust, Mark K. Berman Lifetime
Income Trust and Martin L. Berman Foundation (the "Berman Group"), and Viacom
International Inc. ("Viacom"), a New York corporation (Preiss, the Berman Group
(and the individuals comprising the Berman Group) and Viacom being sometimes
referred to herein individually as a "Shareholder" and collectively as the
"Shareholders").
W I T N E S S E T H :
WHEREAS, pursuant to the terms and conditions set forth in that
certain Stock Purchase Agreement of even date herewith by and among Byron Preiss
Multimedia Company, Inc., a New York corporation (the "Company") and Viacom (the
"Stock Purchase Agreement"), the Company has sold, issued and delivered to
Viacom and Viacom has purchased, 852,375 shares of Common Stock, which upon
issuance equaled twenty percent (20%) of the Company's then issued and
outstanding common stock, par value $.001 per share, (the "Common Stock"), on a
fully-diluted basis; and
WHEREAS, the Shareholders are individually the owners of such number
of the Company's issued and outstanding shares of Common Stock, as set forth in
Schedule 1 hereto (the "Shares"); and
WHEREAS, the Company has granted (i) a warrant to VIACOM to purchase
315,000 shares of the Common Stock (the "Warrant") under certain circumstances,
pursuant to the terms and conditions set forth in that certain Warrant Agreement
and Certificate of even date herewith, by and among the Company and Viacom (the
"Warrant Certificate") and (ii) a warrant to Viacom to purchase additional
shares of the Common Stock upon the exercise of stock options pursuant to the
Company's 1993 Stock Option Plan, as such plan may be amended from time to time
(the "Plan") or (ii) outside of the Plan (the "Additional Warrant"), pursuant to
the terms and conditions set forth in the Additional Warrant; and
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WHEREAS, the parties hereto believe that it is in the best interests
of the Company and the Shareholders of the Company that provision be made for
the stability and continuity of the ownership of the Shares on the terms set
forth herein; and
WHEREAS, the parties hereto wish to memorialize certain agreements
reached among them with respect to the composition of the Company's Board of
Directors and the taking of certain actions by the Board of Directors of the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Rights of First Refusal with Respect to the Shares.
(a) If Viacom has received a bona fide third-party offer to
purchase (a "Third-Party Offer") all or some of its Shares and desires to accept
such a Third-Party Offer, Viacom shall first make an offer (the "Offer") to sell
such Shares (the "Offered Shares") to Preiss and the Berman Group (Preiss and
the Berman Group being collectively referred to herein as the "Group"). Such
Offer shall be upon the same terms and conditions as the Third-Party Offer.
Viacom shall send written notice of the Offer (the "Notice") to the Group (as
set forth in Section 10.1 hereof), which shall state the number of Offered
Shares, the terms and conditions of the Offer and the name of the prospective
purchaser (the "Third-Party Offeror"), together with a copy of all written
communications between such party and Viacom necessary to establish the terms of
the Third-Party Offer. The Notice shall propose the offer price (which price
shall be no higher than such bona-fide Third-Party Offer) payable in the same
manner as the Third-Party Offer and shall contain evidence as to the financial
ability of the Third-Party Offeror to consummate the proposed purchase.
The Group shall have the right to purchase all, but not less
than all, of the Offered Shares specified in the Notice at a purchase price
equal to the offering price stated in the Notice, which right shall be
exercisable by endorsement of the Notice and the delivery of the endorsed Notice
to Viacom within fifteen (15) days after receipt of the Notice. If two or more
members of the Group exercise the right to purchase all of the Offered Shares
specified in the Notice, unless otherwise mutually agreed upon, each member of
the Group shall purchase the Offered Shares in proportion to his or its
respective Pro Rata Amount (as hereinafter defined) divided by the aggregate Pro
Rata Amount of all of the other members of the Group exercising their rights
pursuant to the
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Offer. A member of the Group may endorse on the Notice his desire to purchase
more than his proportionate share of the Offered Shares specified in the Notice
should such additional Offered Shares be available for sale by Viacom after
having been offered to the other members of the Group as provided herein. If the
Group fails to respond to Viacom within the fifteen (15)-day notice period in a
manner which indicates that the members of the Group will purchase all of the
Offered Shares subject to the Notice, such failure shall be regarded as a
rejection of the Offer by all of the members of the Group.
Unless the Group elects to purchase all of the Offered
Shares, Viacom may sell all of the Offered Shares, but not less than all, to the
Third-Party Offeror on the terms and conditions of the Third-Party Offer,
provided that such sale is bona fide and made within ninety (90) days from the
expiration of the notice period pursuant to the Notice. If such sale is not
consummated within such ninety (90)-day period, the restrictions provided for
herein shall again become effective, and no sale, transfer, or assignment of
such Shares may be made thereafter without again offering the same to the
Company and the Group in accordance with this Agreement.
(b) If a member of the Group has received a Third-Party Offer to
purchase its Shares and the member of the Group desires to accept such a
Third-Party Offer, the offering Group member (an Offering Group Member") shall
first make an Offer to sell such Shares (the "Group Offered Shares") to Viacom.
Such Offer shall be upon the same terms and conditions as the Third-Party Offer.
The Offering Group Member shall send Notice of the Offer to Viacom together with
a copy of all written communications between such party and the Offering Group
Member necessary to establish the terms of the Third-Party Offer. The Notice
shall propose the offer price (which price shall be no higher than such
bona-fide Third-Party Offer) payable in the same manner as the Third-Party Offer
and shall contain evidence as to the financial ability of the Third-Party
Offeror to consummate the proposed purchase.
Viacom shall have the right to purchase all, but not less
than all, of the Group Offered Shares (from such Offering Group Member)
specified in the Notice at a purchase price equal to the offering price stated
in the Notice, which right shall be exercisable by endorsement of the Notice and
the delivery of the endorsed Notice to the Offering Group Member within fifteen
(15) days after receipt of the Notice. If Viacom fails to respond to the
Offering Group Member within the fifteen (15)-day notice period in a manner
which indicates that Viacom will purchase all of the Offered Shares subject to
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the Notice, such failure shall be regarded as a rejection of the Offer by
Viacom.
Unless Viacom elects to purchase all of the Group Offered
Shares, the Offering Group Member may sell all of the Group Offered Shares, but
not less than all, to the Third-Party Offeror on the terms and conditions of the
Third-Party Offer, provided that such sale is bona fide and made within ninety
(90) days from the expiration of the notice period pursuant to the Notice. If
such sale is not consummated within such ninety (90)-day period, the
restrictions provided for herein shall again become effective, and no sale,
transfer, or assignment of such Shares may be made thereafter without again
offering the same to the Company and Viacom in accordance with this Agreement.
Notwithstanding anything to the contrary contained in this
Section 1, the provisions of this Section 1 shall not apply to any transfer of
the Shares to family members or affiliates (as such term is defined in the
regulations promulgated under the Securities Exchange Act of 1934, as amended)
of the Stockholders, as appropriate, or to transfers of Shares made by the
Shareholders as gifts or charitable contributions provided, however, that the
transferees of any such transfers shall agree to be subject to the terms of this
Agreement including, but not limited to, the right of first refusal contained
herein.
(c) If an Involuntary Transfer (as hereinafter defined) of any of
the Shares owned by any of the Shareholders shall occur, the Company and the
other Shareholders shall have the same rights of first refusal with respect
thereto (the "Transferred Shares") as if the involuntary transfer had been a
proposed voluntary transfer by such Shareholder, governed by this Section 1,
except that: (i) the periods within which such rights must be exercised shall
run from the date upon which notice of the Involuntary Transfer is received,
(ii) such rights shall be exercised by notice to the involuntary transferee
rather than the Shareholder who suffered the Involuntary Transfer, and (iii) the
purchase price per share of the Transferred Shares shall be the "fair market
value" as determined by the average of the closing bid price for the Company's
shares of Common Stock as quoted on the NASDAQ (or such other exchange on which
the Company's shares are then traded) for a period of twenty (20) consecutive
trading days. In the event that the Company's shares are not being traded on
NASDAQ or some other exchange at the time of the Involuntary Transfer, "fair
market value" shall be determined by an investment banking firm that is
reasonably satisfactory to both the involuntary transferee and the Shareholders
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making such purchase and which is willing and able to complete the valuation
within forty-five (45) days of being retained to do so. If the involuntary
transferee and such Shareholders shall not agree upon the selection of an
investment banking firm within twenty (20) days after such Shareholders give
written notice hereunder to the involuntary transferee, the Company's regularly
engaged independent auditors shall select an investment banking firm for such
purpose. The determination of the purchase price per share by an investment
banking firm hereunder shall be final and binding upon all parties hereto and
the involuntary transferee. The fees of such investment banking firm shall be
paid by the Shareholders making any such purchases hereunder. The closing of any
purchase under this Section 1(c) shall be held at the principal office of the
Company at 11:00 A.M. local time on the forty-fifth (45th) day after the date on
which the "fair market value" is determined or at such other time and place as
the parties to the transaction may mutually agree upon. At such closing, the
involuntary transferee shall deliver certificates representing the Transferred
Shares being purchased by the Other Shareholders duly endorsed for transfer and
accompanied by all requisite stock transfer taxes, and such Shares shall be free
and clear of any liens, claims, options, charges, encumbrances or rights of
others arising through the action or inaction of the involuntary transferee and
the involuntary transferee shall so represent and warrant, and further represent
and warrant that he is the beneficial owner of such Shares. The Shareholders
making such purchase shall deliver at closing, by official bank check, payment
in full for such Shares. At such closing, all parties to the transaction shall
execute such additional documents as are otherwise appropriate.
In the event that the provisions of this Section 1(c) shall
be held to be unenforceable with respect to any particular Involuntary Transfer
of Shares, the other Shareholders shall have a right of first refusal if the
involuntary transferee subsequently obtains a bona fide offer for and desires to
transfer such Shares, in which event the involuntary transferee shall be deemed
to be an "Offering Shareholder" or "Group Offering Member", under Sections 1(a)
and 1(b) above, respectively, and shall be bound by the other provisions of
those Sections and the related provisions of this Agreement.
(d) As used herein, the following terms shall be defined as
follows:
(i) "Involuntary Transfer" shall mean any transfer,
proceeding or action (i) other than a transfer permitted under or pursuant to
the provisions of Sections 1(a) or 1(b) herein, (ii) in which a Shareholder
shall be deprived or divested of any right, title or interest in or to any of
the Shares, including, without limitation, any seizure under levy of attachment
or execution, any transfer in connection with bankruptcy (whether pursuant to
the filing of a voluntary or involuntary petition under the Federal Bankruptcy
Code of 1986, or any modifications or revisions thereto) or other court
proceeding to a debtor in possession, trustee in bankruptcy or receiver or other
officer or agency, any transfer to a state or to a public officer or agency
pursuant to any statute pertaining to escheat or abandoned property, any
transfer pursuant to a separation or divorce agreement or a final decree of a
court in a divorce action, any transfer upon or occasioned by the incompetence
of any Shareholder, or any transfer to a legal representative of any
Shareholder, or (iii) the transfer of a controlling interest of any Shareholder
that is a corporation or partnership, with the exception of transfers to an
affiliate (as the term "affiliate" is defined in the regulations promulgated
under the Securities Exchange Act of 1934, as amended) of such Shareholder.
(ii) The "Pro Rata Amount" of any Shareholder, for purposes
of this Agreement, shall mean the percentage arrived at by dividing (i) the
number of Shares then owned by that Shareholder by (ii) the aggregate number of
Shares then owned by all Shareholders.
2. Board of Directors; Meetings.
(a) The Company and the Shareholders agree that the Board of
Directors of the Company shall be increased to five (5) directors. The Board of
Directors of the Company will hold a special meeting on or shortly after the
date hereof, at which meeting the Board shall increase the number of its members
provided, however, that as an alternative, the foregoing may be effectuated by
the unanimous consent of the Board of Directors.
(b) The Board of Directors of the Company shall initially consist
of Byron Preiss, James Dellomo, Matthew Shapiro, Robert Oehler and a nominee
selected by Viacom. The Shareholders of the Company shall vote their Shares to
elect the foregoing persons (or their nominees) as directors of the Corporation,
pursuant to the terms of this Agreement.
(c) The Company and the Shareholders agree that Viacom's
representation on the Board of Directors of the Company shall be proportional to
Viacom 's percentage ownership of the aggregate issued and outstanding Common
Stock of the Company, on a fully diluted basis. Notwithstanding the foregoing,
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the Company and the Shareholders shall use their respective best efforts so that
Viacom shall continue to be represented on the Board by at least one (1)
individual nominated by it, so long as Viacom maintains ownership of a minimum
of ten percent (10%) of the Common Stock of the Company.
(d) The Company and the Shareholders agree that they shall take
all necessary action to provide for the increase in the number of directors to
five (5) and to enforce their obligations under Section 2(c) including, but not
by way of limitation, amending the By-laws of the Company, to the extent
required.
(e) The Shareholders shall use their best efforts to cause the
Board of Directors to meet at least four times per calendar year, at least sixty
(60) days apart. All normal travel and out-of-pocket expenses incurred in
connection with attending such meetings and any special meetings called by the
Company, shall be paid by the Company.
(f) The Company shall not become a party to any agreement which
by its terms restricts the Company's performance of this Agreement.
3. Reservations of Shares
(a) The parties to this Agreement hereby agree that they shall
procure that a sufficient number of authorized, but unissued, shares of the
Company's Common Stock are reserved for the purposes of the subsequent issuance
of Common Stock by the Company to Viacom in the event Viacom shall exercise its
right to require the Company to issue such shares of its Common Stock pursuant
to the Warrant Certificate.
4. Legends.
Each certificate representing the Shares now held or hereafter
acquired by any Shareholder shall, for as long as this Agreement is effective,
bear a legend in substantially the following form:
"THIS CERTIFICATE IS ISSUED SUBJECT TO THE PROVISIONS
OF A SHAREHOLDERS' AGREEMENT DATED AS OF MARCH __,
1995 AND NEITHER THIS CERTIFICATE NOR THE SHARES
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE
TRANSFERABLE, EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY."
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Each certificate representing the Shares now held or hereafter
acquired by any Shareholder shall, until such Shares are registered under the
Securities Act of 1933, as amended, bear a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), HAVE BEEN ACQUIRED FOR
INVESTMENT, AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT
WITH REGARD THERETO OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
5. Insurance.
For so long as Viacom shall be a Shareholder of the Company, the
Company shall use its best efforts to maintain a term life insurance policy (of
which the Company shall be named the sole beneficiary) insuring the life of
Preiss in an amount of not less than Two Million Nine Hundred and Fifty Thousand
Dollars ($2,950,000.00).
6. Confidentiality.
Each Shareholder agrees that he will not, at any time after the
date hereof, directly or indirectly, use or disclose to any person, firm or
corporation, confidential information, trade secrets, confidential customer
information, technical data or know-how relating to the products, processes,
methods, equipment or business practices of the Company acquired by such
Shareholder at any time prior to or after the date hereof. The provisions of
this Section 7 shall not apply to information which is or becomes generally
available to the public or the multimedia industry other than as a result of
wrongful acts of the non-disclosing party, (b) is in the possession of the
non-disclosing party or its Agents prior to such disclosure, (c) is disclosed to
the non-disclosing party or its Agents on a non-confidential basis by a person
other than the disclosing party or its Agents that, to the non-disclosing
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party's knowledge, is not restricted from disclosing such information to the
non-disclosing party by any contractual, fiduciary or other legal obligation or
(d) is developed by the non-disclosing party without the benefit of the
confidential information) except, that the parties may disclose such information
(x) as required by law or securities market rule or regulation or (y) in
connection with legal proceedings relating to or arising out of the transactions
contemplated hereby. In the event a party is required by clauses (x) and (y) of
the preceding sentence to disclose any confidential information of the
disclosing party such non-disclosing party will (i) promptly notify the
disclosing party of the existence, terms and circumstances surrounding such a
request, (ii) consult with the disclosing party on the advisability of taking
legally available steps to resist or narrow such requests, and (iii) if
disclosure of such information is required, furnish only such portion of the
information as it is legally compelled to disclose and exercise its reasonable
best efforts to obtain, at the disclosing party's expense, an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information that the disclosing party may designate. In
addition, during the period in which this Agreement remains in effect, each
Shareholder hereby agrees and covenants that neither it nor any other entity
operated directly or indirectly as part of its publishing or media operations
will, during the term hereof and for a period of eighteen (18) months from the
date of termination of this Agreement, solicit, hire or retain any employee or
officer of the Company or any affiliate of the Company.
7. Incidental "Piggy-Back" Registration.
In consideration of Preiss and the Berman Group granting to
VIACOM the right of first refusal to purchase the Shares of the Company owned by
Preiss and the Berman Group and other good and valuable consideration, the
Company is granting to Preiss and the Berman Group the Registration Rights set
forth herein.
(a) Right to Include Securities of Preiss and the Berman
Group. If at any time the Company proposes to register any of its equity
securities under the Securities Act of 1933, as amended (the "Securities Act")
(other than a registration on Form S-4 or Form S-8), whether or not for sale for
its own account, it will each such time give at least ten (10) days prior
written notice to Preiss and the Berman Group (the "Holders") of its intention
to do so and of such Holders' rights under this Section 7. Upon the written
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request of any such Holder made within twenty (20) days after the receipt of any
such notice (which request shall specify the Shares intended to be disposed of
by such Holder and the intended method of disposition thereof), the Company will
use its best efforts to effect the registration under the Securities Act of all
Shares of the Holders (on a pro-rata basis with the other equity securities
which the Company is seeking to register pursuant to such incidental
registration) which the Company has been so requested to register by the Holders
thereof (the "Securities"), to the extent requisite to permit the disposition
(in accordance with such intended methods thereof) of the Securities so to be
registered; provided, that if, at any time after giving written notice of its
intention to register any Securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register such Securities, the Company may,
at its election, give written notice of such determination to each Holder of the
Securities and, thereupon, shall be relieved of its obligation to register any
Securities in connection with such registration. Notwithstanding the foregoing,
however, during the period commencing on the date hereof and ending on the date
which is the anniversary of the thirtieth (30th) month from the date hereof,
that Preiss and the Berman Group shall be entitled, pro rata, to a priority in
registering the shares of the Company's Common Stock owned by them, in any
registration statement in which Viacom has exercised its incidental registration
rights, subject to the restrictions set forth in Section 7(b) below. The Company
will pay all Registration Expenses (as defined in the Registration Rights
Agreement of even date herewith by and between the Company and Viacom(the
"Registration Rights Agreement")) in connection with each registration of
Securities requested pursuant to this Section 7.
(b) Priority In Incidental Registrations. If a registration
pursuant to this Section 7 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
Securities requested to be included in such registration exceeds the number
which would have an adverse effect on such offering, including the price at
which such Securities can be sold, the Company will include in such registration
the maximum number of Securities which it is so advised can be sold without such
an adverse effect, allocated as follows:
(A) First, all securities proposed to be
registered by the Company for its own account or
Securities proposed to be registered by Preiss or the
Berman Group (up through the thirtieth (30th) month
from the date hereof), and
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(B) Second, all securities requested to be
included in such registration, any other securities
proposed to be registered by the Company other than
for its own account and other than for the benefit of
Preiss or the Berman Group (except to the extent that
any securities requested to be registered by the
Company, Preiss or the Berman Group pursuant to
paragraph "First" above could not be registered) (if
necessary, allocated pro rata among all such
requesting Holders on the basis of the relative
number of shares of securities each such Holder has
requested to be included in such registration).
8. Registration Procedures.
8.1 Whenever the Company effects or causes the registration of
the Securities of Preiss and the Berman Group under the Securities Act as
provided in this Agreement, the Company will use its best efforts to permit the
sale of such Securities in accordance with the intended method or methods of
distribution thereof, and will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission (the "SEC") a registration statement with respect to such Securities
and use its best efforts to cause such registration statement to become
effective, provided, however, that the Company may discontinue any registration
of its securities which is being effected, at any time prior to the effective
date of the registration statement relating thereto;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period not in excess of two years from the effective date thereof and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Holders set forth in
such registration statement;
(c) furnish to the Holders such number of executed and
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits and all documents
incorporated by reference therein), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
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and supplemental prospectus), and such other documents as the Holders may
reasonably request in order to facilitate the disposition of the Securities by
Preiss and the Berman Group;
(d) use its best efforts to register or qualify (and keep
effective such registration or qualification) such Securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions within the United States as may be reasonably required to permit
the Holders to sell the Securities or as the Holders shall reasonably request,
and do any and all other acts and things which may be reasonably necessary or
advisable to enable the Holders to consummate the disposition in such
jurisdictions of the Securities; provided, that, the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
subsection (d), it would not be obligated to be so qualified, to subject itself
to taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction; provided, further, that this subsection (d)
shall not be construed to require the Company to register as a broker-dealer in
any jurisdiction any third person to whom or through whom a Holder proposes to
sell the Securities;
(e) immediately notify the Holders, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the Company becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and at the request of the Holders promptly prepare
and furnish to such Holders a reasonable number of copies of an amended or
supplemented prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, beginning with the first month after the
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effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(g) use its best efforts to list such Securities on the
NASDAQ or any securities exchange on which securities of such class are then
listed, if such Securities are not already so listed, and to provide a transfer
agent and registrar for such Securities covered by such registration statement
not later than the effective date of such registration statement;
(h) enter into such agreements (including an underwriting
agreement in customary form) and take such other actions as the Holders
reasonably request in order to expedite or facilitate the disposition of the
Securities;
(i) whether or not the registration related to an
underwritten offering, make such representations and warranties to the Holders
and to the underwriters, if any, as are customarily made by issuers to
underwriters in underwritten offerings, obtain opinions of counsel to the
Company addressed to each Holder and to the underwriters, if any, covering the
matters customarily covered in underwritten offerings, and obtain a "cold
comfort" letter or letters and updated thereof from the Company's independent
public accountants in customary form and covering matters of the type
customarily covered in underwritten offerings, in each case as the underwriters
or the Holders shall reasonably request; and
(j) make available for inspection (at reasonable times and
upon reasonable notice) by the Holders, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any
attorney, accountant, or other agent retained by the Holders or any such
underwriter, all pertinent financial and other records pertinent corporate
documents of the Company, and cause all of the Company's executive officers and
directors to supply all information reasonably requested by the Holders,
underwriter, attorney, accountant or agent in connection with such registration
statement.
8.2 The Company may require the Holders to furnish the Company
such information regarding the Holders and the distribution of such securities
for use in the registration statement relating to such registration as the
Company may from time to time reasonably request in writing and to do such
reasonable acts and things as the Company may from time to time reasonably
request in order to permit the Company to comply with the requirements of law.
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8.3 Each Holder of the Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in subsection (e) of Section 8.1, such Holder will forthwith discontinue
disposition of Securities pursuant to the registration statement covering such
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by subsection (e) of Section 8.1, and if so
directed by the Company, such holder will deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in subsection (b) of Section 8.1 shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to subsection (e) of Section 8.1 to and including the date when each
Holder of the Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
subsection (e) of Section 8.1.
8.4 The Company shall have no obligation to register any of the
Securities pursuant to this Agreement if the Company has obtained an opinion of
counsel to the effect that the Securities may be immediately sold to the public
without registration thereof, whether pursuant to Rule 144 promulgated under the
Securities Act, any successor rule or otherwise. In addition, notwithstanding
anything contained herein to the contrary, (i) the Company shall not be
obligated to effect the filing of a registration statement pursuant to Section 1
during the twenty (20)-day period following the effective date of a registration
statement pertaining to an underwritten public offering of securities to the
public generally for the account of the Company, and (ii) if the Company shall
furnish to the Purchaser a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the Company
it would be seriously detrimental to the Company, and its stockholders
generally, for such registration statement to be filed, the Company shall have
the right to defer such filing for a period of not more than ninety (90) days
after receipt of the request of a Holder.
8.5 Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and it hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, the Holders of the Securities covered by such
registration statement, its directors and officers or general and limited
partners (and directors and officers thereof), each Person who participates as
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an underwriter in the offering or sale of such securities and each other Person,
if any, who controls such seller or any such underwriter within the meaning of
the Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including legal, accounting and other reasonable
expenses incurred in connection with investigation, preparation or defense of
any of the foregoing), to which such seller, any such director or officer or
general or limited partner or any such underwriter or controlling Person may
become subject under the Securities Act, the Exchange Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or supplemental prospectus contained
therein, or any amendment or supplement thereto, or (b) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such Holders and each such director, officer, general or limited
partner, underwriter and controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or preparing for
and defending any such loss, claim, liability, action or proceeding from time to
time as such expenses are incurred; provided, that, the Company shall not be
liable in any such case to any such person, to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or amendment
or supplement thereto or in any such preliminary, final or supplemental
prospectus in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such Holder or underwriter
specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Holder or any such director, officer, general or
limited partner, underwriter or controlling Person and shall survive the
transfer of such securities by such Holder.
8.6 Indemnification by the Holders of Securities. As a condition
to including any Securities in any registration statement filed in accordance
with this Agreement, the Holders will and they each hereby do (and the Company
may require, as a condition to including any Securities in any registration
statement filed in accordance with this Agreement that, any other holder of
Securities other than the Holders, provide an undertaking reasonably
satisfactory to the Company pursuant to which such Holder shall indemnify and
hold harmless the Company upon the terms set forth in this Section 8.6),
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indemnify and hold harmless the Company (in the same manner and to the same
extent as set forth in Section 8.5 hereof), its directors and officers signing
the registration statement and its controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or supplemental prospectus
contained therein, or any amendment or supplement, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such Holders specifically stating that it is for use
in the final or supplemental prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing; provided however,
in no event shall the liability of any selling Holder be greater in amount than
the amount of proceeds received by such selling Holder upon such sale. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of its directors, officers or
controlling Persons and shall survive the transfer of such Securities by such
selling Holder.
8.7 Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 10, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that, the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Sections 8.5 and 8.6 hereof, except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment (which is based on the
written opinion of its counsel) a conflict of interest between such indemnified
and indemnifying parties exists in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
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latter in connection with the defense thereof. If in an indemnified party's
reasonable judgment (which is based on the written opinion of its counsel) a
conflict of interest between the indemnified and indemnifying parties exists in
respect of a claim or if the indemnifying party refuses to participate in and to
assume the defense of any action brought against an indemnified party, the
indemnified party may assume the defense of such claim or action with counsel of
its choosing which shall not relieve the indemnifying party of its obligations
under Sections 8.5 and 8.6 hereof. No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
8.8 Contribution. If the indemnification provided for in or
pursuant to Sections 8.5 and 8.6 is due in accordance with the terms hereof but
is held by a court to be unavailable or unenforceable in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified person,
shall contribute to the amount paid or payable by such indemnified person as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified person on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party on the one hand and of the
indemnified person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified person by such persons'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. In no event shall the liability of any
selling Holder of Registrable Securities be greater in amount than the amount of
proceeds received by such Holder upon such sale.
8.9 Rule 144. The Company covenants that it will use its best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the
request of the Holders, make publicly available such information as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will do all
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such other acts and things from time to time as requested by the Holders to the
extent required from time to time to enable each Holder to sell shares of
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereunder adopted by the SEC. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
8.10 Public Trading Market. Until the earlier of (a) three (3)
years after the effective date of the registration statement filed pursuant to
Section 8 or (b) the date on which there are no Securities left unregistered,
the Company shall use its best efforts to maintain a public trading market for
its Common Stock.
9. Registration Rights of VIACOM. Viacom shall have the
registration rights for its Shares as set forth in the Registration Rights
Agreement, the terms of which are incorporated by reference herein and made a
part hereof, as if such terms were fully set forth herein.
10. Miscellaneous.
Notices.
10.1 Notices hereunder shall be given only by personal delivery,
registered or certified mail, return receipt requested, overnight courier
service, or telex, telegram or other form of electronic mail and shall be deemed
transmitted when personally delivered or deposited in the mail or delivered to a
courier service or a carrier for electronic transmittal (as the case may be),
postage or charges prepaid, and properly addressed to the particular party to
whom the notice is to be sent. Unless and until changed by notice given as
provided herein, notices shall be sent to the addresses set forth below, with
appropriate copies to those persons indicated thereon.
If to the Company: Byron Preiss Multimedia Company, Inc.
24 West 25th Street
New York, New York 10010
Fax No. (212) 627-2788
with a copy to: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Robert L. Lawrence, Esq.
Fax No. (212) 245-3009
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If to Preiss: Byron Preiss
50 Sutton Place South
New York, New York 10022
with a copy to: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Robert L. Lawrence, Esq.
Fax No. (212) 245-3009
If to Viacom : Viacom International Inc.
1515 Broadway
New York, New York 10036
Attn: Laura Franco, Esq.
Fax No. (212) 846-1428
If to the Berman Group: Steven Berman
c/o Smith Barney
1345 Avenue of the Americas
New York, New York 10019
Fax No. (212)
If to the Group: Steven Berman
c/o Smith Barney
1345 Avenue of the Americas
New York, New York 10019
Fax No. (212)
- and -
Byron Preiss
50 Sutton Place South
New York, New York 10022
with a copy to: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Robert L. Lawrence, Esq.
Fax No. (212) 245-3009
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10.2 Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.3 Consent to Specific Performance.
The parties hereto declare that it is impossible to measure
in money the damages which would accrue to a party by reason of another party's
failure to perform any of the obligations hereunder. Therefore, if any party
shall institute any action or proceeding to enforce the provisions hereof, any
party against whom such action or proceeding is brought hereby waives any claim
or defense therein that the plaintiff party has an adequate remedy at law, and
consents to specific performance as a remedy; provided, however, that any
consent granted hereunder shall not preclude any plaintiff party from bringing
any other claims or be deemed to be a waiver of any rights which it may have
hereunder.
10.4 New Parties.
The Company shall not record a transfer of Shares from any
Shareholder to any person not a party hereto unless such person shall execute an
acknowledgment of the terms hereof and an agreement to be bound hereby. Upon
execution of any such form, such new Shareholder shall be deemed for all
purposes to be a party hereto, and shall be subject to all the obligations and
entitled to all the benefits created hereby with respect to Shareholders.
10.5 Variations in Pronouns.
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the antecedent person or persons or entity or entities may require.
10.6 Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York without giving
effect to principles of conflicts of laws. The Shareholders hereby agree to
submit to the exclusive jurisdiction of the Federal Courts located in the State
of New York and hereby waive any objection based on venue or forum non
conveniens with respect to any action instituted therein, and agree that any
dispute concerning the conduct of any party in connection with this Agreement or
otherwise shall be heard only in the Federal Courts described above.
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10.7 Amendments and Waivers.
Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Shareholders. Any amendment or waiver effected in
accordance with this Section shall be binding upon all Shareholders and the
Company.
10.8 Public Statements. The Shareholders shall use their best
efforts to communicate and coordinate with the Company with respect to any
material public communication by them relating to the Company, its business,
operations and ownership, unless such communication is made to such
Shareholder's attorneys or accountants, or required to be made as a matter of
law of stock exchange rule.
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IN WITNESS WHEREOF, the undersigned have executed and delivered
this Agreement as of the date first above written.
BYRON PREISS MULTIMEDIA COMPANY, INC.
By: /s/ Byron Preiss
------------------------------------
Name: Byron Preiss
Title: Chief Executive Officer
and President
VIACOM INTERNATIONAL INC.
By: /s/ Rudolph L. Hertlein
-----------------------------------
Name: Rudolph L. Hertlein
Title: Senior Vice President
/s/ Byron Preiss
------------------------------------
Byron Preiss
/s/ Martin L. Berman
------------------------------------
Martin L. Berman
/s/ Phyllis Berman
------------------------------------
Phyllis Berman
/s/ Steven C. Berman
------------------------------------
Steven C. Berman
ALISON A. BERMAN
LIFETIME INCOME TRUST
By: /s/ Mark Kaplan
------------------------------------
Mark Kaplan, Co-Trustee
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MARK K. BERMAN
LIFETIME INCOME TRUST
By: /s/ Mark Kaplan
------------------------------------
Mark Kaplan, Co-Trustee
MARTIN L. BERMAN FOUNDATION
By: /s/ Martin L. Berman
------------------------------------
Martin L. Berman, Trustee
Exhibit 99.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 22,
1995, between BYRON PREISS MULTIMEDIA COMPANY, INC., a New York corporation (the
"Company"), and VIACOM INTERNATIONAL INC., a Delaware corporation (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, the parties hereto are parties to a certain Stock Purchase
Agreement dated March 22, 1995 (the "Purchase Agreement"); and
WHEREAS, pursuant to the terms of the Purchase Agreement, the Company
is issuing to the Purchaser (i) 852,375 unregistered shares (the "Shares") of
the Company's common stock, par value $.001 per share (the "Common Stock"), (ii)
warrants to purchase an aggregate of 315,000 unregistered shares of the
Company's Common Stock (the "Warrants") and (iii) additional warrants (the
"Additional Warrants") to purchase additional shares of the Company's Common
Stock (based solely upon the number of options that are exercised under the
Company's Employee Stock Option Plan, as such plan may be amended from time to
time (the "Plan") and outside of such Plan in order for the Purchaser to
maintain its twenty percent (20%) interest in the Company's Common Stock), all
as further described in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto hereby agree as follows:
1. Certain Definitions. Capitalized terms used herein which are not
otherwise defined herein and which are defined in, or by reference in, the
Purchase Agreement shall have the meanings given therein. For the purposes of
this Agreement, the following terms shall have the following meanings:
"Agreement" shall mean this Registration Rights Agreement, as the same
may be amended, modified or supplemented from time to time.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
"Holder" shall mean the Purchaser and each Person to whom Registrable
Securities are transferred so long as such Person holds such Registrable
Securities.
"Registrable Securities" shall mean the shares of Common Stock issued
to the Purchaser pursuant to the terms of the Purchase Agreement, or upon the
exercise of the Warrant or Additional Warrant, pursuant to the time of the
Purchase Agreement and any securities issued in exchange for or substitution of
any thereof, or as a result of a stock split, in connection with a
recapitalization, merger, consolidation or other reorganization, or as a
dividend or other distribution in respect of any thereof. As to any particular
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been disposed of pursuant to Rule 144 (or any
successor provision) under the Securities Act, (iii) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force (and the
Holder thereof shall have received an opinion of independent counsel for the
Holder reasonably satisfactory to the Company to the foregoing effects), or (iv)
they shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including without limitation,
(i) all SEC and National Association of Securities Dealers, Inc. or stock
exchange registration, listing and filing fees, (ii) all fees and expenses of
complying with securities or blue sky laws (including reasonable fees and
disbursements of counsel for the Company, the underwriters or the Holders in
connection with blue sky qualification of the Registrable Securities (in a
maximum of ten (10) states)), (iii) all printing, messenger, telephone and
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delivery expenses and transfer taxes, (iv) the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, (v) any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, and (vii) the
reasonable fees and expenses of any special experts retained in connection with
the requested registration, but excluding underwriting discounts and commissions
of underwriters, agents or dealers relating to the distribution of the
Registrable Securities, if any.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
2. Demand Registration.
(a) Timing. If at any time during the period commencing on the date
which is eighteen (18) months from the date hereof (the "Effective Date"), the
Company shall receive written notice (a "Demand") from the Purchaser requesting
that the Company register with the SEC any or all of the Registrable Securities,
the Company shall then cause to be prepared and filed an appropriate
registration statement under the Securities Act as soon as reasonably
practicable thereafter and the Company will use its best efforts to cause the
registration statement to become effective and remain effective. In no event
shall the Company be required to effect more than two (2) registrations of the
Registrable Securities pursuant to this Section 2. Notwithstanding the
foregoing, however, the Company and/or certain shareholders of the Company other
than the Purchaser, will be permitted on a pro-rata basis to also include their
shares of the Company's Common Stock in any such registration (subject to
underwriter cutbacks and the availability of audited financial statements of the
Company prepared in the ordinary course), provided, however, that during the
period commencing on the anniversary date of the eighteenth month from the date
hereof and ending on the anniversary of the thirtieth (30th) month from the date
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hereof, the Purchaser shall be entitled to a priority in registering any of its
Registrable Securities over the rights of any other shareholder of the Company
on any demand registration statement (provided, further, that either the Company
and/or the Additional Seller (as defined herein) will be permitted, on a
pro-rata basis, to also include their shares of Common Stock of the Company in
any such registration, subject to cutbacks and the availability of audited
financial statements of the Company prepared in the ordinary course, so long as
the inclusion of such shares does not diminish the number of shares to be
registered by the Purchaser). Any such registration pursuant to this Section 2
shall be effected by the preparation and filing by the Company with the SEC of a
registration statement on either Forms S-1, S-2, SB-2 or S-3 or other similar
form, with respect to the offering and sale by the Holders of the Registrable
Securities on a continuous or delayed basis in the future pursuant to Rule 415
under the Securities Act.
(b) Expenses. The Company will pay all Registration Expenses in
connection with a registration of Registrable Securities registered pursuant to
this Section 2 on Form S-3. In the event that the Registrable Securities are
registered on a form other than Form S-3, the Company shall pay the cost of the
Registration Expenses which would have been incurred if the registration had
been effected on a Form S-3 and the Company and the Purchaser shall equally
share the Registration Expenses incurred which are in excess of the Registration
Expenses which would have been incurred in connection with a registration on
Form S-3.
(c) Effective Registration Statement. A registration pursuant to this
Section 2 will be deemed to have been effected if (i) the registration statement
filed in connection with such registration shall have become effective under the
Securities Act (provided that if, after such registration statement has become
effective, the offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected), or (ii) the Company is unable to complete
such registration statement because one or more Holders of Registrable
Securities thus being registered failed to provide information for use in such
registration statement requested reasonably and in a timely manner by the
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Company or because such Holders otherwise failed to do such reasonable acts and
things as may be requested in writing in a timely manner by the Company, in
order to comply with the requirements of law.
3. Incidental "Piggy-Back" Registration.
(a) Right to Include Registrable Securities. If at any time prior to
the effectiveness of the registration pursuant to Section 2 the Company proposes
to register any of its equity securities under the Securities Act (other than a
registration on Form S-4 or Form S-8), whether or not for sale for its own
account, it will each such time give at least ten (10) days prior written notice
to all Holders of Registrable Securities of its intention to do so and of such
Holders' rights under this Section 3. Upon the written request of any such
Holder made within twenty (20) days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder and the intended method of disposition thereof), the Company will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities (on a pro-rata basis with the other equity securities
which the Company is seeking to register pursuant to such incidental
registration) which the Company has been so requested to register by the Holders
thereof, to the extent requisite to permit the disposition (in accordance with
such intended methods thereof) of the Registrable Securities so to be
registered; provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register such securities, the Company may,
at its election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration,
without prejudice, however, to the rights of Holders under Section 2 herein.
Notwithstanding the foregoing, however, during the period commencing on the date
hereof and ending on the anniversary date of the thirtieth (30th) month from the
date hereof, that certain shareholders of the Company, whose names are set forth
on Exhibit "A" hereto (each on "Additional Seller") shall be entitled, pro rata,
to a priority in registering the shares of the Company's Common Stock owned by
them, in any registration statement which a Holder has exercised its incidental
registration rights pursuant to this Section 3, subject to the restrictions set
forth in Section 3(b) below. No registration effected under this Section 3 shall
relieve the Company of its obligations to effect registrations upon request
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under Section 2 herein. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 3.
(b) Priority In Incidental Registrations. If a registration pursuant
to this Section 3 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which would
have an adverse effect on such offering, including the price at which such
shares can be sold, the Company will include in such registration the maximum
number of securities which it is so advised can be sold without such an adverse
effect, allocated as follows:
(A) First, all securities proposed to be registered by the Company for
its own account or by any Additional Seller (for the period through the
thirtieth (30th) month from the date hereof), and
(B) Second, all securities requested to be included in such
registration under this Section 3 and any other securities proposed to be
registered by the Company other than for its own account and other than for the
benefit of any Additional Seller (except to the extent that any securities
requested to be registered by the Company, or any Additional Seller pursuant to
Paragraph FIRST above, cannot be registered) (if necessary, allocated pro rata
among all such requesting Holders on the basis of the relative number of shares
of securities each such Holder has requested to be included in such
registration).
4. Registration Procedures. Whenever the Company effects or causes the
registration of the Registrable Securities under the Securities Act as provided
in this Agreement, the Company will use its best efforts to permit the sale of
such Registrable Securities in accordance with the intended method or methods of
distribution thereof, and will, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, provided, however, that the Company
may discontinue any registration of its securities which is being effected
pursuant to Section 3 herein at any time prior to the effective date of the
registration statement relating thereto;
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(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period not
in excess of two years from the effective date thereof and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Holders set forth in
such registration statement;
(c) furnish to the Holders such number of executed and conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits and all documents incorporated by
reference therein), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and supplemental
prospectus), and such other documents as the Holders may reasonably request in
order to facilitate the disposition of the Registrable Securities by such
Holders;
(d) use its best efforts to register or qualify (and keep effective
such registration or qualification) such Registrable Securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions within the United States as may be reasonably required to permit
the Holders to sell the Registrable Securities or as the Holders shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Holders to consummate the
disposition in such jurisdictions of the Registrable Securities; provided that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction where, but for the
requirements of this subsection (d), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction, or to consent
to general service of process in any such jurisdiction; provided, further, that
this subsection (d) shall not be construed to require the Company to register as
a broker-dealer in any jurisdiction any third person to whom or through whom a
Holder proposes to sell Registrable Securities;
(e) immediately notify the Holders, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act within the
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appropriate period mentioned in subsection (b) of this Section 4, of the Company
becoming aware that the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be state therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and at the request of the Holders promptly prepare and furnish to such Holders a
reasonable number of copies of an amended or supplemented prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing;
(f) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, and an earnings statement covering the period of at
least twelve months, beginning with the first month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(g) use its best efforts to list such Registrable Securities on NASDAQ
or any securities exchange on which securities of such class are then listed, if
such Registrable Securities are not already so listed, and to provide a transfer
agent and registrar for such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
(h) enter into such agreements (including an underwriting agreement in
customary form) and take such other actions as the Holders reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities;
(i) whether or not the registration related to an underwritten
offering, make such representations and warranties to the Holders and to the
underwriters, if any, as are customarily made by issuers to underwriters in
underwritten offerings, obtain opinions of counsel to the Company addressed to
each Holder and to the underwriters, if any, covering the matters customarily
covered in underwritten offerings, and obtain a "cold comfort" letter or letters
and updated thereof from the Company's independent public accountants in
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customary form and covering matters of the type customarily covered in
underwritten offerings, in each case as the underwriters or the Holders shall
reasonably request; and
(j) make available for inspection (at reasonable times and upon
reasonable notice) by the Holders, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any
attorney, accountant, or other agent retained by the Holders or any such
underwriter, all pertinent financial and other records pertinent corporate
documents of the Company, and cause all of the Company's executive officers and
directors to supply all information reasonably requested by the Holders,
underwriter, attorney, accountant or agent in connection with such registration
statement.
The Company may require the Holders to furnish the Company such
information regarding the Holders and the distribution of such securities for
use in the registration statement relating to such registration as the Company
may from time to time reasonably request in writing and to do such reasonable
acts and things as the Company may from time to time reasonably request in order
to permit the Company to comply with the requirements of law.
Each Holder of Registrable Securities agree by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection (e) of this Section
4, such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (e) of this Section 4, and if so directed
by the Company, such holder will deliver to the Company all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in subsection (b) of this Section 4 shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to subsection (e) of this Section 4 to and including the date when each
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Holder of Registrable Securities covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by subsection (e) of this Section 4.
The Company shall have no obligation to register any of the
Registrable Securities pursuant to this Agreement if the Company has obtained an
opinion of counsel to the effect that the Registrable Securities may be
immediately sold to the public without registration thereof, whether pursuant to
Rule 144 (provided that the volume of sales or manner of sale restrictions
thereof shall not be applicable to such sale) promulgated under the Securities
Act, any successor rule or otherwise. In addition, notwithstanding anything
contained herein to the contrary, (i) the Company shall not be obligated to
effect the filing of a registration statement pursuant to Section 2 during the
twenty (20) day period following the effective date of registration statement
pertaining to an underwritten public offering of securities to the public
generally for the account of the Company, and (ii) if the Company shall furnish
to the Purchaser a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company it
would be seriously detrimental to the Company, and its stockholders generally,
for such registration statement to be filed, the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after receipt
of the request of the Purchaser.
5. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section 2
or 3 herein, the Company will, and it hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, the sellers of any Registrable
Securities covered by such registration statement, its directors and officers or
general and limited partners (and directors and officers thereof), and each
other Person, if any, who controls such seller within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including legal, accounting and other reasonable
expenses incurred in connection with investigation, preparation or defense of
any of the foregoing), to which such seller, any such director or officer or
general or limited partner or any such controlling Person may become subject
under the Securities Act, the Exchange Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) any untrue statement or
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alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary, final or supplemental prospectus contained therein, or any
amendment or supplement thereto, or (b) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company will reimburse such
seller and each such director, officer, general or limited partner, and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or preparing for and defending any such
loss, claim, liability, action or proceeding from time to time as such expenses
are incurred; provided that the Company shall not be liable in any such case to
any such person, to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment or supplement thereto
or in any such preliminary, final or supplemental prospectus in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, general or limited partner or controlling Person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Holders of Registrable Securities. As a
condition to including any Registrable Securities in any registration statement
filed in accordance with Sections 2 or 3 herein, the Purchaser will and it
hereby does (and the Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Sections 2 or 3 herein, any other Holder of Registrable Securities other than
the Purchaser, to provide an undertaking reasonably satisfactory to the Company
pursuant to which such Holder shall indemnify and hold harmless the Company upon
the terms set forth in this Section 5(b)) indemnify and hold harmless (in the
same manner and to the same extent as set forth in subsection (a) of this
Section 5) the Company, its directors and officers signing the registration
statement and its controlling persons and all other prospective selling Holders
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and their respective controlling persons with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or supplemental prospectus contained therein,
or any amendment or supplement, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such sellers specifically stating that it is for use in the final or
supplemental prospectus or amendment or supplement, or a document incorporated
by reference into any of the foregoing; provided however, in no event shall the
liability of any selling Holder or Registrable Securities be greater in amount
than the amount of proceeds received by such selling Holder upon such sale. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any other prospective sellers or any of
their respective directors, officers or controlling Persons and shall survive
the transfer of such securities by such selling Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment (which is based on the written opinion of its counsel) a conflict of
interest between such indemnified and indemnifying parties exists in respect of
such claim, the indemnifying party will be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof. If in an indemnified party's reasonable judgment (which is
based on the written opinion of its counsel) a conflict of interest between the
indemnified and indemnifying parties exists in respect of a claim or if the
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indemnifying party refuses to participate in and to assume the defense of any
action brought against an indemnified party, the indemnified party may assume
the defense of such claim or action with counsel of its choosing which shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 5. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. If the indemnification provided for in or pursuant
to this Section 5 is due in accordance with the terms hereof but is held by a
court to be unavailable or unenforceable in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified person, shall
contribute to the amount paid or payable by such indemnified person as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified person on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party on the one hand and of the
indemnified person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified person by such persons'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. In no event shall the liability of any
selling Holder of Registrable Securities be greater in amount than the amount of
proceeds received by such Holder upon such sale.
6. Rule 144. The Company covenants that it will use its best efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
the Holders, make publicly available such information as necessary to permit
sales pursuant to Rule 144 under the Securities Act), and it will do all such
other acts and things from time to time as requested by the Holders to the
extent required from time to time to enable each Holder to sell shares of
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Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereunder adopted by the SEC. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
7. Public Trading Market. Until the earlier of (a) three (3) years
after the effective date of the registration statement filed pursuant to Section
2 or (b) the date on which there are no Registrable Securities, the Company
shall use its best efforts to maintain a public trading market for its Common
Stock.
8. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Purchaser.
Holders of Registrable Securities shall be bound by any consent authorized by
this Section 8(a), whether or not such Registrable Securities shall have been
marked to indicate such consent.
(b) Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
legal successors-in-interest, and nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
(c) Notices. All notices and other communications provided for
hereunder shall be given and shall be effective as provided in the Purchase
Agreement.
(d) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise effect the
meaning of terms contained herein.
(e) Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
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enforceability of such provision, paragraph, word, clause, phrase, or sentence
in every other respect and of the remaining provisions, paragraphs, words,
clauses, phrases or sentences hereof shall not be in any way impaired, it being
intended that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than on such counterpart.
(g) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
(h) Remedies. The Company acknowledges that monetary damages will not
be adequate compensation for any los incurred by reason of a breach by it of the
provisions hereof and agrees, to the fullest extent permitted by law, to waive
the defense of adequacy of legal remedies in any action for specific performance
hereof.
(i) Merger, etc. If, directly or indirectly, (i) the Company shall
merge with and into, or consolidate with, any other Person, (ii) any Person
shall merge with and into, or consolidate with, the Company and the Company
shall be the surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of the Registrable
Securities shall be changed into or exchanged for stock or other securities of
any other Person, then, in each such case, proper provision shall be made so
that such Person shall be bound by the provisions of this Agreement and the term
"Company" shall thereafter be deemed to refer to such Person. For purposes
hereof, the term "Person" shall mean any individual, corporation, partnership,
trust or other nongovernmental entity.
9. Termination. Except as otherwise provided herein, the Company's
obligations under Sections 2 and 3 hereof shall terminate on the date upon which
there shall be no Registrable Securities outstanding.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Registration Rights Agreement to be executed on its behalf as of the date first
written above.
THE COMPANY:
BYRON PREISS MULTIMEDIA COMPANY, INC.
By: /s/ Byron Preiss
------------------------------------
Title:
PURCHASER:
VIACOM INTERNATIONAL INC.
By: /s/ Rudolph L. Hertlein
------------------------------------
Title:
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EXHIBIT "A"
Additional Sellers
1. Byron Preiss
2. The Preiss Charitable Foundation, Inc.
3. Martin L. Berman
4. Phyllis Berman
5. Steven C. Berman
6. Alison A. Berman Lifetime Income Trust
7. Mark K. Berman Lifetime Income Trust
8. Martin L. Berman Foundation
Exhibit 99.6
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Michael D. Fricklas his true and lawful attorney and
agent, with power to act with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign any and
all Statements on Schedule 13D filed under the Securities Exchange Act of 1934,
as amended, and any and all amendments to such Statements on Schedule 13D, with
respect to the Common Shares, $.001 par value, of Byron Preiss Multimedia
Company, Inc., a New York corporation, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as he might or could in person, hereby
ratifying and confirming all that said attorney and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Limited Power of
Attorney to be executed as of the 31st day of March, 1995.
/s/ Sumner M. Redstone
--------------------------------
Sumner M. Redstone
Exhibit 99.7
Pursuant to Rule 13d-1(f)(1)(iii) of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, each of the
undersigned agrees that the Statement to which this Exhibit is attached is filed
on its behalf.
March 31, 1995 VIACOM INTERNATIONAL INC.
By: /s/ Michael D. Fricklas
---------------------------------------
Name: Michael D. Fricklas
Title: Senior Vice President,
Deputy General Counsel
VIACOM INC.
By: /s/ Michael D. Fricklas
--------------------------------------
Name: Michael D. Fricklas
Title: Senior Vice President,
Deputy General Counsel
*
------------------------------------------
Sumner M. Redstone, Individually
*By /s/ Michael D. Fricklas
--------------------------------
Michael D. Fricklas
Attorney-in-Fact
under the Limited Power of
Attorney filed as Exhibit 99.6
hereto
