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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 30, 1999
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BIG ENTERTAINMENT, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
FLORIDA 0-22908 65-0385686
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
2255 GLADES ROAD, SUITE 237 WEST, BOCA RATON, FLORIDA 33431
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 998-8000
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26141.0006
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
GENERAL
On September 1, 1999, the Company announced that it has entered into a Stock
Purchase Agreement, dated August 26, 1999 (the "Stock Purchase Agreement"),
between the Company and CBS Corporation ("CBS") providing for the issuance by
the Company to CBS of 6,672,031 shares of the Company's common stock for an
aggregate purchase price of $105,303,030. $100,000,000 of the purchase price is
payable by CBS in advertising, promotion and content over a seven-year term
pursuant to an Advertising and Promotion Agreement (the "Promotion Agreement")
and a Content License Agreement (the "Content Agreement"). The Promotion
Agreement and the Content Agreement will be entered into by CBS and
hollywood.com, Inc., the Company's wholly owned subsidiary that operates the
Hollywood.com website, upon the closing of the transaction. The balance of the
purchase price is payable in cash by CBS to the Company upon the closing of the
transaction. The Company will also issue to CBS upon the closing of the
transaction a Warrant (the "Warrant") to purchase an additional 1,178,892 shares
of common stock for an aggregate exercise price of $10,937,002. Half of the
warrant exercise price is payable in cash and half is payable in additional
advertising and promotion under the Promotion Agreement during the 24-month
period immediately following the exercise of the Warrant by CBS. Pursuant to the
Stock Purchase Agreement, the Company and CBS will, upon the closing of the
transaction, enter into an Investor's Rights Agreement, a Registration Rights
Agreement and a Voting Agreement.
STOCK PURCHASE AGREEMENT
The Stock Purchase Agreement contains customary representations and warranties,
covenants, closing conditions and indemnification provisions for a transaction
of this nature. The Company agrees in the Stock Purchase Agreement to use its
best efforts to conduct its business and operations in the ordinary course
consistent with past practice until the closing of the CBS transaction. The
Company specifically agrees, among other things, that until such closing it will
not, without the consent of CBS (1) incur any indebtedness for borrowed money;
(2) sell, license or dispose of any of its material properties or assets except
in the ordinary course of business; (3) acquire or agree to acquire any business
or company (other than up to two acquisitions for an aggregate purchase price of
$10 million); or (4) consummate any registered public offering of common stock
to be sold for the account of the Company. During the period between the signing
of the Stock Purchase Agreement and the closing of the transaction, CBS has a
preemptive right to purchase a pro rata portion of shares of common stock or
securities convertible into common stock issued by the Company. If CBS elects to
exercise this right, it will purchase the shares for cash upon the closing of
the transaction between CBS and the Company and otherwise on the same terms as
the Company has agreed to issue the shares. This preemptive right does not apply
to certain issuances of shares by the Company, including issuances to directors,
officers,
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employees, contractors, advisors or consultants of the Company or its
subsidiaries in the ordinary course of business.
WARRANT
Upon the closing of the transactions under the Stock Purchase Agreement, the
Company will issue to CBS a Warrant to purchase 1,178,892 shares of common stock
for an aggregate exercise price of $10,937,002. Half of the warrant exercise
price is payable in cash at the closing and half is payable in additional
advertising and promotion under the Promotion Agreement. The additional
advertising and promotion will be furnished to the Company during the 24-month
period immediately following the exercise of the Warrant by CBS. The Warrant may
be exercised at any time prior to the earlier of (1) the second anniversary of
the date of its issuance and (2) the consummation by the Company of its first
underwritten, registered public offering of common stock following the date of
issuance of the Warrant.
ADVERTISING AND PROMOTION AGREEMENT
Pursuant to the Promotion Agreement, CBS will provide to the Company an
aggregate of $70 million in advertising and promotion of the Hollywood.com
website over a seven-year term ($10 million per year). In addition, the Company
has the right to allocate up to $30 million in value deliverable by CBS under
the Content Agreement to additional advertising and promotion under the
Promotion Agreement. CBS will conduct the advertising and promotion across its
full range of media properties, including the CBS television network, CBS owned
and operated television stations, CBS cable networks, Infinity Broadcasting
Corporation's radio stations and outdoor billboards, CBS Internet sites and CBS
syndicated television programs. CBS will deliver the advertising and promotion
pursuant to a media plan jointly developed by CBS and the Company, which will
provide broad-based exposure for the Hollywood.com website, including prominent
placements in conjunction with appropriate entertainment-related events and
programming. The value of all advertising and promotion furnished by CBS to the
Company will be based on the average unit price paid to CBS by third parties for
the particular media on which the advertising and promotion occurs. CBS has the
right to terminate its obligation to deliver advertising and promotion under the
Promotion Agreement upon the occurrence of specified defaults by the Company
that are not cured within the time periods specified in the Promotion Agreement.
CONTENT LICENSE AGREEMENT
Pursuant to the Content Agreement, CBS will provide to the Company an aggregate
of $30 million in value over a seven-year term to be allocated in the Company's
discretion to the license of content, advertising sales or advertising and
promotion. The Company will receive $4.3 in value during each of the first six
years of the term and $4.2 in value during the last year of the term.
License of Content. CBS grants to the Company a non-exclusive license to use,
distribute and otherwise make available on the Hollywood.com website certain
text, graphics, photographs,
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video, audio and other information owned by CBS and related to the movie
business or any particular motion picture. In addition, subject to compliance by
the Company with certain obligations, it has the right to archive the CBS
content on the Hollywood.com website after expiration of the term of the Content
Agreement.
Advertising Sales. The Company has the right to require CBS to sell
advertisements on the Hollywood.com website totaling gross advertising revenues
of up to $1.5 million per year. In connection therewith, CBS agrees to include
the Hollywood.com website in all advertising sales programs and presentations
that are appropriate for the sale of advertising on the website. The Company
will pay to CBS a commission of 8% of gross advertising revenues generated by
advertising sold by CBS on the Hollywood.com website in excess of the portion of
the $1.5 million guaranteed amount selected by the Company each year.
Advertising and Promotion. The Company has the right to allocate all or any
portion of the $30 million in value to additional advertising and promotion of
the Hollywood.com website to be furnished by CBS under the Promotion Agreement.
CBS has the right to terminate its obligations under the Content Agreement upon
the occurrence of specified defaults by the Company that are not cured within
the time periods specified in the Content Agreement.
INVESTOR'S RIGHTS AGREEMENT
The Investor's Rights Agreement to be entered into by the Company and CBS at the
closing sets forth various rights and obligations of the Company and CBS related
to CBS's ownership of the Company's common stock, including CBS's registration
rights with respect to the common stock, the Company's right of first refusal
with respect to transfers by CBS of the common stock, standstill provisions to
which CBS is bound, and preemptive rights of CBS with respect to certain
issuances of common stock and other securities by the Company.
Registration Rights. CBS has the right to initiate up to four registrations
under the Securities Act of 1933 of the common stock that it is acquiring from
the Company. The Investor's Rights Agreement contains various restrictions on
the timing of such registrations. In addition, CBS has "piggyback" registration
rights allowing it to include the shares of common stock that it acquires from
the Company in registrations of the Company's common stock initiated by the
Company or other shareholders. The Company will pay all expenses associated with
any such registrations other than underwriters' fees or commissions relating to
the sale of the common stock.
Transfer Restrictions; Right of First Refusal. CBS is not permitted to transfer
any shares of the Company's common stock for a period of one year after the
closing, except to certain affiliates of CBS. If CBS proposes to transfer any
shares of common stock during the six year period following the first year,
other than to certain affiliates or in a bona fide public distribution pursuant
to an effective registration statement, the Company has the right to purchase
the shares on the same terms on which CBS proposes to transfer them to a third
party. The Company's right
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of first refusal will terminate (a) at such time as Mitchell Rubenstein, the
Company's Chairman of the Board and Chief Executive Officer, and Laurie S.
Silvers, the Company's Vice Chairman of the Board and President, have sold more
than 60% of the common stock owned by them as of the closing or (b) at any time
after the second anniversary of the closing if CBS owns less than 15% of the
Company's outstanding common stock (other than as a result of transfers by CBS
of at least half of the common stock acquired by it from the Company).
Standstill Provisions. For a period of seven years after the closing, CBS agrees
that, except as contemplated by the Investor's Rights Agreement or the Stock
Purchase Agreement, it will not, directly or indirectly, do any of the
following:
(1) acquire or propose to acquire any securities of the Company if,
after giving effect thereto, CBS and its affiliates beneficially
own in excess of 34.8% of the Company's outstanding common stock;
(2) solicit proxies or become a participant in a solicitation of
proxies or consents with respect to any securities of the Company
or initiate or encourage the submission of any stockholder
proposal or election content with respect to the Company;
(3) take any action for the purpose of convening a meeting of the
shareholders of the Company or initiate any process to solicit or
obtain consents of shareholders in lieu of a meeting;
(4) except as may be required by applicable law, make any public
announcement or disclosure in respect in respect of any plan,
contract or arrangement relating to the acquisition of capital
stock of the Company or a merger, sale of assets or other
extraordinary corporate transaction relating to the Company;
(5) deposit capital stock of the Company into a voting trust or
subject capital stock of the Company to voting agreements, or
grant a proxy or power-of-attorney with respect to any capital
stock of the Company to any person not designated by the Company
who is not an officer, director or employee of CBS or its
affiliates;
(6) form or in any participate in a group for the purpose of
acquiring, holding, voting or disposing of securities of the
Company; or
(7) disclose publicly any intention or arrangement inconsistent with
the foregoing or enter into any discussions or understandings
with any third party with a view to encouraging any action
prohibited with the foregoing.
If the Company's board of directors approves or recommends to its shareholders
for approval any transaction in which a party (other than Company's existing
large shareholders) would acquire at least 50% of the Company's outstanding
common stock, then the restrictions described above would not apply during the
pendency of the transaction and would cease upon the consummation of the
transaction.
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VOTING AGREEMENT
The Voting Agreement to be entered into by the Company, CBS and certain
shareholders of the Company at the closing contains agreements by such parties
with respect to nominating individuals to serve on the Company's Board of
Directors and the voting of the common stock owned by such parties in favor of
such nominees. CBS has the right to nominate for election to the Company's Board
of Directors a number of individuals equal to the product of CBS's percentage
ownership of the Company's common stock and the total number of members of the
Board of Directors (rounded down to the nearest whole number). In addition, as
long as the Promotion Agreement and the Content Agreement remain in effect, CBS
shall have the right to designate at least one nominee to the Board. In all
elections for members of the Board, each of the shareholders that is a party to
the Voting Agreement agrees to vote all shares beneficially owned by them in
favor of the CBS designees. Each of The Times Mirror Company, Mitchell
Rubenstein, Laurie S. Silvers, Martin H. Greenberg and Rosalind Greenberg have
agreed to enter into the Voting Agreement.
In all elections for members of the Board, CBS agrees to vote all shares of
common stock owned by it, or over which it has voting control, in favor of (1)
each individual nominated for election to the Board by the Company, and (2) each
individual nominated for election to the Board by The Times Mirror Company
pursuant to the Shareholder Agreement between the Company and The Times Mirror
Company.
CBS's right to nominate directors for election to the Board will terminate upon
the acquisition by CBS of an equity interest in excess of 15% in any entity who
owns, operates or controls a website that is a competitor (as defined) of the
Hollywood.com website.
The purchase price for the common stock being acquired by CBS was determined by
arms-length negotiations between the Company and CBS.
Prior to entering into the Stock Purchase Agreement, there were no material
relationships between the Company or any of its affiliates, directors or
officers, or any associates of such directors and officers on one hand, and CBS,
on the other hand.
The descriptions of the Stock Purchase Agreement, the Warrant, the Promotion
Agreement, the Content Agreement, the Investor's Rights Agreement and the Voting
Agreement contained herein are qualified in their entirety by reference to the
applicable agreements, which are attached as Exhibits 10.1, 10.2, 10.3, 10.4,
10.5 and 10.6, respectively.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
1. Stock Purchase Agreement, dated as of August 26, 1999,
between the Company and CBS
2. Form of Advertising and Promotion Agreement between
hollywood.com, Inc. and CBS
3. Form of Content License Agreement between hollywood.com,
Inc. and CBS
4. Form of Warrant to be issued by the Company to CBS
5. Form of Investor's Rights Agreement between the Company
and CBS
6. Form of Voting Agreement between the Company, CBS and each
of the other shareholders signatory thereto
7. Form of Waiver Letter
8. Press Release dated September 1, 1999
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EXHIBIT INDEX
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Exhibit Number Description
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10.1 Stock Purchase Agreement, dated as of August 26, 1999,
between the Company and CBS
10.2 Form of Advertising and Promotion Agreement between
hollywood.com, Inc. and CBS
10.3 Form of Content License Agreement between hollywood.com,
Inc. and CBS
10.4 Form of Warrant to be issued by the Company to CBS
10.5 Form of Investor's Rights Agreement between the Company
and CBS
10.6 Form of Voting Agreement between the Company, CBS and each
of the other shareholders signatory thereto
10.7 Form of Waiver Letter
99.1 Press Release dated September 1, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BIG ENTERTAINMENT, INC.
By: /s/ W. Robert Shearer
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W. Robert Shearer
Senior Vice President
And General Counsel
Date: September 28, 1999
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STOCK PURCHASE AGREEMENT
by and between
CBS CORPORATION,
and
BIG ENTERTAINMENT, INC.
Dated August 26, 1999
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EXECUTION COPY
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated August 26, 1999 (the
"Agreement") is by and between CBS CORPORATION, a Pennsylvania corporation with
principal offices located at 51 West 52nd Street, New York, New York 10019
("CBS"); and BIG ENTERTAINMENT, INC., a Florida corporation with principal
offices located at 2255 Glades Road, Suite 237 W, Boca Raton, Florida 33431-7383
(the "Company"), for the issuance of stock of the Company. CBS and the Company
are sometimes hereinafter referred to as the "Parties".
1. Authorization and Sale of Shares of Common Stock; Cash
Consideration.
1.1 Authorization.
(a) In consideration of (i) CBS providing advertising, promotion and
content as more fully described in, and in accordance with the terms and
conditions of Exhibit A to this Agreement, and (ii) paying the additional
consideration to the Company specified in Section 1.1(b) below, the Company has
authorized the issuance and sale to CBS of Six million six hundred seventy-two
thousand and thirty-one (6,672,031) shares of its common stock, $.01 par value
per share (the "Shares"). In addition, the Company shall grant to CBS a warrant
(the "Warrant") by which CBS shall be entitled to acquire additional shares (the
"Warrant Shares") of the Company in the manner and for the period of time as
described in Exhibit B to this Agreement at an exercise price of $10,937,002
(the "Warrant Exercise Price"), $5,468,501 of which is payable in the form of
cash and $5,468,501 of which is payable in the form of additional advertising
and promotion, to be provided during the 24 month period immediately following
exercise of the warrant, under the Advertising and Promotion Agreement attached
hereto as Exhibit A. The Shares have the rights and provisions as set forth in
the Company's Amended and Restated Articles of Incorporation, as amended from
time to time (the "Certificate").
(b) Cash Consideration. At the Closing, subject to Section 1.1(c)
below, CBS shall pay to the Company, in immediately available funds, $5,303,030
in cash, which payment shall be made to an account specified by the Company
within three (3) business days prior to the Closing Date.
(c) Adjustment. The cash payment set forth in Section 1.1(b), payment
of a portion of the Warrant Exercise Price specified in Section 1.1(a) and the
issuance of a portion of the Shares and the Warrant Shares are contingent on the
closing of the proposed transaction among the Company and Baseline II, Inc.,
Paul Kagan Associates, Inc., Cinema Enterprises Group LLC and Mr. Paul Kagan
whereby the Company will issue an aggregate of 710,531 shares, or warrants to
purchase shares, of Common Stock of the Company for aggregate consideration of
$12,500,000 (the "Baseline Acquisition"). If the Baseline Acquisition has not
closed prior to the Closing Date, (i) the number of Shares to be issued to CBS
pursuant to Section 1.1(a) shall be reduced by 301,437 shares; (ii) the number
of Warrant Shares to be issued pursuant to the Warrant shall be reduced by
53,261 shares; (iii) the Warrant Exercise Price shall be reduced by $937,002;
and (iv) CBS shall not be required to make the cash payment specified in Section
1.1(b).
1.2 Sale and Issuance of the Shares. Subject to the terms and
conditions of this Agreement, on the Closing Date, the Company will (a) issue
and sell to CBS, and CBS will purchase and receive the number of Shares as
indicated in Section 1.1 and (b) grant to CBS, and CBS shall acquire, the
Warrant as
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indicated in Section 1.1.
2. Closing; Delivery.
2.1 Purchase and Sale. The closing of the purchase and sale of the
Shares shall be held at the offices of CBS Corporation, 51 West 52nd Street, New
York, New York 10019, at 11:00 a.m. on a date specified by CBS that is not
earlier than two (2) days and not later than ten (10) days following the
satisfaction or waiver of the last to occur of the conditions to the Closing set
forth in Section 5.
2.2 Closing. The closing referred to in subsection (a) above is
hereinafter referred to as the "Closing" and the date of the Closing is
hereinafter referred to as the "Closing Date".
2.3 Delivery of Shares and Warrant. At the Closing, the Company will
deliver to CBS a certificate representing the Shares to be purchased by CBS from
the Company and the Warrant. The Certificate and the Warrant shall be issued in
the name of CBS or such subsidiary of CBS designated by CBS prior to Closing;
provided, however, CBS shall be permitted to designate a subsidiary only if such
subsidiary is an "affiliate" (within the meaning of Rule 12b-2 under the
Exchange Act) that owns interests in multiple Internet businesses. It shall be a
condition to such designation pursuant to this Section 2.3, that after
consummation thereof, CBS shall guaranty and remain liable for the performance
and observance of this Agreement by its affiliate.
3. Representations and Warranties of the Company.
The Company hereby makes the following representations and
warranties, each of which is true and correct on the date hereof (except where
specifically provided otherwise), and will be true and correct on the Closing
Date, and each of which shall survive the Closing Date and the transactions
contemplated hereby to the extent set forth in Section 8.3 hereof.
3.1 Organization, Standing and Power. The Company and its
subsidiaries are duly organized, validly existing and in good standing under the
laws of their respective jurisdiction of incorporation. The Company and its
subsidiaries have full corporate power and authority and possess all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable each to own, lease or otherwise hold its properties and
assets and to conduct its businesses as presently conducted, including, but not
limited to, the ownership and operation of the Company's Internet business and
its non-Internet business (collectively, the "Business"), other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect (i) on the business, assets,
condition (financial or otherwise) or results of operations of the Business, or
(ii) on the ability of the Company to perform its obligations and to consummate
the transactions contemplated by this Agreement and that certain (v) Voting
Agreement between the Company, CBS and the other parties thereto, (w) Investors'
Rights Agreement between the Company and CBS, (x) Advertising and Promotion
Agreement between hollywood.com, Inc., a California corporation
("hollywood.com") and CBS (the "Advertising and Promotion Agreement"), (y)
Warrant issued by Company to CBS and (z) Content License Agreement between
hollywood.com and CBS (the "Content License Agreement"), each to be dated as of
the Closing Date (collectively, the "Ancillary Agreements") (a "Company Material
Adverse Effect"). The Company and its subsidiaries are each duly qualified to do
business as a foreign corporation in each jurisdiction where the character of
the assets held by it or the nature of the Business make such qualification
necessary for it to conduct the Business as currently conducted by it except
where the failure so to qualify would not have a Company Material Adverse
Effect.
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3.2 Authority; Execution and Delivery; Enforceability. The Company
and its subsidiaries has full power and authority to execute this Agreement and
the Ancillary Agreements (to the extent it is a party) and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the
Company and its subsidiaries of this Agreement and the Ancillary Agreements (to
the extent it is a party) and the consummation by the Company and its
subsidiaries of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company and its
subsidiaries. The Company and its subsidiaries have duly executed and delivered
this Agreement and each Ancillary Agreement (to the extent it is a party), and
this Agreement and each Ancillary Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
3.3 Subsidiaries. Except as otherwise set forth on Schedule 3.3
attached hereto, the Company does not control, directly or indirectly, any other
corporation, association, limited liability company or any other business
entity.
3.4 Capitalization. (a) The authorized capital stock of the Company
consists of (i) 25,000,000 shares of common stock (the "Common Stock"), of
which, as of August 23, 1999, 13,668,584 shares of Common Stock were issued and
outstanding (each together with common stock purchase rights (the "Company
Rights") issued pursuant to the Rights Agreement (the "Rights Agreement"), dated
as of August 23, 1996 by and between the Company and American Stock Transfer &
Trust Company), and 394,466 shares of Common Stock were issued and held as
collateral for lease obligations of the Company; and (ii) one million shares of
preferred stock ("Preferred Stock"), designated as follows: (A) 217,600 shares
of Series A Variable Rate Convertible Preferred Stock, $6.25 stated value per
share, none of which shares, as of the date hereof, are issued and outstanding,
(B) 142,223 shares of Series B Variable Rate Convertible Preferred Stock, $5.21
stated value per share, none of which shares, as of the date hereof, are issued
and outstanding, (C) 100,000 shares of 4% $100 Series C Convertible Preferred
Stock, $100 stated value per share, none of which shares, as of the date hereof,
are issued and outstanding, (D) 1,000 shares of 7% Series D Convertible
Preferred Stock, $10,000 stated value per share, 50 of which shares, as of the
date hereof, are issued and outstanding and (E) 50 shares of 7% Series D-2
Convertible Preferred Stock, $10,000 stated value per share, none of which
shares, as of the date hereof, are issued and outstanding. All issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth on Schedule 3.4, except for the
Company Rights and the Preferred Stock and except as contemplated by this
Agreement and the Ancillary Agreements, there are no outstanding rights,
warrants, conversion rights or agreements for the purchase or acquisition from
the Company of any shares of its capital stock. The Common Stock and the
Preferred Stock shall have the rights and provisions as set forth in the
Certificate.
(b) The Common Stock constitutes the only class of equity securities
of the Company or its subsidiaries registered or required to be registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
3.5 No Conflicts; Consents. The execution and delivery by Company of
this Agreement and each Ancillary Agreement and the consummation of the
transactions contemplated hereby and thereby and compliance by Company with the
terms hereof and thereof do not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien (as
defined in Section 3.8 hereof) upon any of the properties or assets of the
Company or any of its subsidiaries under any provision of (i) the Certificate or
by-laws of the Company or any of its subsidiaries, (ii) any contract to which
the Company or any of its subsidiaries is a party (including, but not limited
to, contracts to which the Company or any of its subsidiaries is a party by
virtue of assignment or novation) or by which any of their respective properties
or assets is bound or (iii) any judgment, order or
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decree ("Judgment") or statute, law, ordinance, rule or regulation applicable to
the Company or any of its subsidiaries ("Applicable Law") or the properties or
assets of the Company or any of its subsidiaries, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and could not reasonably be expected to have a Company
Material Adverse Effect. Except as may be required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "H-S-R Act"), no consent,
approval, license, permit, order or authorization ("Consent") of, or
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity") is required to be obtained or made by or with
respect to the Company or any of its subsidiaries in connection with the
execution, delivery and performance of this Agreement or any Ancillary Agreement
or the consummation by the Company of the transactions contemplated hereby and
thereby.
3.6 Authorization.
(a) Corporate Action. All corporate action on the part of
the Company and its officers and directors necessary for the sale, issuance and
delivery of the Shares and the Warrant has been taken or will be taken on or
prior to the Closing.
(b) Valid Issuance. The Shares and the Warrant Shares, when
issued, will be duly authorized and reserved for issuance, validly issued, fully
paid and nonassessable, and will be free of any Liens (as defined in Section
3.8) caused or created by the Company; provided, however, that all such shares
may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein, and as may be required by future changes in such laws.
(c) No Preemptive Rights. Except as contemplated by this
Agreement and the Ancillary Agreements, no person has any right of first
refusal, first offer, or any preemptive rights in connection with the issuance
of Shares or any future issuances of securities by the Company.
3.7 SEC Reports; Financial Statements. The Company has filed all
required forms, reports and documents required to be filed by it ("SEC Reports")
with the Securities and Exchange Commission ("SEC") since December 31, 1996,
each of which has complied as to form in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, each as in effect on the date such
forms, reports and documents were filed. None of such SEC Reports, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein, contained, as of their respective dates (and,
if amended or superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
The audited consolidated financial statements of the Company included in the SEC
Reports were prepared in accordance with GAAP and present fairly the
consolidated financial position of Company and its consolidated subsidiaries as
of the dates thereof and their consolidated results of operations and changes in
financial position for the period then ended.
3.8 Company Assets. The Company and its subsidiaries have good and
valid title to all assets and properties of the Business (the "Company Assets"),
in each case free and clear of all mortgages, liens, security interests, charges
or encumbrances of any kind (collectively, "Liens"), except (a) such Liens as
are set forth in Schedule 3.8 and (b) Permitted Liens. For purposes of this
Agreement, "Permitted Liens" mean (i) mechanics', carriers', workmen's,
warehousemen's, repairmen's or other like liens arising in the ordinary course
of business, (ii) liens arising under any original purchase price conditional
sales contracts and
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equipment leases with third parties entered into in the ordinary course, (iii)
liens for Taxes and other governmental obligations not yet due and payable or
which hereafter may be paid without penalty, and (iv) other imperfections of
title, restrictions or encumbrances, if any, which liens, imperfections of
title, restrictions or other encumbrances do not materially impair the continued
use in the Business of the respective owner thereof and operation of the
specific assets to which they relate.
3.9 Proprietary Rights.
(a) Except as set forth on Schedule 3.9(a), the Company and
its subsidiaries own or possess adequate licenses or other rights to use all
patents, trademarks, trade secrets, service marks, trade names, copyrights,
inventions, drawings, designs, customer lists, proprietary know-how or
information, or other rights with respect thereto (collectively referred to as
"Proprietary Rights") used in the Business as currently conducted. Except as set
forth on Schedule 3.9(a), the operation of the Business as now conducted does
not and will not conflict with or infringe any proprietary rights owned or
possessed by any third party.
(b) Except as set forth on Schedule 3.9(b), there are no
claims, disputes, actions, proceedings, suits or appeals pending against the
Company or its subsidiaries with respect to any Proprietary Rights (other than
those, if any, with respect to which service of process or similar notice has
not yet been made on the Company or any of its subsidiaries), and, to the
knowledge of the Company, none has been threatened against the Company or its
subsidiaries. To the knowledge of the Company, there are no facts or alleged
facts which would reasonably serve as a basis for any claim that the Company or
its subsidiaries does not have the right to use all Proprietary Rights in the
development, manufacture, use, sale or other disposition of any or all products
or services presently being used, furnished or sold in the conduct of the
Business.
(c) Except as set forth in Schedule 3.9(c), to the
knowledge of the Company, the Proprietary Rights have not been infringed by
others.
(d) Except as set forth in Schedule 3.9(d) and except for
content license agreements, data service agreements, affiliate agreements,
e-commerce agreements and book licensing agreements entered into in the ordinary
course of business, there are no outstanding options, licenses or agreements of
any kind relating to the Proprietary Rights, nor is the Company or any of its
subsidiaries bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.
(e) To the Company's knowledge, all computer programs and
technology used by the Company or any of its subsidiaries in the Business, are
or will be in sufficient time to avoid any material disruption to the business
(i) free of any "Year 2000 Problem" such that such computer program and
technology does not and will not, without requiring any material modifications,
experience any malfunctions or other usage problems in connection with the year
2000 (and later years) as distinct from the years 1900 through 1999 and (ii)
free of any "bugs" or "viruses" that could materially interfere with the
Company's use of such computer programs and technology.
3.10 Contracts.
(a) Except for (i) this Agreement and the Ancillary
Agreements, (ii) that certain Agreement and Plan of Merger dated of January 10,
1999, among The Times Mirror Company, Hollywood Online, Inc., Big Entertainment,
Inc. and Big Acquisition Corp. (the "HOL Agreement"), that certain Asset
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Purchase Agreement dated as of March 29, 1999, among Big Entertainment, Inc.,
CinemaSource, Inc., Brett West and Pamela West and any other contract disclosed
therein or in the respective schedules thereto and (iii) the contracts and other
agreements listed on Schedule 3.10, neither the Company nor any of its
subsidiaries are a party to or bound by any contract that is used, held for use
or intended for use in, or that arises out of, the operation or conduct of the
Business and that is:
(i) an employment agreement or employment contract;
(ii) collective bargaining agreement;
(iii) a covenant not to compete or other covenant of
the Company or any of its subsidiaries restricting the Business;
(iv) a contract with (A) any shareholder or affiliate
of the Company or any of its subsidiaries or (B) any current or
former officer, director or employee of the Company or any of its
subsidiaries or affiliates;
(v) a lease, sublease or similar contract with any
person under which (A) the Company or any of its subsidiaries is
lessee of, or holds or uses, any machinery, equipment, vehicle or
other tangible personal property owned by any person or (B) the
Company or any of its subsidiaries is a lessor or sublessor of, or
makes available for use by any person, any tangible personal property
owned or leased by the Company, in any such case which has an
aggregate liability or receivable, as the case may be, in excess of
$100,000;
(vi) (A) a contract under which the Company or any of
its subsidiaries has borrowed any money from, or issued any note,
bond, debenture or other evidence of indebtedness to, any person or
(B) any other note, bond, debenture or other evidence of indebtedness
issued to any person;
(vii) a contract (including any so-called "take-or-pay"
or "keepwell" agreement) under which (A) any person has directly or
indirectly guaranteed indebtedness, liabilities or obligations of the
Company or any of its subsidiaries, or (B) the Company or any of its
subsidiaries has directly or indirectly guaranteed indebtedness,
liabilities or obligations of any other person (in each case other
than endorsements for the purpose of collection in the ordinary
course of business);
(viii) a contract under which the Company or any of its
subsidiaries has, directly or indirectly, made any advance, loan,
extension of credit or capital contribution to, or other investment
in, any person (other than extensions of trade credit in the ordinary
course of the Business);
(ix) a contract granting a Lien, other than a Permitted
Lien, upon any Company Assets;
(x) a contract providing for indemnification of any
person with respect to liabilities of any current or former business
of the Company or any predecessor person;
(xi) a contract for the sale of any Company Assets or
the grant of any preferential rights to purchase any Company Assets
or requiring the consent of any party to the transfer thereof; or
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(xii) a contract for any joint venture, partnership,
limited liability company or similar arrangement.
(b) All contracts, plans and agreements to which Company or
any of its subsidiaries is a party (either directly or by assignment or
novation) are valid, binding and in full force and effect and are enforceable by
the Company in accordance with their terms. The Company and its subsidiaries
have performed all material obligations required to be performed by them to date
under the contracts, and they are not (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder and, to the knowledge of the Company, no other party to any such
contract is (with or without the lapse of time or the giving of notice, or both)
in breach or default in any material respect thereunder. Neither the Company nor
any of its subsidiaries has received notice of the intention of any party to
terminate any contract listed in any Schedule. Complete and correct copies of
all contracts listed in the Schedules, together with all modifications and
amendments thereto, have been delivered to or made available for inspection by
CBS.
(c) Schedule 3.10(c) sets forth each contract with respect
to which the consent of the other party or parties thereto is required by virtue
of the execution and delivery of this Agreement to avoid the termination
thereof, a breach, violation or default thereunder or any other change or
modification to the terms thereof, each of which has been obtained.
3.11 Condition of Properties. All buildings, facilities, machinery,
equipment, fixtures, vehicles and other properties owned, leased or used by the
Company or any of it subsidiaries (a) are in good operating condition and repair
(reasonable wear and tear excepted) and (b) to the Company's knowledge, are
being operated in conformity with all applicable building, safety, zoning,
environmental, waste and other applicable ordinances, laws and regulations.
3.12 Permits. The Company and its subsidiaries possess all
certificates, licenses, permits, authorizations and approvals ("Permits") issued
or granted to the Company or its subsidiaries by Governmental Entities that are
necessary or desirable for the conduct of the Business, except for those the
non-possession of which would not have a Company Material Adverse Effect. All
Permits are validly held by the Company and its subsidiaries, and the Company
and its subsidiaries have complied in all material respects with all terms and
conditions thereof, except for such non-compliance which would not have a
Company Material Adverse Effect. Neither the Company nor any of its subsidiaries
has received notice of any proceedings relating to the revocation or
modification of any such Permits. None of the Permits will be subject to
suspension, modification, revocation or nonrenewal as a result of the execution
and delivery of this Agreement.
3.13 Insurance. The Company and its subsidiaries maintain insurance
policies for fire and casualty, liability, Directors' and Officers' liability
and miscellaneous professional liability with respect to the Business in such
amounts, with such deductibles and against such risks and losses as are, in the
Company's judgment, reasonable for the Business. All such policies are in full
force and effect, all premiums due and payable thereon have been paid, and no
notice of cancellation or termination has been received with respect to any such
policy which has not been replaced on substantially similar terms prior to the
date of such cancellation. To the knowledge of the Company, the Business has
been conducted in a manner so as to conform in all material respects to all
applicable provisions of such insurance policies.
3.14 Sufficiency of the Company Assets. The Company Assets comprise
all the assets employed by the Company and its subsidiaries in connection with
the Business. The Company Assets are
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sufficient for the conduct of Business immediately following the Closing in
substantially the same manner as currently conducted.
3.15 Taxes.
(a) For purposes of this Agreement:
"Tax" means (i) any tax, governmental fee or other like
assessment or charge of any kind whatsoever (including any tax imposed under
Subtitle A of the Code and any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding tax on amounts paid, payroll,
employment, excise, severance, stamp, capital stock, occupation, property,
environmental or windfall profit tax, premium, customs, duty or other tax),
together with any interest, penalty, addition to tax or other additional amount,
imposed by any Governmental Entity (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority"), (ii) any liability for the
payment of any amount of the type described in clause (i) above as a result of a
party to this Agreement being a member of an affiliated, consolidated or
combined group with any other corporation at any time on or prior to the date
hereof and (iii) any liability of any person with respect to the payment of any
amounts of the type described in clause (i) or (ii) above as a result of any
express or implied obligation of such person to indemnify any other person.
"Code" means the Internal Revenue Code of 1986, as
amended.
(b) The Company, and any affiliated group, within the
meaning of Section 1504 of the Code, of which the Company is or has been a
member, has filed or caused to be filed in a timely manner (within any
applicable extension periods) all Tax returns, reports and forms required to be
filed by the Code or by applicable state, local or foreign Tax laws. All Taxes
shown to be due on such returns, reports and forms have been timely paid in full
or will be timely paid in full by the due date thereof. No Tax Liens have been
filed and no claims are being asserted in writing with respect to any Taxes.
(c) All liabilities of the Company and each of its
subsidiaries for Taxes, whether or not due and payable, are fully reserved for
in the audited financial statements of the Company included in the SEC Reports
for the 12-month period ended December 31, 1998.
(d) Neither the Company nor any of its affiliates has made
with respect to the Company, or any assets of the Business, any consent under
Section 341(f) of the Code. None of the Company Assets is "tax exempt use
property" within the meaning of Section 168(h) of the Code. None of the Company
Assets is a lease made pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954.
(e) The Company is not a "foreign person" within the
meaning of Section 1445 of the Code.
3.16 Litigation, etc. There is no action, suit or proceeding pending
against Company or any of its subsidiaries or to the Company's knowledge,
threatened against any of them, that questions the validity of this Agreement or
the Ancillary Agreements or the right of the Company or any of its subsidiaries
to enter into such agreements or to consummate the transactions contemplated
hereby or thereby. Except as set forth in Schedule 3.16, there is no action,
suit or proceeding pending against the Company or any of its subsidiaries or, to
the Company's knowledge, threatened against the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action,
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suit, proceeding or investigation by the Company or any of its subsidiaries
currently pending or which the Company or any of its subsidiaries currently
intends to initiate.
3.17 Benefit Plans.
(a) Except as set forth in Schedule 3.17, neither the
Company nor any of its subsidiaries has any "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), maintained or contributed to by the Company or its
subsidiaries for the benefit of any officers or employees of the Business or
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA), bonus,
stock option, stock purchase, deferred compensation plans or arrangements and
other employee fringe benefit plans maintained, or contributed to, by the
Company or any of its affiliates or subsidiaries for the benefit of any officers
or employees of the Business ("Benefit Plans").
(b) Each Benefit Plan has been operated in accordance with
the Applicable Law (including ERISA and the Code), the plan documents and
collective bargaining agreements, if any.
(c) There are no material undisclosed liabilities in
respect of the Benefit Plans with respect to which
CBS could be liable.
(d) Neither the Company nor any of its subsidiaries have
contributed to any multi-employer plans as defined in Section 3(37) of ERISA
which would subject CBS to any liability.
(e) There is no litigation or administrative or other
proceedings involving any Benefit Plan nor has the Company or any of its
subsidiaries received any notice that any such proceeding is threatened, in each
case that would have or reasonably be expected to have a Material Adverse
Effect.
(f) No employee or former employee of the Company or its
subsidiaries will become entitled to any bonus, retirement, severance, job
security or similar benefit or any enhanced benefit solely as a result of the
transactions contemplated hereby.
(g) None of the Benefit Plans provides for post-employment
life or health insurance, benefits or coverage for any participant or any
beneficiary of any participant, except as required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or as may be offered as
individual conversion rights.
3.18 Absence of Changes or Events. Except as set forth in Schedule
3.18, since June 30, 1999, there has not been any material adverse change in the
business, assets, condition (financial or otherwise), results of operations or
prospects of the Business, taken as a whole, other than changes relating to the
economy in general or the entertainment media, or Internet industry in general,
and not specifically relating to the Company. Except as set forth in Schedule
3.18, since June 30, 1999, the Company has caused the Business to be conducted
in the ordinary course and in substantially the same manner as previously
conducted and has made all reasonable efforts consistent with past practices to
preserve the relationships of the Business with customers, suppliers and others
with whom the Business deals.
3.19 Compliance with Applicable Laws. The Company and its
subsidiaries are in compliance with all Applicable Laws, including those
relating to occupational health and safety and the Workers Adjustment and
Retraining Notification Act (or any similar state or local law) ("WARN"), except
for such non-compliance which would not have a Company Material Adverse Effect.
Neither the Company nor its subsidiaries have received any written or oral
communication from a Governmental Entity that alleges that the Business has
failed to comply in any material respect with any Applicable Laws.
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Neither the Company nor its subsidiaries have received any written notice that
any investigation or review by any Governmental Entity with respect to the
Company Assets or the Business is pending or that any such investigation or
review is contemplated. This Section 3.19 does not relate to matters with
respect to Taxes, which are the subject of Section 3.15.
3.20 Leasehold Interests/Real Property.
(a) All leasehold interests held by the Company or its
subsidiaries are identified in Schedule 3.20(a). All leases listed in the
schedule are valid, binding and in full force and effect and enforceable by the
Company or its subsidiaries in accordance with their terms. All material
obligations required to be performed by the Company or any of its subsidiaries
to date under the leases have been performed, and Company and its subsidiaries
are not (with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder and, to the knowledge of
the Company, no other party to any such lease is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder. Neither the Company nor any of its subsidiaries has received
notice of the intention of any party to terminate any lease listed in Schedule
3.20(a). Complete and correct copies of all leases listed in the Schedule,
together with all modifications and amendments thereto, have been delivered to
or made available for inspection by CBS.
(b) All real property owned by Company and its subsidiaries
is identified in Schedule 3.20(b). The Company and its subsidiaries have good
and marketable title to all such real property and such property is free and
clear of all Liens.
3.21 Labor Matters. Except as disclosed on Schedule 3.21, neither the
Company nor its subsidiaries are subject to any suit, action or proceeding which
is pending or, to the knowledge of Company, threatened, with respect to the
Business, asserting that the Company or any of its subsidiaries have committed
unfair labor practices (within the meaning of the National Labor Relations Act
or applicable state statutes) or seeking to compel the Company or any of its
subsidiaries to bargain with any labor organization as to the terms and
conditions of employment. No strikes, lockout or other work stoppage or material
labor dispute involving the Company or any of its subsidiaries and relating to
the Business is pending or, to the knowledge of the Company, threatened, and
there is no current petition, proceeding or similar activity involving any
employees of the Company or any of its subsidiaries seeking to certify a
collective bargaining unit or engaging in any organizational activity. Neither
the Company nor any of its subsidiaries is a party to or bound by any collective
bargaining agreement or other contract with a labor union or labor organization.
Except as set forth on Schedule 3.21, the Company and its subsidiaries have
complied in all material respects with all laws relating to employment, wages,
hours, collective bargaining arrangements, payment of social security or similar
Taxes, and no Person has asserted that the Company or any of its subsidiaries is
liable for any arrears of wages, Taxes, or penalties for failure to comply with
any of the foregoing.
4. Representations and Warranties of CBS/Restrictions on Transfer
Imposed by the Securities Act.
4.1 Representations and Warranties by CBS. CBS represents, warrants,
acknowledges and covenants to the Company as follows:
(a) Organization, Standing and Power. CBS is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has full corporate power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals, the lack
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of which, individually or in the aggregate, have not had and could not
reasonably be expected to have a material adverse effect on the ability of CBS
to perform its obligations under this Agreement and the Ancillary Agreements or
to deliver the CBS Consideration and the other transactions contemplated hereby
and thereby (a "CBS Material Adverse Effect").
(b) Authority; Execution and Delivery; Enforceability. CBS
has full power and authority to execute this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by CBS of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action. CBS has duly executed and
delivered this Agreement and each Ancillary Agreement to which it is a party,
and this Agreement and each Ancillary Agreement to which it is a party
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
(c) No Conflicts; Consents. The execution and delivery by
CBS of this Agreement and each Ancillary Agreement to which it is a party, and
the consummation by it of the transactions contemplated hereby and thereby and
compliance by CBS with the terms hereof and thereof do not conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under or result
in the creation of any Lien upon any of the properties or assets of CBS or any
of its subsidiaries under, any provision of (i) the certificate of incorporation
or by-laws of CBS or any of its subsidiaries, (ii) any contract, agreement or
instrument to which CBS or any of its subsidiaries is a party or by which any of
their respective properties or assets is bound or (iii) any Judgment or
Applicable Law applicable to CBS or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually or in the aggregate, have not had and could
not reasonably be expected to have a CBS Material Adverse Effect. Except as may
be required by the H-S-R Act, no Consent of, or registration, declaration or
filing with, any Governmental Entity is required to be obtained or made by or
with respect to CBS or any of its subsidiaries in connection with the execution,
delivery and performance of this Agreement or any Ancillary Agreement or the
consummation by CBS of the transactions contemplated hereby and thereby or (B)
the conduct by the Company of the Business following the Closing as conducted on
the date hereof.
(d) Knowledge and Experience. CBS is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares. CBS
has been furnished with and has had access to such information as CBS considered
necessary to make an informed investment decision and determination as to the
purchase of the Shares.
(e) Not Organized to Purchase. CBS has not been organized
for the purpose of purchasing the Shares.
(f) Litigation. There is no action, suit or proceeding
pending against CBS or, to CBS's knowledge, threatened against it, that
questions the validity of this Agreement or the Ancillary Agreements or the
right of CBS to enter into such agreements or to consummate the transactions
contemplated hereby or thereby.
4.2 Legends. Each certificate representing the Shares may be endorsed
with the following legends:
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(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED, EXCEPT
(i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
ACT, (ii) IN COMPLIANCE WITH THE RESALE LIMITATIONS OF RULE 144 UNDER THE ACT,
OR (iii) PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE ACT AND
SUBJECT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED AS TO SAID SALE, OFFER OR TRANSFER.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN
AGREEMENT BETWEEN THE COMPANY AND THE HOLDER DATED _________ ___, 1999, THAT
RESTRICTS THE SALE, ASSIGNMENT AND TRANSFER OF THE SECURITIES REPRESENTED
HEREBY. A COPY OF SUCH AGREEMENT IS AVAILABLE, WITHOUT CHARGE, FROM THE
SECRETARY OF THE COMPANY.
(b) Other Legends. Any other legends required by applicable
state blue-sky laws.
(c) The Company need not register a transfer of legended
Shares, and may also instruct its transfer agent not to register the transfer of
the Shares, unless the conditions specified in each of the foregoing legends are
satisfied.
4.3 Removal of Legend and Transfer Restrictions. Any legend endorsed
on a certificate pursuant to subsection 4.2(a) and/or 4.2(b) and the "stop
transfer" instructions with respect to such legended securities shall be
removed, and the Company shall issue a certificate without such legend to the
holder of such securities (a) if such securities are registered and sold
pursuant to an effective registration statement under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available and delivered in connection with such sale or (b) if such holder
satisfies the requirements of Rule 144(k) and, where reasonably deemed necessary
by the Company, provides the Company with an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such holder, meets the
requirements of Rule 144(k) and a public sale, transfer or assignment of such
Securities may be made without registration.
4.4 Rule 144. CBS is aware of the adoption and requirements of Rule
144 by the SEC promulgated under the Securities Act, which permits limited
public resales of securities acquired in a nonpublic offering, subject to the
satisfaction of certain conditions. CBS understand that under Rule 144, the
conditions include, among other things: the availability of certain current
public information about the issuer and the resale occurring not less than one
year after the party has purchased and fully paid for the securities to be sold,
certain limitations on the volume of Shares to be offered and sold in any
three-month period, certain requirements as to manner of resale and certain
notice of sale filing requirements with the SEC.
5. Conditions to Closing.
5.1 Conditions to CBS' Obligations. The obligations of CBS to
purchase the Shares at the Closing are subject to the fulfillment to its
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by CBS in its sole discretion:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof that are subject to materiality
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qualifications shall be true and correct when made and shall be true and correct
on the Closing Date with the same force and effect as if they had been made as
of said date (except where they speak to a different date) or waived by CBS in
its sole discretion. All other representations and warranties made by the
Company in Section 3 hereof shall be true and correct in all material respects
when made and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made as of said date
(except where they speak to a different date) or waived by CBS in its sole
discretion. The Company shall have performed all obligations and conditions
herein required to be performed or observed by it.
(b) Consents and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement, including, but
not limited to, the expiration or early termination of any applicable waiting
periods under the H-S-R Act.
(c) Board Approval. The board of directors of CBS shall
have approved and authorized the transactions contemplated by this Agreement and
the Ancillary Agreements.
(d) No Injunction or Restraints. No temporary restraining
order, preliminary or permanent injunction or other legal restraint or
prohibition preventing or materially restricting or altering the consummation of
the transaction contemplated by this Agreement shall be in effect and there
shall not be any pending action by or before any governmental authority
challenging or seeking to restrain or prohibit or materially alter the
consummation of the transactions contemplated by this Agreement in any material
respect or seeking to obtain any damages from any of the parties in connection
with the transactions contemplated by this Agreement.
(e) Shareholder Approval. The Company shall have received
the approval of its shareholders for the issuance of the Shares to the extent
required by the rules and regulations of the Nasdaq Stock Market.
(f) Investors' Rights Agreement. The Company shall have
executed and delivered the Investor's Rights Agreement in the form attached as
Exhibit C hereto.
(g) Advertising and Promotion Agreement; Content License
Agreement. The Company shall have executed and delivered the Advertising and
Promotion Agreement and the Content License Agreement in the forms attached as
Exhibit A.
(h) Voting Agreement. The Company and the signatories
identified in Schedule I to the Voting Agreement attached hereto as Exhibit D
each shall have executed and delivered the Voting Agreement in the form attached
hereto as Exhibit D.
(i) Waivers. The Company shall have obtained and delivered
to CBS written waivers (i) by Mitchell Rubenstein of the provisions of Paragraph
6, Change of Control, of the Employment Agreement between Company and Mitchell
Rubenstein dated July 1, 1993, as amended, including all of his rights and
benefits thereunder and (ii) by Laurie S. Silvers of the provisions of Paragraph
6, Change of Control, of the Employment Agreement between the Company and Laurie
S. Silvers dated July 1, 1993, as amended, including all of her rights and
benefits thereunder, each in the form attached hereto as Exhibit E.
(j) State Securities Law. The sale of the Shares shall have
been qualified with applicable state's securities law, and evidence of all such
qualifications shall have been furnished to CBS counsel.
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(k) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
at the Closing hereby and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to CBS and
its counsel, and CBS and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
5.2 Conditions to Obligations of the Company. The obligations of the
Company to sell and deliver the Shares and the Warrant at the Closing are
subject to the fulfillment to its satisfaction, on or prior to the Closing Date,
of the following conditions, any of which may be waived by the Company in its
sole discretion:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by CBS in Section 4 hereof
that are subject to materiality qualifications shall be true and correct when
made and shall be true and correct on the Closing Date with the same force and
effect as if they had been made as of said date (except where they speak to a
different date) or waived by the Company in its sole discretion. All other
representations and warranties made by CBS in Section 4 hereof shall be true and
correct in all material respects when made and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made as of said date or waived by the Company in its sole discretion.
CBS shall have performed all obligations and conditions herein required to be
performed or observed by it.
(b) Consents and Waivers. CBS shall have obtained any and
all consents, permits and waivers necessary or appropriate for consummation of
the transactions contemplated by this Agreement, including, but not limited to,
the expiration or early termination of any applicable waiting periods under the
H-S-R Act.
(c) Board Approval. The board of directors of the Company
shall have approved and authorized the transactions contemplated by this
Agreement and the Ancillary Agreements.
(d) Advertising and Promotion Agreement; Content License
Agreement. CBS shall have executed and delivered the Advertising and Promotion
Agreement and the Content License Agreement in the forms attached as Exhibit A.
(e) Investors' Rights Agreement. CBS shall have executed
and delivered the Investor's Rights Agreement in the form attached as Exhibit C
hereto.
(f) Voting Agreement. CBS shall have executed and delivered
the Voting Agreement in the form attached hereto as Exhibit D.
(g) Shareholder Approval. The Company shall have received
the approval of its shareholders for the issuance of the Shares to the extent
required by the rules and regulations of the Nasdaq Stock Market.
(h) No Injunction or Restraints. No temporary restraining
order, preliminary or permanent injunction or other legal restraint or
prohibition preventing or materially restricting or altering the consummation of
the transaction contemplated by this Agreement shall be in effect and there
shall not be any pending action by or before any governmental authority
challenging or seeking to restrain or prohibit or materially alter the
consummation of the transactions contemplated by this Agreement in any material
respect or seeking to obtain any damages from any of the parties in connection
with the transactions contemplated by this Agreement.
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6. Affirmative Covenants.
6.1 The Company hereby covenants and agrees as follows:
(a) that as soon as reasonably practicable after the
Closing Date, each of its employees shall enter into, and the Company will use
reasonable efforts to prevent any employee from violating, a customary
confidentiality and proprietary information agreement with the Company.
(b) that during the period from the date of this Agreement
to the Closing Date, except as otherwise contemplated by this Agreement or the
transactions contemplated hereby or as set forth in Schedule 6.1 hereto, the
Company:
(i) shall use its best efforts to conduct its business
and operations in the ordinary course consistent with past practice;
and
(ii) shall not and shall not allow its subsidiaries to
(1) sell, license or dispose of any of its material properties or
assets, except in the ordinary course of business; (2) make any
loans, advances (other than advances in the ordinary course of
business or advances to any affiliate thereof) or capital
contributions to, or investments in, any other person; (3) make any
change in any of its present accounting methods and practices, except
as required by changes in GAAP; (4) make or authorize any capital
expenditures exceeding $500,000 individually or $1,500,000 in the
aggregate; (5) settle or compromise any material Tax liability,
except as is consistent with past practice; (6) incur any
indebtedness for borrowed money, other than from intercompany loans
between the Company or any of its subsidiaries and any of its
affiliates, issue any debt securities or assume, guarantee or endorse
the obligations of any third parties or mortgage or encumber any of
their respective properties or assets other than Permitted Liens or
immaterial liens which do not restrict use or detract from value; (7)
amend its articles of incorporation or by-laws, except to change the
name of the Company to Hollywood.com, increase the number of shares
of authorized Common Stock or as may be necessary to consummate the
transactions contemplated by this Agreement and the Ancillary
Agreements; (8) issue any New Securities (as defined in Section 6.2)
without first complying with Section 6.2; (9) declare a stock
dividend or split; (10) acquire or agree to acquire by merging or
consolidating with or by purchasing the stock of, or a substantial
portion of the assets of, or by any other manner, any business or
corporation, partnership, association or other business or division
thereof or otherwise acquire or agree to acquire any assets (other
than in the ordinary course of business), except as contemplated by
this Agreement; (11) knowingly take any action that would cause any
of its representations and warranties to become untrue in any
material respect; (12) enter into any written employment agreement
with any employee providing for annual cash compensation in excess of
$150,000 or increase in any material respect the compensation of any
of the officers or other key employees of the Business, except for
such increases as are granted in the ordinary course of business in
accordance with its customary practices (which shall include normal
periodic performance reviews and related compensation and benefit
increases); (13) adopt, grant, extend or increase the rate or terms
of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for, or with any such officers or
employees of the Business, or any other benefits payable in any other
form by the Company except increases required by applicable law, or
increase in the ordinary course of business consistent with past
practice; (14) consummate any registered public offering of Common
Stock to be sold for the account of the Company; or (15) take, or
agree to take, any of the foregoing actions.
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(iii) shall (1) give CBS and its authorized
representatives reasonable access to all books, records, personnel,
offices and other facilities and properties of the Business and its
accountants, (2) permit CBS to make such copies and inspections
thereof as CBS may reasonably request and (3) cause the officers of
the Company to furnish CBS with such financial and operating data and
other information with respect to the business and properties of the
Business as CBS may from time to time reasonably request; provided,
however, that any such access shall be conducted at CBS's expense, at
a reasonable time, under the supervision of the personnel of the
Company and in such a manner as to maintain the confidentiality of
this Agreement and the transactions contemplated hereby and not to
interfere unreasonably with the normal operation of the business of
the Company.
6.2 Preemptive Rights
(a) General. CBS shall have the right to purchase the CBS
Percentage of all (or any part) of any New Securities that the Company may from
time to time issue during the period from the date of this Agreement to the
Closing Date. Any such purchase shall be consummated by the Company and CBS on
the Closing Date.
(b) New Securities. The term "New Securities" means any
Common Stock or Derivative Securities issued by the Company in either a private
placement or a registered public offering, but excluding (i) any shares of
Common Stock issuable upon the conversion, exercise or exchange of Derivative
Securities of the Company issued and in effect as of the date of this Agreement;
(ii) the issuance or sale by the Company of Common Stock or Derivative
Securities to any directors, officers, employees, contractors, advisors or
consultants of the Company or any of its subsidiaries provided such issuance or
sale is pursuant to agreements or employee plans in the ordinary course of
business of the Company consistent with past practice; (iii) up to 150,000
shares of Common Stock and/or Derivative Securities in the aggregate issued in
connection with any equipment lease, real property lease or any similar
financing transactions entered into in the ordinary course of business (other
than any of the 394,466 shares of Common Stock currently held in escrow to
secure lease obligations) or shares of Common Stock and/or Derivative Securities
issued as collateral in connection with any loans, credit lines, guarantees of
indebtedness or similar financing; or (iv) Common Stock and/or Derivative
Securities issued by the Company in any arms'-length transaction whose primary
purpose is to provide carriage to the websites operated by the Company, in an
amount not to exceed, in the aggregate, 4.99% of the aggregate shares of Common
Stock outstanding; or (v) any securities issuable as set forth in Schedule 6.2.
(c) Procedures. If the Company proposes to undertake an
issuance of New Securities, it shall give CBS written notice of its intention to
issue New Securities (the "Notice"), describing the type of New Securities and
the price and the terms upon which the Company proposes to issue such New
Securities. CBS shall have five business days from the date of delivery of any
such Notice to agree in writing to purchase for cash the CBS Percentage of such
New Securities for the price and upon the terms specified in the Notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased (not to exceed the CBS Percentage).
(d) Failure to Exercise. In the event that CBS fails to
exercise such right to purchase within such five business day period, then the
Company shall have 120 days thereafter to sell the New Securities specified in
the Notice, at a price and upon general terms not more favorable to the
purchasers thereof than specified in the Notice.
(e) CBS Percentage. For purposes of this Agreement, the
term "CBS Percentage" shall mean, on any date of determination, that percentage
determined by dividing (i) the number of Shares to be
16
<PAGE>
issued to CBS by the Company on the Closing Date, as determined pursuant to
Section 1.1 hereof, plus the number of Warrant Shares that CBS is then entitled
to acquire pursuant to the Warrant by (ii) the total number of shares of Common
Stock of the Company outstanding immediately prior to the issuance of New
Securities (assuming issuance of the shares to CBS hereunder and pursuant to the
Warrant) . The CBS Percentage shall in no event exceed 34.8%. For purposes of
this Agreement, the term "Derivative Securities" means any options, warrants,
rights, preferred stock or other securities that are convertible, exercisable or
exchangeable into Common Stock or other capital stock of the Company that is
entitled by its terms to vote generally in the election of directors of the
Company.
6.3 CBS shall take any and all reasonable efforts to obtain Board of
Director approval and authorization of the transactions contemplated by this
Agreement and the Ancillary Agreements within ten business days after the date
of this Agreement.
6.4 The Company shall use all reasonable efforts to file not later
than 30 days after the date hereof, a proxy statement with the SEC seeking
approval by the Company's shareholders of the issuance of Shares pursuant to
this Agreement to the extent required by the rules and regulations of The Nasdaq
Stock Market and, as soon as practicable after such proxy statement is "cleared"
by the SEC, to disseminate such proxy statement to the Company's shareholders.
7. Indemnification.
7.1 Indemnification by the Company. The Company shall indemnify CBS
and its respective officers, directors, employees, stockholders, agents and
representatives against, and hold them harmless from, any loss, liability,
claim, damage or expense (including reasonable legal fees and expenses)
("Losses"), as incurred (payable promptly upon written request), arising from,
in connection with or otherwise with respect to:
(a) any breach of any representation or warranty of the
Company contained in this Agreement, in any Ancillary Agreement or in any
document delivered in connection herewith, determined without regard to any
materiality or Material Adverse Effect qualification in such representation or
warranty;
(b) any breach of any covenant of the Company contained in
this Agreement or in any Ancillary Agreement;
(c) any fees, expenses or other payments incurred or owed
by the Company to any brokers, financial advisors or comparable other persons
retained or employed by it in connection with the transactions contemplated by
this Agreement.
7.2 Indemnification by CBS. CBS shall indemnify the Company and each
of its respective affiliates and each of its respective officers, directors,
employees, stockholders, agents and representatives against, and hold them
harmless from, any Losses, as incurred (payable promptly upon written request),
arising from, in connection with or otherwise with respect to:
(a) any breach of any representation or warranty of CBS
contained in this Agreement or, in any Ancillary Agreement or in any document
delivered in connection herewith, determined without regard to any materiality
or Material Adverse Effect qualification in such representation or warranty;
(b) any breach of any covenant of CBS contained in this
Agreement or in any Ancillary Agreement;
17
<PAGE>
(c) any fees, expenses or other payments incurred or owed
by CBS to any brokers, financial advisors or
comparable other persons retained or employed by it in connection with the
transactions contemplated by this Agreement.
7.3 Calculation of Losses; Limitations. (a) The amount of any Loss
for which indemnification is provided under this Section 7 shall be net of any
amounts actually recovered by the Indemnified Party under insurance policies
with respect to such Loss and shall be (i) increased to take account of any net
Tax cost incurred by the Indemnified Party arising from the receipt of indemnity
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any net Tax benefit realized by the Indemnified Party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
Tax cost or Tax benefit, the Indemnified Party shall be deemed to recognize all
other items of income, gain, loss deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss.
(b) Notwithstanding the foregoing, neither Party shall have
any obligation to indemnify the other Party for Losses described under 7.1(a) or
7.2 (a) hereof until such other party shall incur, in the aggregate, Losses
described under 7.1 (a) or 7.2 (a) hereof in excess of $1.5 million, and then
only for Losses in excess of such amount.
7.4 Termination of Indemnification. The obligations to indemnify and
hold harmless any party, (i) pursuant to Section 7.1(a) or 7.2(a), shall
terminate when the applicable representation or warranty terminates pursuant to
Section 8.3, (ii) pursuant to Section 7.1(b) or 7.2(b), shall terminate on the
one-year anniversary of the Closing Date, and (iii) pursuant to the other
clauses of Section 7.1 or 7.2 shall not terminate; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim (stating in reasonable detail the basis of such claim)
pursuant to Section 7.5 to the party to be providing the indemnification.
7.5 Procedures.
(a) In order for a party (the "Indemnified Party"), to be
entitled to any indemnification provided for under this Agreement in respect of,
arising out of or involving a claim made by any person against the Indemnified
Party (a "Third Party Claim"), such Indemnified Party must notify the party
against whom indemnification is sought (the "Indemnifying Party"), in writing of
the Third Party Claim promptly following receipt by such Indemnified Party of
written notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure. Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, promptly following the Indemnified Party's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party Claim and not also
addressed to the Indemnifying Party.
(b) If a Third Party Claim is made against an Indemnified
Party, the Indemnifying Party shall be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the Indemnifying Party; provided that such counsel is not reasonably
objected to by the Indemnified Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for any legal expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof unless the
Indemnifying Party has failed to promptly assume the defense of a Third Party
Claim after receipt of notice of the commencement thereof or if there are
defenses available to the Indemnifying Party and the
18
<PAGE>
Indemnified Party which are sufficiently disparate and several such that
continued representation by one counsel (or firm of counsel) of both the
Indemnifying and the Indemnified Parties would materially prejudice the
assertion or prosecution of such defenses or otherwise result in a conflict of
interest for such counsel. If the Indemnifying Party assumes such defense, the
Indemnified Party shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall
control such defense. If the Indemnifying Party chooses to defend or prosecute a
Third Party Claim, all the Indemnified Parties shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
Indemnifying Party's request) the provision to the Indemnifying Party of records
and information that are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the Indemnifying Party assumes the defense of a Third Party Claim, the
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying Party's
prior written consent (which consent shall not be unreasonably withheld). If the
Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified
Party shall agree to any settlement, compromise or discharge of a Third Party
Claim that the Indemnifying Party may recommend and that by its terms obligates
the Indemnifying Party to pay the full amount of the liability in connection
with such Third Party Claim, which releases the Indemnified Party completely in
connection with such Third Party Claim and that would not otherwise adversely
affect the Indemnified Party. Notwithstanding the foregoing, the Indemnifying
Party shall not be entitled to assume the defense of any Third Party Claim (and
shall be liable for the fees and expenses of counsel incurred by the Indemnified
Party in defending such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the Indemnified Party that the Indemnified Party reasonably
determines, after conferring with its outside counsel, cannot be separated from
any related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the Indemnifying Party shall be entitled to assume the defense of the
portion relating to money damages.
(c) Other Claims. In the event any Indemnified Party should
have a claim against any Indemnifying Party under Section 7.1 or 7.2 that does
not involve a Third Party Claim being asserted against or sought to be collected
from such Indemnified Party, the Indemnified Party shall deliver notice of such
claim with reasonable promptness to the Indemnifying Party. The failure by any
Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to such Indemnified Party
under Section 7.1 or 7.2, except to the extent that the Indemnifying Party
demonstrates that it has been materially prejudiced by such failure. The
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
(d) Indemnification Payments. The Company may elect to make
any payments due and owing to CBS pursuant to this Section 7 by agreeing to
first reduce the amount of any advertising or promotion deliverable to the
Company or any of its affiliates pursuant to the Advertising and Promotion
Agreement by an amount equal to the amount of any payment due and owing to CBS,
and if such amount has been exhausted, by agreeing to reduce the amount of any
advertising revenues, additional advertising and promotion or content
deliverable to the Company or any of its affiliates under the Content License
Agreement by an amount equal to the amount of any payment due and owing to CBS.
8. Miscellaneous
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8.1 Waivers and Amendments. Any amendment or modification to this
Agreement or the rights of either party must be by the written agreement of the
parties.
8.2 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of New York as such laws are applied to agreements
between New York residents entered into and to be performed entirely within New
York.
8.3 Survival. The representations and warranties made herein shall
survive the Closing of the transactions contemplated hereby until the second
anniversary of the Closing, notwithstanding any investigation made by CBS. All
written statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of any of the parties pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by such party hereunder as of the date of such
certificate or instrument.
8.4 Assignments. This Agreement and the rights hereunder may not be
assigned, transferred or conveyed without the prior written consent of the other
party hereto, which consent may not be unreasonably withheld or delayed.
8.5 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person or entity,
other than the parties hereto and such assigns, any legal or equitable rights
hereunder.
8.6 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
Parties hereto.
8.7 Entire Agreement. This Agreement and the Ancillary Agreements
delivered pursuant hereto constitute the full and entire understanding and
agreement between the Parties with regard to the subjects hereof and thereof and
they supersede, merge and render void every other prior written and/or oral
understanding or agreement among or between the Parties hereto with respect to
such subject matters.
8.8 Notices, etc. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when so delivered
by hand, or if mailed, three days after mailing (one business day in the case of
express mail or overnight courier service), as follows:
if to the Company, to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, Florida, 33431-7383
Attention: Mitchell Rubenstein, Chief Executive Officer
with a copy to:
W. Robert Shearer, General Counsel
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, Florida, 33431-7383
20
<PAGE>
with a copy (which shall not constitute notice pursuant to
this Section 8.8), to:
Greenberg Traurig
MetLife Building, 15th Floor
200 Park Avenue
New York, New York 10166
Attention: Clifford E. Neimeth, Esq.
if to CBS, to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Fredric G. Reynolds, Executive Vice President
and Chief Financial Officer
with a copy to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Louis J. Briskman, Executive Vice President and
General Counsel
8.9 Severability. In case any provision of this Agreement shall be
found by a court of law of competent jurisdiction to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
8.10 Finder's Fees and Other Fees. (a) The Company (i) represents and
warrants that other than the engagement of Wasserstein Perella & Co., Inc. the
cost of which engagement the Company agrees to exclusively pay in full, it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and, (ii) hereby agrees to indemnify and to hold CBS harmless
from and against any liability for commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Company, or any of the employees or representatives is responsible.
(b) CBS (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Company harmless
from and against any liability for any commission or compensation in the nature
of a finder's fee to any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
CBS or any of its employees or representatives is responsible.
(c) The Company and CBS shall each bear their own expenses
and legal fees in connection with the consummation of this transaction.
21
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8.11 Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.13 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to CBS, as the case may be, shall
impair any such right, power or remedy of the Company or CBS, nor shall it be
construed to be a waiver of any breach or default under this Agreement, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any delay or omission to exercise any right, power or
remedy or any waiver of any single breach or default be deemed a waiver of any
other right, power or remedy or breach or default theretofore or thereafter
occurring. All remedies, either under this Agreement, or by law otherwise
afforded to the Company or CBS, as the case may be, shall be cumulative and not
alternative.
8.14 Knowledge Whenever any representation or warranty of the Company
contained in this Agreement or in any schedule, exhibit or other document
delivered in connection with this Agreement is qualified to the "knowledge" of
the Company, such qualification shall mean the actual knowledge, after due
inquiry, of Mitchell Rubenstein, Laurie S. Silvers, W. Robert Shearer and Eric
Soto.
22
<PAGE>
IN WITNESS WHEREOF, the Parties hereby have duly executed and delivered this
Stock Purchase Agreement effective as of the date first above written.
CBS CORPORATION
By: /s/ Frederic G. Reynolds
----------------------------------
Fredric G. Reynolds
Its: Executive Vice President and Chief
Financial Officer
BIG ENTERTAINMENT, INC.
By: /s/ Mitchell Rubenstein
------------------------------------
Mitchell Rubenstein
Its: Chief Executive Officer
23
ADVERTISING AND PROMOTION AGREEMENT
-----------------------------------
AGREEMENT made as of the ___ day of _______, 1999, by and between CBS
Corporation, a Pennsylvania corporation with offices at 51 West 52nd Street, New
York, New York 10019 ("CBS") and hollywood.com, Inc., a California corporation
with offices at 2255 Glades Road, Suite 237 W, Boca Raton, Florida, 33431-7383
("Hollywood" or the "Company").
1. GENERAL DEFINITIONS
1.1 "Affiliate" - means any Person that directly or indirectly
(through one or more intermediaries) controls, is controlled by, or is under
common control with such Person concerned.
1.2 "Annual Ad Sales Commitment" - shall have the meaning set forth
in paragraph 2.2 hereof.
1.3 "Annual Additional Promo Commitment" - shall have the meaning set
forth in subparagraph 2.3(a) hereof.
1.4 "Arbitration Proceeding" - means a proceeding conducted in
accordance with the following rules:
(a) such proceeding is commenced by the party concerned,
within five (5) days after notice to the other party of its intent to elect
arbitration (under paragraph 1.6 below), and requesting the New York office of
the American Arbitration Association to designate one arbitrator (who is a
retired federal or state judge or a member of the CPC Panel of Distinguished
Neutrals of the CPR Institute for Dispute Resolution and who is not and has not
been an affiliate, employee, consultant, officer, director or stockholder of CBS
or Big Entertainment, Inc. ("BEI") to conduct the proceeding;
(b) within seven (7) days after the designation of the
arbitrator, the arbitrator and the parties shall meet, at which time each party
shall be required to set forth in writing all disputed issues, together with its
proposed resolution of the matter, all in reasonable detail and containing such
supporting materials it may choose to submit;
(c) the arbitrator shall set a date for a hearing, which
shall be no later than ten (10) days after the submission of written proposals
pursuant to subparagraph 1.4(b) above, to discuss each of the issues identified
by the parties. Each party shall have the right to be represented by counsel.
The arbitration shall be governed by the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that the Federal Rules of
Evidence shall apply with regard to the admissibility of evidence;
(d) the arbitrator shall rule on the matter at issue within
seven (7) days after the completion of the hearing described in subparagraph
1.4(c) above. All rulings of the
<PAGE>
arbitrator shall be in writing, shall be delivered to the parties and shall be
final and conclusive as to any such matter; and
(e) the arbitration shall be conducted in New York City.
1.5 "Capital Stock" - means any common stock or preferred stock of
BEI and any options, warrants, rights, or other securities that are convertible,
exercisable, or exchangeable into common stock or preferred stock of BEI.
1.6 "CBS Competitor" - means any Person, other than CBS or any
Affiliate of CBS, who is primarily engaged in North America directly, or
indirectly through an Affiliate, in radio or television programming or radio or
television program distribution (including, without limitation, free
over-the-air, telephone, Internet or microwave). A CBS Competitor shall not
include any of the following:
(a) any Person engaged in television programming or
television program distribution, provided such Person's aggregate
revenues generated from television programming and television program
distribution are less than five percent (5%) of the aggregate
revenues of the television broadcast market.
(b) any Person engaged in free over-the-air radio
programming or radio program distribution, provided such Person is
not one of the top two (excluding CBS) nationally ranked radio
broadcast networks, based on overall radio audience ratings.
(c) any Person engaged in television programming or
television program distribution over the Internet ("Television
Internet Concern"), provided either of the following conditions are
met:
(i) the aggregate revenue of the Internet video
streaming market/industry ("Internet Video Streaming
Market") is less than 10% of the aggregate revenue for the
network television broadcast market; or
(ii) if the aggregate revenue of the Internet
Video Streaming Market is equal to or more than 10% of the
aggregate revenue for the network television broadcast
market, then the Television Internet Concern shall not be a
CBS Competitor if the aggregate revenue of such Television
Internet Concern generated by television programming or
television program distribution over the Internet is less
than 10% of the aggregate revenue of the Internet Video
Streaming Market.
The foregoing markets and revenues shall be identified/delineated by
Veronis, Suhler & Associates, provided, however, that if Veronis,
Suhler is not a nationally reputable media/ communications
forecasting service or does not (as a matter of course) provide the
relevant data, the parties shall mutually agree upon a nationally
reputable media/communications forecasting service (the "Forecasting
Service"). In the event that
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the parties are unable to reach agreement upon the Forecasting
Service within ten (10) business days of commencement of discussion
on the issue, then either party hereto shall have the right to elect
to commence an Arbitration Proceeding to determine the Forecasting
Service.
(d) any Person engaged in radio programming or radio
program distribution over the Internet ("Radio Internet Concern"),
provided either of the following conditions are met:
(i) the aggregate revenue of the Internet radio
streaming market/industry ("Internet Radio Streaming
Market") is less than 10% of the aggregate revenue for the
radio broadcast market; or
(ii) if the aggregate revenue of the Internet
Radio Streaming Market is equal to or more than 10% of the
aggregate revenue for the radio broadcast market, then the
Radio Internet Concern shall not be a CBS Competitor if the
aggregate revenue of such Radio Internet Concern generated
by radio programming or radio program distribution over the
Internet is less than 10% of the aggregate revenue of the
Internet Radio Streaming Market.
The foregoing markets and revenues shall be identified/delineated by
Veronis, Suhler & Associates, provided, however, that if Veronis,
Suhler is not a nationally reputable media/ communications
forecasting service or does not (as a matter of course) provide the
relevant data, the parties shall mutually agree upon a nationally
reputable media/communications forecasting service (the "Forecasting
Service"). In the event that the parties are unable to reach
agreement upon the Forecasting Service within ten (10) business days
of commencement of discussion on the issue, then either party hereto
shall have the right to elect to commence an Arbitration Proceeding
to determine the Forecasting Service.
(e) any Person who owns or operates a multichannel video
program distribution service, a cable system, a wireless cable system
or a direct broadcast satellite system, so long as such Person does
not otherwise engage (either directly or indirectly through an
Affiliate) in television or radio programming or program
distribution.
(f) any Person engaged in the production of television
programs or other audio visual materials, so long as such Person does
not otherwise engage (either directly or indirectly through an
Affiliate) in television or radio programming or program
distribution.
(g) AT&T Corporation, Comcast Corporation, Gannett Co, Inc.
or The Times Mirror Company, as constituted on the date of this
Agreement.
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(h) any Person engaged in television programming or
television program distribution, so long as neither CBS nor any
Affiliate of CBS owns a majority interest in the CBS Television
Network.
(i) any Person engaged in radio programming or radio
program distribution, so long as neither CBS nor any Affiliate of CBS
owns a majority interest in Infinity Broadcasting Corporation.
The revenue calculations in the preceding sentences shall be based on the last
full fiscal year of the Person (including, without limitation, Television
Internet Concern or Radio Internet Concern) concerned and the last full calendar
year of the applicable market/industry.
1.7 "CBS Content" - means any Television Content, including archival
Content, related to the movie business or any particular motion picture and
contained in CBS's regularly scheduled hard news broadcasts, scheduled special
events coverage and unscheduled live breaking news coverage, which CBS has the
right to license for use on the Internet. Notwithstanding anything contained
herein to the contrary, nothing herein shall be construed to grant Hollywood any
rights to CBS Radio Content.
1.8 "CBS PLUS" - means a corporation-wide cross media sales unit that
designs customized consumer-driven media and marketing programs for advertisers.
CBS PLUS media and marketing programs are executed in cooperation with the sales
organizations of the entire CBS organization, including: CBS Television Network,
the CBS Television Stations Group, CBS/Infinity Radio Stations, CBS Cable and
TDI, Infinity Broadcasting Corporation's outdoor advertising business.
1.9 "CBS Media Properties" - means the CBS Television Network, CBS
Owned and Operated Television and Radio Stations (including those owned and
operated by CBS Affiliates, including Infinity Broadcasting Corporation), CBS
Cable, TDI, and CBS wholly-owned Internet websites.
1.10 "Co-Branded Site" - means an Internet Site: (a) that
contains/displays a majority of the Content displayed on the Hollywood Site, and
displays such Content in the same form and format as featured on the Hollywood
Site; (b) is branded with the Hollywood name (or trademark) and the
name/trademark of the third-party Web Site and (c) is accessed from the third
party Web Site.
1.11 "Collaboration Agreement" - means any one of the following
agreements between or among CBS, Hollywood and BEI: (a) this Agreement; (b) the
Content Agreement dated as of even date (the "Content License") (c) the Stock
Purchase Agreement dated as of even date; (d) the Investor's Rights Agreement
dated as of even date and (e) the Voting Agreement dated as of even date.
1.12 "Content" - means text, graphics, photographs, video, audio
and/or other data or information, including, without limitation, Television
Content, relating to any subject, and/or advertisements.
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1.13 "Contract Year" - means the annual period beginning on the date
of commencement of the term of this Agreement, and each subsequent annual period
during the term beginning on the anniversary of that commencement date (as such
Year may be suspended or extended, and those dates postponed, as provided
herein).
1.14 "Gross Ad Revenues" - means Gross cash revenues accrued from the
sale of advertising on the Hollywood Site (as defined below), provided that such
revenues or other consideration shall not be reduced for royalties, commissions,
fees or other expenses incurred in generating such revenues and without
reduction for taxes.
1.15 "Hollywood Site" - means: (a) the Internet Web Site owned or
controlled by Hollywood (and is accessed via the URL www.hollywood.com) that
features or will feature movie, music and television-related news, data and
merchandise offers and related Content and merchandise offers; (b) any
Co-Branded Site and (c) any Mirror Site.
1.16 "Internet" - means a global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit content that is directly or indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such content is delivered through on-line browsers, off-line
browsers, or through "push" technology, electronic mail, broadband distribution,
satellite, wireless or otherwise.
1.17 "Internet Site" or "Web Site" - means any site or service
delivering content on or through the Internet, including, without limitation,
any on-line service such as America Online, CompuServe, Prodigy and the
Microsoft Network.
1.18 "Person" - means any individual, partnership, corporation or
organized group of persons, including agencies and other instrumentalities of
governments and states.
1.19 "Term" - shall have the meaning set forth in paragraph 3.1
below.
1.20 "Television Content" - means Content broadcast on television.
1.21 "URL Scroll" - means the exhibition of a written representation
of a URL in or during (i.e., at any time from the opening frame through the end
of the closing credits) a television program or in/on an Internet Web Site page.
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2. SCOPE
2.1 (a) During the Term, CBS shall arrange for the placement of
advertising and promotion of the Hollywood Site in the media category or type
set forth on Exhibit A attached hereto, at the rate of Ten Million Dollars
($10,000,000) per Contract Year (based upon the value ascribed for such
advertising in subparagraph 2.1(b) below). A portion of the foregoing
$10,000,000 amount may, at the option of Hollywood, be allocated to production
costs for such advertising and promotion incurred by CBS or its Affiliates, at
Hollywood's request. CBS and Hollywood shall meet periodically to jointly
develop a media plan to formulate the Contract Yearly allocation of Ten Million
Dollars of advertising and promotion, using the media categories or types set
forth in Exhibit A. The media plan shall provide broad-based exposure for the
Hollywood Site, including prominent placements in conjunction with appropriate
entertainment-related events and programming. The media plan shall provide for
the distribution of television and radio ads over various time periods. CBS will
endeavor to implement the advertising and promotional goals set forth in the
media plan. All advertising and promotional materials shall be subject to the
applicable CBS Television Network Advertising Guidelines and CBS's standard
preemption policies. CBS shall not have to make any ad placements if the
exigencies of time or current or future contractual obligations entered into
prior to the time the Company requests such advertising, prevent or restrict CBS
from doing so.
(b) The rate card value of all broadcast advertising and
promotion provided hereunder shall be based upon the average paid unit price,
excluding barter, for spots (excluding political spots) purchased during the
specific CBS Television Network, CBS television station, CBS/Infinity owned and
operated radio station or CBS Cable broadcast in which the advertising or
promotion occurs. The value of the banner advertising on CBS Internet Sites
shall have a rate card price equal to the average price paid or payable
(excluding barter) by third parties for banner advertising during the month in
which such advertising is delivered. The price of the billboard ad concerned
shall be based on the average price paid or payable (excluding barter) by any
third party during the same time period for any similar (in terms of, among
other things, location, size, and type of billboard) billboard ad(s) during the
month prior to the month in which such billboard ad is delivered.
(c) CBS will provide to Hollywood calendar monthly
statements, calendar quarterly statements (i.e., March 31, June 30, September
30, December 31) and calendar yearly statements, within twenty (20) days
following expiration of the time period concerned (i.e. calendar month, quarter
and year) showing the (i) value attributable to each of the media categories and
types with respect to the advertising and promotions purchased by Hollywood
during the statement period and (ii) the calculation of the aggregate value of
advertising purchased.
2.2 (a) CBS will maintain accurate books and records which report the
expenditure of the advertising and promotional value by Hollywood and
information from which the calculation can be derived. Hollywood may, at its own
expense, examine those books and records, as provided in this Section 2.2.
Hollywood may make such an examination for a particular statement provided
pursuant to subparagraph 2.1(c) only once and such examination
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must occur within three (3) years after the date such statement is sent by CBS
to Hollywood. (CBS will be deemed conclusively to have sent Hollywood the
statement concerned at the time prescribed in Section 2.1(c), unless Hollywood
notifies CBS otherwise with respect to any statement within sixty (60) days
after that designated time.) Hollywood may make those examinations only during
CBS's usual business hours, and at the address set forth herein for the
provision of notices to CBS, unless otherwise notified. Hollywood will be
required to notify CBS at least ten (10) days before the date of planned
examination. If Hollywood's examination has not been completed within two (2)
months from the time Hollywood begins it, CBS may require Hollywood to terminate
it on seven (7) days notice to Hollywood at any time.
(b) If any examination of CBS's books and records discloses
that:
(i) CBS has failed to properly account for
advertising and promotions purchased by Hollywood hereunder, then CBS
will make appropriate adjustment(s) to the cumulative total purchased
by Hollywood.
(ii) CBS has overstated the value of advertising
purchased by more than 7.5%, then CBS shall reimburse Hollywood for
its direct out-of-pocket expenses incurred in identifying such
material overstatement.
2.3 (a) During each Contract Year, upon Hollywood's notice to CBS,
Hollywood shall have the option to require CBS to sell
advertisements/advertising space on the Hollywood Site totaling Gross Ad
Revenues up to $1.5 million per Contract Year (the "Annual Ad Sales Option"),
provided however, that Hollywood shall reduce the amount of Annual Additional
Promo Commitment available to Hollywood, pursuant to paragraph 2.4 below (i.e.,
$4,300,000 per Contract Year) by the Annual Ad Sales Option or any portion
thereof elected/sought by Hollywood.
(b) (i) (A) CBS shall include the Hollywood Site in all of
its CBS PLUS advertising sales programs and presentations to the extent that
such programs/presentations are appropriate in respect of the sale of
advertising on Hollywood Site, and (B) CBS shall invite Hollywood ad sales staff
members to attend all CBS PLUS sales meetings specifically related to the sale
of advertisements/advertising space on the Hollywood Site; and (ii) CBS will
have the right to bundle inventory relating to the Hollywood Site with
television, radio, cable, Internet and billboard inventory, although Hollywood
shall only be credited with the pro-rated value of the advertising which appears
on the Hollywood Site.
(c) Hollywood shall pay CBS a commission of eight per cent
(8%) of Gross Ad Revenues (the "CBS Commission") with respect to advertising
sold on the Hollywood Site, in excess of the Annual Ad Sales Option concerned,
if any. The CBS Commission shall be payable upon Hollywood's receipt of payment
from the advertiser. CBS shall coordinate all such sales of
advertisements/advertising space with Hollywood's ad sales staff or as otherwise
agreed to by the parties. All sales of advertisements/advertising space by CBS
shall be consistent with CPM rates and other pricing then being charged on the
Hollywood Site. All sales in excess of
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the Annual Ad Sales Option shall be subject to the availability of advertising
inventory on the Hollywood Site.
2.4 (a) (i) In addition to the advertising and promotion described in
paragraph 2.1 above, Hollywood shall have the right to require CBS to arrange
for placement of advertising and promotion of the Hollywood Site (in the media
category or type set forth in Exhibit A, and subject to the terms of this
Agreement) at a Market Value of no more than Four Million Three Hundred Thousand
Dollars ($4,300,000) during each of the first six Contract Years and Four
Million Two Hundred Thousand Dollars ($4,200,000) during the seventh Contract
Year (the "Annual Additional Promo Commitment"), subject to the reductions
prescribed in section 2.4(a)(ii) below.
(ii) The Annual Additional Promo Commitment shall
be reduced by: (A) the Annual Ad Sales Option, as prescribed in
paragraph 2.3 above; and (B) the Market Value of any Content provided
by CBS (during the Contract Year concerned), pursuant to section
2.4(a)(i) of the Content License.
(b) (i) Upon commencement of the Contract Year and/or each
calendar quarter of the Contract Year concerned, Hollywood shall use
reasonable efforts to notify CBS of its election to license CBS
Content, exercise the Annual Ad Sales Option or utilize the Annual
Additional Promo Commitment, and the respective Market Values
thereof.
(ii) If, upon expiration of the Contract Year
concerned, Hollywood has failed to notify CBS of its election, as set
forth in section 2.4(b)(i) above, then the Annual Additional Promo
Commitment (or any portion thereof for which Hollywood has failed to
notify CBS of its election) will be deemed forfeited.
(iii) Except as set forth in section 2.4(b)(ii)
above, if upon expiration of the Contract Year concerned, the Annual
Additional Promo Commitment has not been exhausted, then the amount
of the unused portion of the Annual Additional Promo Commitment may
be carried over to the immediately subsequent Contract Year (the
"Annual Promo Carryover"), it being understood, however, that (A) in
the immediately subsequent Contract Year the Annual Promo Carryover
shall be exhausted (first) before the Annual Additional Promo
Commitment for such subsequent Contract Year is utilized (B)
Hollywood shall identify the intended use for (i.e., allocate) the
Annual Promo Carryover during the first thirty (30) days of such
subsequent Contract Year, and CBS shall use reasonable efforts to
satisfy the allocation request depending upon the availability of the
inventory/item sought. In the event that the inventory is not
available, then Hollywood shall make a substitute allocation within
thirty (30) days following CBS's advising Hollywood that the
inventory/item sought is unavailable, (C) any portion of the Annual
Promo Carryover unused as of the expiration date of the Contract Year
concerned (i.e., such subsequent Contract Year) shall be deemed
forfeited, except to the extent Hollywood complied with the notice
requirements prescribed herein and CBS did
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not deliver such portion of the Annual Promo Carryover and (D) any
portion of Annual Additional Promo Commitment (including any Annual
Promo Carryover) unused as of the expiration date of the Term shall
be deemed forfeited, except to the extent Hollywood complied with the
notice requirements prescribed herein and CBS did not deliver such
portion of the Annual Additional Promo Commitment or Annual Promo
Carryover, as applicable.
(c) "Market Value", as used in this paragraph 2.3, shall
mean:
(i) with respect to CBS Content, the average
price paid by a third party for the license of such Content on the
Internet (provided that CBS has an established market for licenses on
the Internet) or, if no such rate (or CBS market) exists, then the
average price for worldwide over-the-air free television use
(including in all instances, without limitation, any costs related to
the retrieval, preparation (e.g., tape transfer and/or duplication)
or delivery of CBS Content).
(ii) with respect to advertising sales on the
Hollywood Site, the proportionate dollar amount (of the Gross Ad
Revenues) of the Ad Sales Option .
(iii) with respect to CBS advertising and
promotion, the unit price for the advertising medium concerned, as
described in subparagraph 2.1(b) of this Agreement.
3. TERM
3.1 The term of this Agreement ("Term") shall begin as of the date
hereof and shall continue in full force and effect for a period of seven (7)
consecutive years, through and including __________, 2006, unless it is
terminated earlier in accordance with the terms and conditions stated herein.
4. WARRANTIES, REPRESENTATIONS; INDEMNITEES
4.1 (a) CBS represents and warrants that:
(i) it has full power and authority to enter
into and fully perform this Agreement;
(ii) this Agreement has been duly authorized and
is enforceable in accordance with its terms; and
(iii) at all times, it will comply with all
applicable federal, state, local and foreign laws and regulations.
(b) The Company represents, warrants and covenants that:
(i) it has full power and authority to enter
into and fully perform this Agreement;
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(ii) this Agreement has been duly authorized and
is enforceable in accordance with its terms;
(iii) the Hollywood Site will be produced,
advertised and transmitted in accordance with all applicable federal,
state, local and foreign laws and regulations; and
(iv) at all times, it will maintain the Hollywood
Site in a professional manner consistent with applicable industry
standards. In connection therewith, the Company shall satisfy the
following minimum performance standards: (A) use its best efforts to
maintain continuous accessibility to the public on the Internet; (B)
capability of sustaining traffic of no less than 22 million page
views per month, including, without limitation, the existence of a
viable technological response, in the event that the foregoing
traffic number is exceeded, that is designed to handle at least 44
million page views per month; (C) functionality as
outlined/delineated in the most recent business plan for Hollywood;
(D) monitoring of the Hollywood Site's traffic flows on a regular
basis and (in addition to and above and beyond clause (B) above)
implementation of plans to meet expected traffic flows and (E)
maintenance of standards of quality and ease of use no less than the
quality and ease of use of the Hollywood Site as of this date.
(v) advertising and promotion material and any
portion thereof created by or on behalf of Hollywood or furnished by
Hollywood to CBS and the use thereof shall not violate any law or
violate the rights of any Person.
4.2 (a) Each party to this Agreement (the "Indemnifying Party") shall
at all times indemnify, hold harmless and defend the other party (collectively,
the "Indemnified Party") from and against any loss, cost, liability or expense
(including court costs and reasonable attorneys' fees) arising out of or
resulting from any breach by the Indemnifying Party of any representation,
warranty or covenant contained herein. In the event of any claim, the
Indemnified Party shall: (i) promptly notify the Indemnifying Party of the
claim; (ii) allow the Indemnifying Party to direct the defense and settlement of
third party claim with counsel of the Indemnifying Party's choosing; and (iii)
provide the Indemnifying Party, at the Indemnifying Party's expense, with
information and assistance that is reasonably necessary for the defense and
settlement of the third party claim. The Indemnified Party reserves the right to
retain counsel, at the Indemnified Party's sole expense, to participate in the
defense of any such claim. The Indemnifying Party shall not settle any such
claim or alleged claim without first obtaining the Indemnified Party's prior
written consent, which consent shall not be unreasonably withheld, if the terms
of such settlement would adversely affect the Indemnified Party's rights under
this Agreement or otherwise. If the Indemnifying Party assumes the defense and
settlement of the claim as set forth above, then the Indemnifying Party's only
obligation is to satisfy the claim, judgment or approved settlement.
(b) Any sums payable by Hollywood under this paragraph 4.2
may be offset by Hollywood against the Market Value of any advertising, Content
or Ad Sales Option deliverable by CBS (the "CBS Deliverable(s)") pursuant to
this Agreement or the Content License (the "Indemnity Offset"). The amount or
Market Value of the CBS Deliverable concerned will be reduced by the proportion
thereof used for or contributed to the Indemnity
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Offset. For purposes of the Indemnity Offset, Hollywood shall be obligated to
exhaust the CBS Deliverables as follows:
(i) The Market Value of any advertising or
promotion, deliverable pursuant to paragraph 2.1 of this Agreement,
shall be fully exhausted before any other CBS Deliverable is used
for/contributed to the Indemnity Offset.
(ii) Provided the Deliverable described in
section 4.2(b)(i) above has been fully exhausted, the Market Value of
any Annual Additional Promo Commitment (deliverable pursuant to
paragraph 2.4 above) or Annual Ceiling (as such term is defined in
the Content License and deliverable pursuant to subparagraph 2.3(c)
of the Content License), shall be fully exhausted before any other
CBS Deliverable is used for/contributed to the Indemnity Offset.
(iii) The Market Value of any Ad Sales Option,
deliverable pursuant to paragraph 2.2 of this Agreement, may be used
for/contributed to the Indemnity Offset only if and when the
Deliverables described in sections 4.2(b)(i) and (ii) above have been
fully exhausted.
For avoidance of doubt, CBS's obligation to deliver any CBS Deliverable,
pursuant to this Agreement or the Content License, shall be extinguished (or
reduced, as applicable) to the extent that such CBS Deliverable is used
for/contributed to any Indemnity Offset.
5. REMEDIES
5.1 (a) CBS shall have the right to suspend and/or withdraw placement
of all advertising and promotion and Hollywood Site ad sales:
(i) during such time as the Company is enjoined
from using the tradename, trademark or term(s) "HOLLYWOOD.com" on or
in connection with the Hollywood Site and has not renamed the
Website. The Company shall rename the Hollywood Site within twenty
(20) days following the issuance of any injunction or the resolution
of any claim which requires the Company to cease using the tradename,
trademark or term(s) "HOLLYWOOD.com" on or in connection with its
Website.
(ii) In the event that the Hollywood Site is not
operational for a period of seventy-two (72) consecutive hours until
it becomes operational in a manner consistent with the standards in
the industry.
(b) CBS may exercise its right to suspend and/or withdraw
placement of all advertising and promotion and all advertising sales pursuant to
this paragraph 5.1 by sending the appropriate notice to Hollywood. No exercise
by CBS of its rights under this Article 5 will limit CBS's remedies by reason of
Hollywood's or BEI's default, CBS's rights to exercise any other rights under
this Article 5, or any of CBS's other rights.
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5.2 CBS shall have the right to terminate this Agreement if any of
the following occurs:
(a) The Hollywood Site contains Content which, in CBS's
reasonable business judgment, violates Article I or Article III of the CBS
License Guidelines (as set forth in the Content License) and Hollywood fails to
remove such Content from the Hollywood Site within ten (10) days after written
notice of CBS's objection thereto demanding the removal of such Content.
(b) Except as otherwise set forth in subparagraph 5.2(a)
above, either Hollywood or BEI (if applicable) breaches any material term or
condition of this Agreement, or any Collaboration Agreement and fails to: (i)
cure such breach within thirty (30) days after CBS's notice of such breach, or
(ii) complete curing such breach within sixty (60) days following CBS's notice
of such breach; provided however that this clause (ii) shall only apply to a
default that is incapable of being cured in thirty (30) days. The foregoing cure
period will not apply: (i) solely with respect to this Agreement, to a term or
condition (in this Agreement) for which a specific cure period is provided; or
(ii) to a breach incapable of being cured.
(c) BEI or Hollywood: (i) becomes insolvent or unable to
pay its debts as they mature or makes an assignment for the benefit of its
creditors; (ii) is the subject of a voluntary petition in bankruptcy or any
voluntary proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors, if such petition or proceeding is not
dismissed within sixty (60) days of filing; (iii) becomes the subject of any
involuntary petition in bankruptcy or any involuntary proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within sixty (60)
days of filing; or (iv) is liquidated or dissolved.
(d) BEI issues to a Person any voting securities of BEI
and: (i) at the time of such issuance such Person is a CBS Competitor and (ii)
as a result of such issuance such Person beneficially owns or controls, directly
or indirectly, more than fifteen (15%) percent of the total voting power of BEI,
in the aggregate. For the purposes of this subparagraphs 5.2(d), 5.2(e) and
5.2(f): (x) the term "beneficial ownership" shall have the meaning set forth in
Section 13(d) of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder; (y) the term "total voting power" shall mean
at any time, the total number of votes that may be cast in the election of
directors of BEI at any meeting of the holders of voting securities at such time
for such purpose; and (z) the term "voting securities" shall mean the Capital
Stock and any other securities issued by BEI having the power to vote in the
election of directors of BEI including, without limitation, any securities
having such power only upon the occurrence of a default or any other
extraordinary contingency.
(e) BEI issues to a Person any voting securities of BEI
and: (i) at the time of such issuance such Person is a CBS Competitor that
beneficially owns or controls, directly or indirectly, more than fifteen (15%)
percent of the total voting power of BEI and (ii) as a result of such issuance
the voting power of such Person is increased by any amount.
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(f) BEI's board of directors consents to the acquisition of
voting securities by a CBS Competitor such that as a result of such consent, the
CBS Competitor beneficially owns or controls, directly or indirectly, more than
15% of the total voting power of BEI and at the time of such consent the Rights
Agreement by and between BEI and American Stock Transfer & Trust Company dated
August 23, 1996, as amended, is in full force and effect.
(g) Hollywood discontinues using the "Hollywood.com" mark
(or any substitute mark approved by CBS) and does not establish use of a
substitute mark reasonably acceptable to CBS within thirty (30) days.
(h) The Hollywood Site ceases to operate due to any
circumstance(s) (other than circumstances beyond Hollywood's reasonable control,
which circumstances simultaneously affect a substantial number of web sites on
the Internet) for: (i) a period of thirty (30) consecutive days; or (ii) a
period of one week at least two times in any six (6) month period.
CBS may exercise its right to terminate pursuant to this paragraph 5.2 by
sending Hollywood appropriate written notice. No exercise by CBS of any of its
rights under this Article 5 will limit CBS's remedies by reason of Hollywood's
or BEI's default, CBS's rights to exercise any other rights under this Article
5, or any of CBS's other rights.
6. GENERAL
6.1 Neither party may assign this Agreement, or their respective
rights and obligations hereunder, in whole or in part without the other party's
prior written consent. Any attempt to assign this Agreement without such consent
shall be void and of no effect ab initio. Notwithstanding the foregoing, CBS may
assign this Agreement or any of its rights and obligations hereunder to an
affiliate or to any entity controlling, controlled by or under common control
with, CBS, or to any entity that acquires CBS by purchase of stock or by merger
or otherwise, or by obtaining substantially all of CBS's assets (a "CBS
Assignee"), provided that any such CBS Assignee, or any division thereof,
thereafter succeeds to all of the rights and is subject to all of the
obligations of CBS under this Agreement.
6.2 Each party hereto irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County;
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby or thereby. Each the parties
hereto agrees to commence any such action, suite or proceeding either in the
United States District Count for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties hereto further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth below shall be effective service of process for any action,
suite or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this paragraph
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6.2. Each of the parties hereto irrevocably and unconditionally
waives any objection to the laying of venue of any action, suite or proceeding
arising out of this Agreement or the transactions contemplated hereby in (i) the
Supreme Court of the State of New York, New York County; or (ii) the United
States District Court for the Southern District of New York, and hereby and
thereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in any inconvenient forum.
6.3 If any provision of this Agreement (or any portion there) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
6.4 All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(a) if to Hollywood,
hollywood.com, Inc.
2255 Glades Road, Suite 237W
Boca Raton, Florida 33431
Attention: Mitchell Rubenstein, Chief Executive Officer
with a copy to:
hollywood.com, Inc.
2255 Glades Road, Suite 237W
Boca Raton, Florida 33431
Attention: W. Robert Shearer, General Counsel
and a copy to:
hollywood.com, Inc.
1620 26th Street, Suite 370 South
Santa Monica, CA 90404
Attention: Scott Shrock, Vice President of Operations
and a copy to:
Greenberg Traurig
200 Park Avenue
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New York, New York 10166
Attention: Clifford E. Neimeth, Esq.
(b) if to CBS:
CBS Corporation
51 West 52nd Street
New York, New York 10019
Attention: Chief Financial Officer
with a copy to:
CBS Corporation
51 West 52nd Street
New York, New York 10019
Attention: General Counsel
6.5 The parties to this Agreement are independent contractors. There
is no relationship of partnership, joint venture, employment, franchise, or
agency between the parties. Neither party shall have the power to bind the other
or incur obligations on the other's behalf without the other's prior written
consent.
6.6 No failure of either party to exercise or enforce any of its
rights under this Agreement shall act as a waiver
of such right.
6.7 This Agreement, along with any Exhibits hereto, contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
6.8 This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to each of the other parties.
6.9 This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
6.10 This Agreement shall be governed by and construed in accordance
with the internal laws of the state of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
6.11 This Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
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6.12 The headings contained in this Agreement or in any Exhibit or
Schedule hereto are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in
any Schedule or Exhibit but not otherwise defined therein, shall have the
meaning
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as defined in this Agreement. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
HOLLYWOOD.COM, INC. CBS CORPORATION
By: By:
-------------------------------- ------------------------------
Name: Name:
------------------------------ ----------------------------
Title: Title:
----------------------------- ---------------------------
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Attached to and forming a part of the Agreement made as of _______________, 1999
between CBS Corporation, Big Entertainment, Inc. and hollywood.com, Inc..
- --------------------------------------------------------------------------------
PLACEMENT POSSIBILITIES
1. CBS Television Network programming
2. CBS Owned and Operated Television Stations' and Infinity owned and operated
Radio Stations' programming
3. Infinity outdoor billboards and all other outdoor media owned by CBS
4. CBS Internet Sites
5. CBS Cable
6. CBS Syndicated Programs
PLACEMENT TYPES
o 30 second units where available
o 15 second units where available
o 10 second units where available
o URL Scrolls (5 seconds)
o On-air mentions (30 seconds)
o Banner ads, buttons and sponsorships
o Credit rolls/sign-offs (5 seconds)
CONTENT LICENSE AGREEMENT
-------------------------
AGREEMENT made as of the day of ___________, 1999, by and between CBS
Corporation, a Pennsylvania corporation with offices at 51 West 52nd Street, New
York, New York 10019 ( "CBS"), and hollywood.com, Inc., a California corporation
with offices at 2255 Glades Road, Suite 237W, Boca Raton, Florida 33431
("Hollywood").
1. DEFINITIONS
1.1 "Affiliate" of the Person concerned, means a Person that directly
or indirectly (through one or more intermediaries) controls, is controlled by or
is under common control with such Person.
1.2 "Annual Ceiling" shall have the meaning set forth in section
2.3(c)(i) hereof.
1.3 "Arbitration Proceeding" means a proceeding conducted in
accordance with the following rules:
(a) such proceeding is commenced by the party concerned,
within five (5) days after notice to the other party of its intent to elect
arbitration (under paragraph 1.6 below), and requesting the New York office of
the American Arbitration Association to designate one arbitrator (who is a
retired federal or state judge or a member of the CPC Panel of Distinguished
Neutrals of the CPR Institute for Dispute Resolution and who is not and has not
been an affiliate, employee, consultant, officer, director or stockholder of CBS
or Big Entertainment, Inc. ("BEI")) to conduct the proceeding;
(b) within seven (7) days after the designation of the
arbitrator, the arbitrator and the parties shall meet, at which time each party
shall be required to set forth in writing all disputed issues, together with its
proposed resolution of the matter, all in reasonable detail and containing such
supporting materials it may choose to submit;
(c) the arbitrator shall set a date for a hearing, which
shall be no later than ten (10) days after the submission of written proposals
pursuant to subparagraph 1.3(b) above, to discuss each of the issues identified
by the parties. Each party shall have the right to be represented by counsel.
The arbitration shall be governed by the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that the Federal Rules of
Evidence shall apply with regard to the admissibility of evidence;
(d) the arbitrator shall rule on the matter at issue within
seven (7) days after the completion of the hearing described in subparagraph
1.3(c) above. All rulings of the arbitrator shall be in writing, shall be
delivered to the parties and shall be final and conclusive as to any such
matter; and
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(e) the arbitration shall be conducted in New York City.
1.4 "Capital Stock" means any common stock or preferred stock of BEI
and any options, warrants, rights, or other securities that are convertible,
exercisable, or exchangeable into common stock or preferred stock of BEI.
1.5 "CBS License Guidelines" means the clearance, form, format and
use restrictions and procedures set forth in Exhibit A attached hereto.
1.6 "CBS Competitor" means any Person, other than CBS or any
Affiliate of CBS, who is primarily engaged in North America directly, or
indirectly through an Affiliate, in radio or television programming or radio or
television program distribution (including, without limitation, free
over-the-air, telephone, Internet or microwave). A CBS Competitor shall not
include any of the following:
(a) any Person engaged in television programming or
television program distribution, provided such Person's aggregate revenues
generated from television programming and television program distribution are
less than five percent (5%) of the aggregate revenues of the television
broadcast market.
(b) any Person engaged in free over-the-air radio
programming or radio program distribution provided such Person is not one of the
top two (excluding CBS) nationally ranked radio broadcast networks, based on
overall radio audience ratings.
(c) any Person engaged in television programming or
television program distribution over the Internet ("Television Internet
Concern"), provided either of the following conditions are met:
(i) the aggregate revenue of the Internet video
streaming market/industry ("Internet Video Streaming Market") is less
than 10% of the aggregate revenue for the network television
broadcast market; or
(ii) if the aggregate revenue of the Internet
Video Streaming Market is equal to or more than 10% of the aggregate
revenue for the network television broadcast market, then the
Television Internet Concern shall not be a CBS Competitor if the
aggregate revenue of such Television Internet Concern generated by
television programming or television program distribution over the
Internet is less than 10% of the aggregate revenue of the Internet
Video Streaming Market.
The foregoing markets and revenues shall be identified/delineated by Veronis,
Suhler & Associates, provided, however, that if Veronis, Suhler is not a
nationally reputable media/ communications forecasting service or does not (as a
matter of course) provide the relevant data, the parties shall mutually agree
upon a nationally reputable media/communications forecasting service (the
"Forecasting Service"). In the event that the parties are unable to reach
agreement
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upon the Forecasting Service within ten (10) business days of commencement of
discussion on the issue, then either party hereto shall have the right to elect
to commence an Arbitration Proceeding to determine the Forecasting Service.
(d) any Person engaged in radio programming or radio
program distribution over the Internet ("Radio Internet Concern"), provided
either of the following conditions are met:
(i) the aggregate revenue of the Internet radio
streaming market/industry ("Internet Radio Streaming Market") is less
than 10% of the aggregate revenue for the radio broadcast market; or
(ii) if the aggregate revenue of the Internet
Radio Streaming Market is equal to or more than 10% of the aggregate
revenue for the radio broadcast market, then the Radio Internet
Concern shall not be a CBS Competitor if the aggregate revenue of
such Radio Internet Concern generated by radio programming or radio
program distribution over the Internet is less than 10% of the
aggregate revenue of the Internet Radio Streaming Market.
The foregoing markets and revenues shall be identified/delineated by Veronis,
Suhler & Associates, provided, however, that if Veronis, Suhler is not a
nationally reputable media/ communications forecasting service or does not (as a
matter of course) provide the relevant data, the parties shall mutually agree
upon a nationally reputable media/communications forecasting service (the
"Forecasting Service"). In the event that the parties are unable to reach
agreement upon the Forecasting Service within ten (10) business days of
commencement of discussion on the issue, then either party hereto shall have the
right to elect to commence an Arbitration Proceeding to determine the
Forecasting Service.
(e) any Person who owns or operates a multichannel video
program distribution service, a cable system, a wireless cable system or a
direct broadcast satellite system, so long as such Person does not otherwise
engage (either directly or indirectly through an Affiliate) in television or
radio programming or program distribution.
(f) any Person engaged in the production of television
programs or other audio visual materials, so long as such Person does not
otherwise engage (either directly or indirectly through an Affiliate) in
television or radio programming or program distribution.
(g) AT&T Corporation, Comcast Corporation, Gannett Co, Inc.
or The Times Mirror Company, as constituted on the date of this Agreement.
(h) any Person engaged in television programming or
television program distribution, so long as neither CBS nor any Affiliate of CBS
owns a majority interest in the CBS Television Network
(i) any Person engaged in radio programming or radio
program distribution, so
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long as neither CBS nor any Affiliate of CBS owns a majority interest in
Infinity Broadcasting Corporation.
The revenue calculations in the preceding sentences shall be based on the last
full fiscal year of the Person (including, without limitation, Television
Internet Concern or Radio Internet Concern) concerned and the last full calendar
year of the applicable market/industry.
1.6 "CBS Content" means any Television Content, including archival
Content, related to the movie business or any particular motion picture and
contained in CBS's regularly scheduled hard news broadcasts, scheduled special
events coverage and unscheduled live breaking news coverage, which CBS has the
right to license for use on the Internet. Notwithstanding anything contained
herein to the contrary, nothing herein shall be construed to grant Hollywood any
rights to CBS Radio Content.
1.7 "CBS Content Pages" means pages of the Hollywood Site that
include any CBS Content.
1.8 "Ceiling Amount" shall have the meaning ascribed to it in section
2.4(a)(i).
1.9 "Co-Branded Site" means an Internet Site: (a) that
contains/displays a majority of the Content displayed on the Hollywood Site, and
displays such Content in the same form and format as featured on the Hollywood
Site; (b) is branded with the Hollywood name (or trademark) and the
name/trademark of the third-party Web Site and (c) is accessed from the third
party Web Site.
1.10 "Collaboration Agreement" means any one of the following
agreements between or among CBS, Hollywood and BEI: (a) this Agreement; (b) the
Advertising and Promotion Agreement dated as of even date (the "Ad Agreement")
(c) the Stock Purchase Agreement dated as of even date; (d) the Investor's
Rights Agreement dated as of even date and (e) the Voting Agreement dated as of
even date.
1.11 "Content" means text, graphics, photographs, video, audio and/or
other data or information, including, without limitation, Television Content,
relating to any subject, and/or advertisements.
1.12 "Contract Year" means the annual period beginning on the date of
commencement of the term of this Agreement, and each subsequent annual period
during the term beginning on the anniversary of that commencement date (as such
Year may be suspended or extended, and those dates postponed, as provided
herein).
1.13 "Hollywood Content" means any Content owned or controlled by
Hollywood other than CBS Property (as defined in subparagraph 4.1(a)).
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1.14 "Hollywood Site" means: (a) the Internet Web Site owned or
controlled by Hollywood (and is accessed via the URL www.hollywood.com) that
features or will feature movie, music and television-related news, data and
merchandise offers and related Content and merchandise offers; (b) any
Co-Branded Site and (c) any Mirror Site.
1.15 "Intellectual Property Rights" means all inventions,
discoveries, trademarks, patents, trade names, copyrights, jingles, know-how,
intellectual property, software, shop rights, licenses, developments, research
data, designs, technology, trade secrets, test procedures, processes, route
lists, computer programs, computer discs, computer tapes, literature, reports
and other confidential information, intellectual and similar intangible property
rights, whether or not patentable or copyrightable (or otherwise subject to
legally enforceable restrictions or protections against unauthorized third party
usage), and any and all applications for, registrations of and extensions,
divisions, renewals and reissuance of, any of the foregoing, and rights therein,
including without limitation (a) rights under any royalty or licensing
agreements, and (b) programming and programming rights, whether on film, tape or
any other medium.
1.16 "Internet" means a global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit Content that is directly or indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such Content is delivered through on-line browsers, off-line
browsers, or through "push" technology, electronic mail, broadband distribution,
satellite, wireless or otherwise.
1.17 "Internet Site" or "Web Site" means any site or service
delivering Content on or through the Internet, including, without limitation,
any on-line service such as America Online, Compuserve, Prodigy and the
Microsoft Network.
1.18 "Market Value" shall have the meaning ascribed to it in section
2.4(a)(iii).
1.19 "Mirror Site" means an Internet Site that contains the same
Content as the Hollywood Site and is displayed in the same form/format as the
Hollywood Site, and which (a) is located at a geographic location distinct from
the Hollywood Site and (b) is created for the sole purpose of improving the
performance of and accessibility to the Hollywood Site.
1.20 "Person" means any natural person, legal entity, or other
organized group of persons or entities. (All pronouns whether personal or
impersonal, which refer to Persons include natural persons and other Persons.)
1.21 "Television Content" consists of Content broadcast on
television.
1.22 "Term" means the term specified in paragraph 3.1 below.
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2. LICENSE
2.1 (a) Subject to the terms and conditions contained herein, CBS
grants to Hollywood the non-exclusive right and license to:
(i) use, copy, publicly display, publicly
perform, distribute, or otherwise make the CBS Content available on
the Hollywood Site during the Term, and
(ii) Archive the CBS Content after expiration of
the Term,
to the extent CBS has the right to so license such Content to
Hollywood.
(b) CBS agrees that users of the Hollywood Site may view,
access, retrieve, copy and print only for noncommercial private use (which use
shall exclude any not-for-profit private use) any CBS Content distributed
hereunder on the Hollywood Site. Nothing in this Agreement grants Hollywood
ownership or other rights in or to the CBS Content, except in accordance and to
the extent of this license.
(c) "Archive", as used in this paragraph 2.1 (and with
respect to CBS Content), shall mean the retention of CBS Content in the form,
format and context originally displayed on the Hollywood Site during the Term
(without, for avoidance of doubt, any editing or derivative use thereof), and
use thereof in accordance with the terms of this Agreement applicable during the
Term (including, without limitation, the CBS License Guidelines).
2.2 Hollywood's exercise of the rights granted herein shall conform
to the restrictions or requirements set forth in the CBS License Guidelines, as
the CBS License Guidelines may be amended or revised from time to time by CBS,
to reflect any changes in the business, practice, procedures or policies of CBS.
CBS will notify Hollywood of such amendments/revisions.
2.3 Hollywood shall have reasonable access to, and, subject to the
conditions stated in the next sentence, CBS shall deliver CBS Content to
Hollywood in a mutually agreed-upon form and format, provided Hollywood's
request for CBS Content is reasonable. Notwithstanding anything to the contrary
contained in this paragraph, CBS shall have the right to refuse to deliver to
Hollywood any CBS Content if, in CBS's reasonable judgment: (i) any Content on
the Hollywood Site (the "Hollywood Content") or (ii) the use contemplated for
the CBS Content, conflicts with, interferes with or is detrimental to CBS's
interests, reputation or business or might subject CBS to unfavorable regulatory
action, violate any law, infringe the rights of any Person, or subject CBS to
liability for any reason.
2.4 (a) (i) The CBS Content licensed hereunder shall not exceed a
total Market Value of Thirty Million Dollars ($30,000,000) during the
Term (the "Aggregate Ceiling") or a Market Value of Four Million
Three Hundred Thousand Dollars ($4,300,000) during each of the first
six Contract Years and Four Million Two Hundred Thousand Dollars
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($4,200,000) during the seventh Contract Year (the "Annual Ceiling"),
subject to the reduction(s) prescribed in section 2.4(a)(ii) below.
The Aggregate Ceiling and the Annual Ceiling are sometimes
hereinafter individually or collectively referred to as the "Ceiling
Amount".
(ii) The Annual Ceiling shall be reduced by: (A)
the (Market Value of the) Annual Ad Sales Option, as prescribed in
paragraph 2.3 of the Ad Agreement; and (B) the Market Value of any
advertising or promotion provided by CBS (during the Contract Year
concerned), pursuant to paragraph 2.4 of the Ad Agreement.
(iii) "Market Value", as used in this
subparagraph 2.4(a), shall mean:
(A) with respect to CBS Content, the
average price paid by a third party for the
license of such Content on the Internet
(provided that CBS has an established market for
licenses on the Internet) or, if no such rate
(or CBS market) exists, then the average price
for worldwide over-the-air free television use
(including in all instances, without limitation,
any costs related to the retrieval, preparation
(e.g., tape transfer and/or duplication) or
delivery of CBS Content).
(B) with respect to advertising sales
on the Hollywood Site, the proportionate dollar
amount (of the Gross Ad Revenues, as such term
is defined in the Ad Agreement) of the Ad Sales
Option (as defined in paragraph 2.3 of the Ad
Agreement).
(C) with respect to CBS advertising
and promotion, the unit price for the
advertising medium concerned, as described in
subparagraph 2.1(b) of the Ad Agreement.
(b) (i) Upon commencement of the Contract Year concerned
and/or each calendar quarter of the Contract Year
concerned, Hollywood shall use reasonable efforts to notify
CBS of its election to license Content, exercise its Annual
Ad Sales Option (as defined in paragraph 2.3 of the Ad
Agreement) or utilize the Annual Additional Promo
Commitment (as prescribed in paragraph 2.4 of the Ad
Agreement), and the respective Market Values thereof.
(ii) If, upon expiration of the Contract Year
concerned, Hollywood has failed to notify CBS of its
election, as set forth in section 2.4(b)(i) above, then the
Annual Ceiling (or any portion thereof for which Hollywood
has failed to notify CBS of its election) will be deemed
forfeited.
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(iii) Except as set forth in section
2.4(b)(ii) above, if upon expiration of the Contract Year
concerned, the Annual Ceiling has not been exhausted, then
the amount of the unused portion of the Annual Ceiling for
such Contract Year may be carried over to the immediately
subsequent Contract Year (the "Annual Ceiling Carryover"),
it being understood, however, that (A) in the immediately
subsequent Contract Year the Annual Ceiling Carryover shall
be exhausted (first) before the Annual Ceiling for such
subsequent Contract Year is utilized, (B) Hollywood shall
identify the intended use for (i.e., allocate) the Annual
Ceiling Carryover during the first thirty (30) days of the
subsequent Contract Year, and CBS shall use reasonable
efforts to satisfy the allocation request depending upon
the availability of the inventory/item sought. In the event
that the inventory is not available, then Hollywood shall
make a substitute allocation within thirty (30) days
following CBS's advising Hollywood that the inventory/item
sought is unavailable, (C) any portion of the Annual
Ceiling Carryover unused as of the expiration date of the
Contract Year concerned (i.e., such subsequent Contract
Year) shall be deemed forfeited, except to the extent
Hollywood complied with the notice requirements prescribed
herein and CBS did not deliver such portion of the Annual
Ceiling Carryover and (D) any portion of the Ceiling Amount
(including the Annual Ceiling Carryover) unused as of the
expiration date of the Term shall be deemed forfeited,
except to the extent Hollywood complied with the notice
requirements prescribed herein and CBS did not deliver such
portion of the Ceiling Amount or Annual Ceiling Carryover,
as applicable.
2.5 During the Term, the Hollywood Site shall consist of (i)
movie-related entertainment news, data and merchandise offers (including movie
celebrity interviews, movie reviews, movie trailers, movie soundtracks,
movie-theater listings and movie ticketing), (ii) music-related news, data and
merchandise offers, (iii) television-related news, data and merchandise offers
and (iv) other entertainment-related Content and merchandise offers, in each
case as determined by Hollywood from time to time in its sole discretion. All
Content displayed on the Hollywood Site shall be subject to any restrictions or
requirements set forth in the CBS License Guidelines. CBS shall have the right
to demand the removal from the Hollywood Site of any Content which in CBS's
reasonable business judgment conflicts with, interferes with or is detrimental
to CBS's interests, reputation or business or which might subject CBS to
unfavorable regulatory action, violate any law, infringe the rights of any
Person, or subject CBS to liability for any reason. Hollywood shall thereafter
remove the objected-to Content as soon as technically feasible, but in no event
later than ten (10) days (or less than said ten days if CBS is or would be
subject to potential liability, it being understood that: (i) in each instance,
CBS shall notify Hollywood of the potential liability concerned; and (ii)
Hollywood shall use its best efforts to remove the Content concerned as soon as
possible, but in any event within three (3) business days) after written notice
from CBS demanding the removal of such Content, subject to the next sentence.
CBS shall have no right to demand the removal of any Content which is a hard
news item of a nature normally reported by other news organizations of a
character and stature equal to Hollywood or an editorial item clearly marked as
such, provided, however, that such Content does
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not/will not subject CBS to unfavorable regulatory action, violate any law,
infringe the rights of any Person, or subject CBS to liability for any reason.
For purposes of this paragraph 2.5 (and in addition to the terms and conditions
set forth in paragraph 7.4 below) notice shall be deemed given when sent by
facsimile transmission to the fax number concerned in paragraph 7.4 below.
2.6 (a) During the Term, Hollywood shall periodically consult with
CBS regarding the presentation of the CBS Content on the Hollywood Site. In no
event shall Hollywood distort or misrepresent any material contained in the CBS
Content. No CBS Content shall be used/displayed out of context. Hollywood shall
have the right to edit and revise the CBS Content solely to meet spatial
requirements provided that any such edits or revisions shall not distort or
misrepresent any events, opinions or statements contained in the CBS Content.
(b) Subject to any restrictions or requirements in the CBS
License Guidelines, Hollywood shall have the right, but not the obligation, to
correct any errors, omissions and/or inaccuracies in the transmission or
transcription of the CBS Content identified by Hollywood or reported to
Hollywood by Hollywood Site users.
2.7 Except as otherwise specified in this Agreement, during the Term,
Hollywood shall not, without CBS's prior written approval, display, perform,
distribute, transmit or otherwise make available in any media now known or
hereafter developed, other than through the Hollywood Site, any CBS Content, or
any portion thereof.
2.8 In the event that Hollywood desires to use any music contained in
any CBS Content on the Hollywood Site, prior to such use, Hollywood shall: (i)
report to the applicable music rights society on behalf of CBS, all titles and
publishers of all such music; (ii) secure, at its sole cost and expense, and pay
for all performing, duplication and/or recording rights licenses, if any,
required by the applicable rights holder(s) for the use of musical compositions
and sound recordings on the Internet and (iii) assume any and all liability in
connection with its use of the music. CBS shall endeavor to deliver to Hollywood
accurate music cue sheets for all music contained in the CBS Content.
2.9 Hollywood's right to Archive CBS Content shall cease if any of
the following occurs: (i) CBS terminates this Agreement pursuant to paragraph
6.1; or (ii) Hollywood breaches any term of the CBS License Guidelines.
2.10 Upon termination of this Agreement pursuant to paragraph 6.1 or
the Archive rights, Hollywood shall cease using any CBS Content or Content
derived therefrom. In that connection, Hollywood shall immediately remove or
erase the CBS Content from the Hollywood Site as soon as technically
practicable, but in no event shall any such material remain on the Hollywood
Site more than ten (10) days (or less than said ten days, if CBS is or would be
subject to potential liability) after CBS's notice of termination, and at CBS's
request, Hollywood shall furnish CBS with certified evidence of such removal or
erasure satisfactory to CBS.
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3. TERM
3.1 The term of this Agreement ("Term") shall begin on
______________, 1999 and shall continue in full force and effect for a period of
seven (7) years, through and including ___________, 2006, unless earlier
terminated in accordance with the terms and conditions contained herein.
4. RIGHTS
4.1 (a) As between CBS and Hollywood, CBS is or shall be the
exclusive owner of and shall retain all right, title and interest to the CBS
Content or any Content derived therefrom, including all Intellectual Property
Rights therein (the "CBS Property").
(b) Hollywood shall place a notice of copyright on each CBS
Content Page in accordance with the CBS License Guidelines. No CBS Content Page
shall contain any other copyright notice whatsoever except as provided in the
CBS License Guidelines. Hollywood shall cooperate fully with CBS in connection
with CBS's obtaining appropriate copyright protection in the name of CBS for any
CBS Content Page.
(c) With respect to all Content on the Hollywood Site other
than the CBS Property (i.e., CBS Content or any Content derived therefrom), as
between CBS and Hollywood, Hollywood is or shall be the exclusive owner of and
shall retain all right, title and interest to such Content or any Content
derived therefrom, including all Intellectual Property Rights therein, and that
Content shall be deemed "Hollywood Content."
4.2 Hollywood agrees to take all action and cooperate as is
reasonably necessary, at CBS's request, to protect the CBS's rights, titles, and
interests specified in this Article 4, and further agrees to execute any
documents that might be necessary to perfect CBS's ownership of such rights,
titles and interests.
5. WARRANTIES; REPRESENTATIONS; INDEMNITIES
5.1 (a) CBS represents and warrants that:
(i) it has full power and authority to
enter into and fully perform this Agreement; and
(ii) it has sufficient right and authority to
grant to Hollywood all licenses and rights granted by CBS hereunder.
(b) Hollywood represents and warrants that:
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(i) it owns or controls all right, title, and
interest in and to the Hollywood Content and the Hollywood Site, and
all Intellectual Property Rights therein, necessary to carry out its
obligations hereunder;
(ii) it is has the full power and authority to
enter into and fully perform this Agreement;
(iii) the Hollywood Site (including any and all
Intellectual Property Rights therein or connected thereto) and the
Hollywood Content and the use thereof shall not violate any
applicable law or infringe upon or violate any rights of any Person;
and
(iv) the Hollywood Site will be produced,
advertised and transmitted in accordance with all applicable federal,
state, local and foreign laws and regulations.
5.2 (a) Each party (the "Indemnifying Party") shall at all times
indemnify, hold harmless and defend the other party (the "Indemnified Party")
from and against any loss, cost, liability or expense (including court costs and
reasonable attorneys' fees) arising out of or resulting from any breach by the
Indemnifying Party of any representation, warranty, covenant or agreement
contained herein. In the event of any such claim, the Indemnified Party shall:
(i) promptly notify the Indemnifying Party of the claim; (ii) allow the
Indemnifying Party to direct the defense and settlement of any third party claim
with counsel of the Indemnifying Party's choosing; and (iii) provide the
Indemnifying Party, at the Indemnifying Party's expense, with information and
assistance that is reasonably necessary for the defense and settlement of the
third party claim. The Indemnified Party reserves the right to retain counsel,
at the Indemnified Party's sole expense, to participate in the defense of any
such claim. The Indemnifying Party shall not settle any such claim or alleged
claim without first obtaining the Indemnified Party's prior written consent,
which consent shall not be unreasonably withheld, if the terms of such
settlement would adversely affect the Indemnified Party's rights under this
Agreement or otherwise. If the Indemnifying Party assumes the defense and
settlement of the claim as set forth above, then the Indemnifying Party's only
obligation is to satisfy the claim, judgment or approved settlement.
(b) Any sums payable by Hollywood under this paragraph 5.2
may be offset by Hollywood against the Market Value of any advertising, Content
or Ad Sales Commitment deliverable by CBS (the "CBS Deliverable(s)") pursuant to
this Agreement or the Ad Agreement (the "Indemnity Offset"). The amount or
Market Value of the CBS Deliverable concerned will be reduced by the proportion
thereof used for or contributed to the Indemnity Offset. For purposes of the
Indemnity Offset, Hollywood shall be obligated to exhaust the CBS Deliverables
as follows:
(i) The Market Value of any advertising or
promotion, deliverable pursuant to paragraph 2.1 of the Ad Agreement,
shall be fully exhausted before any other CBS Deliverable is used
for/contributed to the Indemnity Offset.
(ii) Provided the CBS Deliverable described in
section 5.2(b) above has been fully exhausted, the Market Value of
any Ceiling Amount, deliverable pursuant to subparagraph 2.4(a) of
this Agreement (or the Additional Promo Commitment, deliverable
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pursuant to paragraph 2.4 of the Ad Agreement), shall be fully
exhausted before any other CBS Deliverable is used for/contributed to
the Indemnity Offset.
(iii) The Market Value of any Ad Sales Option
deliverable pursuant to paragraph 2.3 of the Ad Agreement, may be
used for/contributed to the Indemnity Offset only if and when the
Deliverables described in sections 5.2(b)(i) and (ii) above have been
fully exhausted.
For avoidance of doubt, CBS's obligation to deliver any CBS Deliverable,
pursuant to this Agreement or the Ad Agreement, shall be extinguished (or
reduced, as applicable) to the extent that such CBS Deliverable is used
for/contributed to any Indemnity Offset.
6. REMEDIES
6.1 CBS shall have the right to terminate this Agreement if any of
the following occurs:
(a) The Hollywood Site contains Content which, in CBS's
reasonable business judgment, violates Article I or Article III of the CBS
License Guidelines and Hollywood fails to remove such Content from the Hollywood
Site within ten (10) days after written notice of CBS's objection thereto
demanding the removal of such Content.
(b) Except as otherwise set forth in subparagraph 6.1(a)
above, either Hollywood or BEI (if applicable) breaches any material term or
condition of this Agreement, or any Collaboration Agreement and fails to: (i)
cure such breach within thirty (30) days after CBS's written notice of such
breach, or (ii) complete curing such breach within sixty (60) days following
CBS's notice of such breach; provided however that this clause (ii) shall only
apply to a default that is incapable of being cured in thirty (30) days. The
foregoing cure period will not apply: (x) solely with respect to this Agreement,
to a term or condition (in this Agreement) for which a specific cure period is
provided; or (y) to a breach incapable of being cured.
(c) BEI or Hollywood: (i) becomes insolvent or unable to
pay its debts as they mature or makes an assignment for the benefit of its
creditors; (ii) is the subject of a voluntary petition in bankruptcy or any
voluntary proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors, if such petition or proceeding is not
dismissed within sixty (60) days of filing; (iii) becomes the subject of any
involuntary petition in bankruptcy or any involuntary proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within sixty (60)
days of filing; or (iv) is liquidated or dissolved.
(d) BEI issues to a Person any voting securities of BEI
and: (i) at the time of such issuance such Person is a CBS Competitor and (ii)
as a result of such issuance such Person beneficially owns or controls, directly
or indirectly, more than fifteen (15%) percent of the total voting power of BEI,
in the aggregate. For the purposes of this subparagraphs 6.1(d), 6.1(e) and
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6.1(f): (x) the term "beneficial ownership" shall have the meaning set forth in
Section 13(d) of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder; (y) the term "total voting power" shall mean
at any time, the total number of votes that may be cast in the election of
directors of BEI at any meeting of the holders of voting securities at such time
for such purpose; and (z) the term "voting securities" shall mean the Capital
Stock and any other securities issued by BEI having the power to vote in the
election of directors of BEI including, without limitation, any securities
having such power only upon the occurrence of a default or any other
extraordinary contingency.
(e) BEI issues to a Person any voting securities of BEI
and: (i) at the time of such issuance such Person is a CBS Competitor that
beneficially owns or controls, directly or indirectly, more than fifteen (15%)
percent of the total voting power of BEI and (ii) as a result of such issuance
the voting power of such Person is increased by any amount.
(f) BEI's board of directors consents to the acquisition of
voting securities by a CBS Competitor such that as a result of such consent, the
CBS Competitor beneficially owns or controls, directly or indirectly, more than
15% of the total voting power of BEI and at the time of such consent the Rights
Agreement by and between BEI and American Stock Transfer & Trust Company dated
August 23, 1996, as amended, is in full force and effect.
(g) Hollywood discontinues using the "Hollywood.com" mark
(or any substitute mark approved by CBS) and does not establish use of a
substitute mark reasonably acceptable to CBS within thirty (30) days after such
discontinuation.
(h) The Hollywood Site ceases to operate due to any
circumstance(s) (other than circumstances beyond Hollywood's reasonable control,
which circumstances simultaneously affect a substantial number of Web Sites on
the Internet) for: (i) a period of thirty (30) consecutive days; or (ii) a
period of one week at least two times in any six (6) month period.
CBS may exercise its right to terminate pursuant to this paragraph 6.1 by
sending Hollywood appropriate written notice. No exercise by CBS of any of its
rights under this Article 6 will limit CBS's remedies by reason of Hollywood's
or BEI's default, CBS's rights to exercise any other rights under this paragraph
6.1, or any of CBS's other rights.
7. GENERAL
7.1 Neither party may assign this Agreement, or their respective rights
and obligations hereunder, in whole or in part without the other party's prior
written consent. Any attempt to assign this Agreement without such consent shall
be void and of no effect ab initio. Notwithstanding the foregoing, CBS may
assign this Agreement or any of its rights and obligations hereunder to an
affiliate or to any entity controlling, controlled by or under common control
with, CBS, or to any entity that acquires CBS by purchase of stock or by merger
or otherwise, or by obtaining substantially all of CBS's assets (a "CBS
Assignee"), provided that any such CBS
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Assignee, or any division thereof, thereafter succeeds to all of the rights and
is subject to all of the obligations of CBS under this Agreement.
7.2 Each party hereto irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby or thereby. Each of CBS and
Hollywood agrees to commence any such action, suit or proceeding either in the
United States District Court for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of CBS and Hollywood further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this paragraph 7.2. Each of CBS and Hollywood
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby and thereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby and thereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
7.3 If any provision of this Agreement (or any portion thereof) or
the application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
7.4 All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(a) if to Hollywood,
hollywood.com, Inc.
2255 Glades Road, Suite 237W
Boca Raton, Florida 33431
Attention: Mitchell Rubenstein, Chief Executive Officer
Fax: (561) 998-2974
with a copy to:
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hollywood.com, Inc.
2255 Glades Road, Suite 237W
Boca Raton, Florida 33431
Attention: W. Robert Shearer, General Counsel
Fax: (561) 998-2974
and a copy to:
hollywood.com, Inc.
1620 26th Street, Suite 370 South
Santa Monica, CA 90404
Attention: Scott Shrock, Vice President of Operations
Fax: (310) 447-2887
and a copy to:
Greenberg Traurig
200 Park Avenue
New York, New York 10166
Attention: Clifford E. Neimeth, Esq.
Fax: (212) 801-6400
(b) if to CBS:
CBS Corporation
51 West 52nd Street
New York, New York 10019
Attention: Chief Financial Officer
with a copy to:
CBS Corporation
51 West 52nd Street
New York, New York 10019
Attention: General Counsel
7.5 The parties to this Agreement are independent contractors. There
is no relationship of partnership, joint venture, employment, franchise, or
agency between the parties. Neither party shall have the power to bind the other
or incur obligations on the other's behalf without the other's prior written
consent.
7.6 No failure of either party to exercise or enforce any of its
rights under this Agreement shall act as a waiver of such right.
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<PAGE>
7.7 This Agreement, along with any Exhibits hereto, contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
7.8 This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to each of the other parties.
7.9 This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
7.10 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
7.11 This Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
7.12 The headings contained in this Agreement or in any Exhibit or
Schedule hereto are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in
any Schedule or Exhibit but not otherwise defined therein, shall have the
meaning as defined in this Agreement. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
HOLLYWOOD.COM, INC. CBS CORPORATION
- ------------------------ ---------------------------
Mitchell Rubenstein Name:
Chief Executive Officer Title:
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(Attached to and forming a part of the Agreement, made as of
______________________, 1999 between CBS Corporation and hollywood.com, Inc.)
- -------------------------------------------------------------------------------
CBS LICENSE GUIDELINES AND RESTRICTIONS
---------------------------------------
I. GENERAL
(a) The Hollywood Site shall not include the following Content (or
other materials regarding or containing the following): (i) cigarettes, (ii)
hard liquor, (iii) massage parlors, (iv) abortion clinics, (v) firearms and
ammunition, (vi) head shops, (vii) illegal (under federal, state, local or
foreign laws) lotteries, (viii) gambling (other than legal lotteries under
federal, state or local, local laws applicable to the venue concerned), (ix)
sexually explicit content, or (x) Content that denigrates a particular group
based on gender, race, creed, religion, sexual preference or handicap
("Proscribed Content"). The standard for Content deemed "sexually explicit"
shall be subject to the standards and practices applicable to the CBS Television
Network.
(b) The CBS License Guidelines may be amended or revised from time to
time by CBS, to reflect any changes in CBS's business, practice, procedures or
policies. CBS will notify Hollywood of such amendments/revisions.
II. CONTENT
(a) (i) Each party shall notify the other of all errors, omissions,
and/or inaccuracies in transmission or transcription of the CBS
Content within twenty-four (24) hours after it becomes aware thereof.
(ii) If Hollywood provides such notice, it shall specify to
CBS what action, if any, it has taken to correct the error, omission
and/or inaccuracy.
(iii) If CBS provides such a notice, or receives such
notice, it may specify the action to be taken by Hollywood to correct
the error, omission and/or inaccuracy or resubmit such Content.
(b) All CBS Content on the Hollywood Site shall be subject to
restrictions and instructions disclosed by CBS at any time.
(c) CBS shall have the right to demand the removal from the Hollywood
Site of any Content which in CBS's reasonable business judgment conflicts with,
interferes with or is detrimental to CBS's interests, reputation or business or
which might subject CBS to unfavorable regulatory action, violate any law,
infringe the rights of any Person, or subject CBS to liability for any reason.
Hollywood shall thereafter remove the objected to Content as soon as technically
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feasible, but in no event later than ten (10) days (or less than said ten days,
if CBS is or would be subject to potential liability , it being understood that:
(i) in each instance, CBS shall notify Hollywood of the potential liability
concerned; and (ii) Hollywood shall use its best efforts to remove the Content
concerned as soon as possible, but in any event within three (3) business days)
after written notice from CBS demanding the removal of such Content, subject to
the next sentence. CBS shall have no right to demand the removal of any Content
which is a hard news item of a nature normally reported by other news
organizations of a character and stature equal to Hollywood or an editorial item
clearly marked as such, provided, however, that such Content does not/will not
subject CBS to unfavorable regulatory action, violate any law, infringe the
rights of any Person, or subject CBS to liability for any reason. For purposes
of this subparagraph II.(c) (and in addition to the terms and conditions set
forth in paragraph 7.4) notice shall be deemed given when sent by facsimile
transmission to the fax number concerned in paragraph 7.4.
(d) Hollywood shall abide by responsible journalistic standards. No
CBS Content shall be used and/or displayed out of context. Hollywood shall not
distort or misrepresent any events, opinions or statements contained in the CBS
Content received by Hollywood.
III. CROSS-LINKS
(a) Hollywood shall not establish any links from the Hollywood Site
to any Internet Site containing Proscribed Content. Notwithstanding anything
contained herein to the contrary, Hollywood shall not be deemed in breach of
this Agreement if Hollywood links to an Internet web site, which Internet web
site, in turn, includes advertising for, or links to, an independent web site
(the "Indirectly Linked Site") displaying the above Proscribed Content, provided
that Hollywood derives no revenues or other financial benefit from such
Indirectly Linked Site or Proscribed Content. For avoidance of doubt, "financial
benefit" includes the realization or accrual of any revenue from page views or
reach of such Indirectly Linked, Site, or advertisements displayed on web site
pages of such Indirectly Linked Site.
(b) Hollywood shall not conduct any cross promotions between the
Hollywood Site and any Internet Site which exhibits Proscribed Content.
IV. OWNERSHIP
(a) Hollywood shall place an appropriate copyright notice to be
furnished by CBS on all CBS Content Pages of the Hollywood Site.
(b) Hollywood and CBS shall mutually develop the procedures for
placing any third party copyright notice on any CBS Content Page.
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THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON THE
EXERCISE HEREOF (THE "WARRANT SHARES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE "RESTRICTED SECURITIES"
WITHIN THE MEANING OF RULE 144 UNDER THE ACT. THE WARRANT SHARES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED, EXCEPT (I) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (II) IN COMPLIANCE WITH THE
RESALE LIMITATIONS OF RULE 144 UNDER THE ACT, OR (III) PURSUANT TO AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUBJECT TO AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, STATING THAT SUCH REGISTRATION IS NOT REQUIRED AS
TO SAID SALE, OFFER OR TRANSFER.
THE WARRANT SHARES ARE SUBJECT TO AN AGREEMENT BETWEEN THE
COMPANY AND THE HOLDER DATED _______ __, 1999, REGARDING THE SALE, ASSIGNMENT
AND TRANSFER OF THE WARRANT SHARES. A COPY OF SUCH AGREEMENT IS AVAILABLE,
WITHOUT CHARGE, FROM THE SECRETARY OF THE COMPANY.
No: ______
_____, 1999 Number of Shares: 1,178,892
BIG ENTERTAINMENT, INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
------------------------------------------
FOR VALUE RECEIVED, BIG ENTERTAINMENT, INC., a Florida corporation
(the "Company"), hereby certifies that CBS CORPORATION, a Pennsylvania
corporation ("CBS") is entitled, upon the terms and subject to the conditions
contained herein, to purchase from the Company One million, one hundred
seventy-eight thousand eight hundred and ninety-two (1,178,892) duly issued,
fully paid and non-assessable shares of Common Stock (as defined below) of the
Company, subject to adjustment, as provided herein, at the exercise price (the
"Exercise Price") set forth in Section 1.1 of that certain Stock Purchase
Agreement dated August __, 1999, between CBS and the Company (the "Stock
Purchase Agreement").
The term "Common Stock" means the Common Stock, par value $.01 per
share, of the Company as constituted on the date hereof. The number of shares of
Common Stock to be received upon the exercise of this Warrant shall be subject
to adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter referred to as "Warrant Shares."
1. Exercise of Warrant. This Warrant may be exercised, in whole or in
part, at any time prior to the earlier of (i) the second anniversary of the date
hereof and (ii) the consummation by the Company of its first underwritten,
registered public offering of Common Stock next following the date hereof. This
Warrant will terminate and be of no further force and effect upon the earlier of
the dates set forth in clause (i) and (ii) above. This Warrant shall be deemed
duly and properly exercised only upon
<PAGE>
presentation and surrender by the holder hereof to the Company at its principal
offices (which offices on the date hereof are situated at 2255 Glades Road,
Suite 237W, Boca Raton, Florida 33431), or at the office of the Company's
transfer agent for the Common Stock (which transfer agent on the date hereof is
the American Stock Transfer and Trust Company and whose principal offices are
situated at 40 Wall Street, New York, NY 10005), with the Warrant Exercise Form
attached hereto properly completed signed and dated, and together with payment
in full of the Exercise Price specified in Section 1.1 of the Stock Purchase
Agreement. Upon presentation and surrender of the Warrant together with payment
in full of the Exercise Price as aforesaid, CBS shall be deemed to be the holder
of record of the Warrant Shares issuable upon such exercise, notwithstanding
that the transfer books of the Company may then be closed or that certificates
representing such Warrant Shares may not then be actually delivered to CBS. The
Company shall pay any and all documentary, stamp or similar issue or transfer
taxes payable in respect of the issuance or delivery of Warrant Shares upon
exercise of this Warrant. Certificates for the Warrant Shares purchased upon
exercise of this Warrant shall be delivered to CBS or its permitted assignee
(pursuant to Section 12) within a reasonable time, not exceeding 10 days after
said exercise.
2. Reservation of Shares. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant, all Warrant Shares and
other shares of capital stock of the Company from time to time issuable upon
exercise of this Warrant. All such shares shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and
non-assessable and free and clear of all preemptive rights, taxes, liens and
other charges. The Company will take all actions as may be necessary to assure
that the Warrant Shares issuable upon exercise hereof may be issued without
violation of any applicable law or regulation, or of any requirement of any
domestic securities exchange upon which any capital stock of the Company may
then be listed or admitted to unlisted trading privileges (including, without
limitation, obtaining any requisite approval of the Company's stockholders).
3. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issuable upon the exercise of this Warrant, but the
Company shall pay CBS an amount equal to the fair market value of such
fractional share in lieu of each fraction of a share otherwise so issuable as
determined by the Board of Directors in good faith.
4. Exchange of Warrants. This Warrant is exchangeable, without
expense, at the option of CBS, upon presentation and surrender hereof to the
Company or the transfer agent for the Common Stock for Warrants of smaller
denominations, entitling CBS to purchase in the aggregate the same number of
Warrant Shares purchasable upon the exercise of this Warrant.
5. Intentionally omitted.
6. Anti-Dilution Provisions
6.1 Adjustment for Recapitalization. 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. If the
Company shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or other combination thereof, the number of
shares of Common Stock subject to this Warrant immediately prior to such
combination shall be proportionately decreased. Any such adjustments pursuant to
this Section 6.1 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
shall be the record date established by the Company therefor.
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6.2 Adjustment for Reorganization, Consolidation, Merger,
Etc.
(a) In case of any capital reorganization of the
Company (or any other corporation, the securities of which are at the time
receivable upon the exercise of this Warrant) after the date hereof or in case
after the date hereof the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then, in each such case,
CBS thereafter shall be entitled to receive upon the exercise of this Warrant
the kind and amount of securities, cash or other property which it would have
owned or been entitled to receive immediately after consummation of such capital
reorganization, consolidation, merger or conveyance had this Warrant been
exercised immediately prior to the effective time of such capital
reorganization, consolidation, merger or conveyance, and, in any such case, if
necessary, appropriate adjustment shall be made in the application of the
provisions of this Section 6.2 with respect to the relative rights and interests
thereafter of CBS to the end that such provisions thereafter shall
correspondingly be made applicable, as nearly as reasonably may be practicable,
in relation to any shares of capital stock or other securities or property
thereafter deliverable upon the exercise of this Warrant.
(b) If the Company shall consolidate with or
merge into another corporation, and shall not be the surviving corporation, or
shall convey all or substantially all of its assets to another corporation,
then, and in each such case, the Company, as a condition of the closing of such
transaction, shall require that the surviving corporation or the corporation
that shall have received substantially all of the Company's assets, expressly
assume the obligations of the Company under this Warrant in a form reasonably
satisfactory to CBS.
6.3 No Impairment. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution,
issuance or sale of securities, sale of assets or any other voluntary action,
willfully avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of CBS against
impairment. Without limiting the generality of the foregoing, while this Warrant
is outstanding, the Company will not permit the par value, if any, of the
Warrant Shares to be greater than the amount payable therefor upon such
exercise.
6.4 Certificate as to Adjustments. In each case of an
adjustment in the number of Warrant Shares receivable upon the exercise of this
Warrant, the Company, at its expense, will promptly compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate executed by
the chief financial officer of the Company setting forth such adjustment and
showing in reasonable detail the facts upon which such adjustment is based. The
Company will forthwith mail a copy of each such certificate to CBS at the
address set forth in Section 11 hereof. The failure of CBS to object in writing
to such certificate of adjustment within 10 days after receipt thereof shall
constitute approval thereof by CBS.
6.5 Certain Other Distributions. If at any time Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash (other than a cash distribution or
dividend payable out of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of incorporation of the
Company);
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(b) any evidences of its indebtedness, any shares
of the Company's capital stock or any other property of any nature whatsoever;
or
(c) any warrants or other rights to subscribe for
or purchase any evidences of the Company's indebtedness, any shares of its
capital stock or any other securities or property of any nature whatsoever,
then, and in each such case, if this Warrant remains outstanding, the Company
shall mail or cause to be mailed to CBS a notice specifying the date on which a
record is to be taken for the purpose of such dividend or distribution, and
stating the amount and character of such dividend, distribution or right. Such
notice shall be mailed at least 15 days prior to the date therein specified and
the Warrant may be exercised prior to said date during the term of the Warrant.
7. Restrictions on Warrant Shares. The Warrant Shares may not be
offered, sold, transferred or otherwise disposed of unless such transactions are
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and any applicable state securities laws, or unless such transactions are
effected pursuant to available exemptions from such registration, provided that
CBS delivers to the Company an opinion of counsel satisfactory to the Company
confirming the availability of such exemption.
8. Legend.
8.1 Unless the Warrant Shares have been registered under
the Securities Act, upon exercise of this Warrant and the issuance of any of the
Warrant Shares, all certificates representing such securities shall bear on the
face thereof substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND ARE "RESTRICTED SECURITIES"
WITHIN THE MEANING OF RULE 144 UNDER THE ACT. THESE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED, EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (II) IN COMPLIANCE
WITH THE RESALE LIMITATIONS OF RULE 144 UNDER THE ACT, OR
(III) PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION
UNDER THE ACT AND SUBJECT TO AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, STATING THAT SUCH REGISTRATION
IS NOT REQUIRED AS TO SAID SALE, OFFER OR TRANSFER.
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8.2 As may be required by that certain Investors' Rights
Agreement of even date herewith by and between CBS and the Company, all
certificates representing the Warrant Shares shall bear on the face thereof
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO AN AGREEMENT BETWEEN THE COMPANY AND CBS
DATED AS OF ________ __, 1999, REGARDING THE SALE,
ASSIGNMENT AND TRANSFER OF THESE SECURITIES. COPIES OF SUCH
AGREEMENT ARE AVAILABLE, WITHOUT CHARGE, FROM THE SECRETARY
OF THE COMPANY.
9. No Rights or Liabilities as Stockholder. This Warrant does not by
itself entitle CBS to any voting rights or other rights as a stockholder of the
Company. In the absence of affirmative action by CBS to purchase Warrant Shares
upon exercise of this Warrant, no provisions of this Warrant, and no enumeration
herein of the rights or privileges of CBS shall, by itself, cause CBS to be a
stockholder of the Company for any purpose.
10. Amendment; Waiver. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and CBS. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon CBS and the Company.
11. Notices. All notices required hereunder shall be in writing and
shall be deemed given when telegraphed, delivered personally or within two days
after mailing when mailed by certified or registered mail, return receipt
requested, as follows:
if to the Company, to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, FL 33431-7383
Attention: Mitchell Rubenstein, Chief Executive Officer
with a copy to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, FL 33431-7383
Attention: W. Robert Shearer, General Counsel
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with a copy (which shall not constitute notice
pursuant to this Section 11) to:
Greenberg Traurig
The MetLife Building
200 Park Avenue
New York, NY 10166
Attention: Clifford E. Neimeth, Esq.
if to CBS, to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Fredric G. Reynolds, Executive Vice President
and Chief Financial Officer
with a copy to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Louis J. Briskman, Executive Vice President and
General Counsel
12. Assignment. This Warrant, and the rights of CBS hereunder, are
not assignable by CBS except to a subsidiary of CBS; provided that such
subsidiary is an affiliate of CBS (within the meaning of Rule 12b-2 under the
Exchange Act) that owns interests in multiple Internet businesses. Any attempted
assignment in violation of this Section 12 shall be null and void.
13. Lost or Destroyed Certificate. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification or the posting of bond, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
14. Applicable Law. This Warrant shall be governed in all respects by
the laws of the State of New York as such laws are applied to agreements between
New York residents entered into and to be performed entirely in New York.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
on its behalf, in its corporate name, by its duly authorized officer, all as of
the day and year first above written.
BIG ENTERTAINMENT, INC.
By:
------------------------------------------
Name: Mitchell Rubenstein
Title: Chief Executive Officer
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WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise its right under the
attached Warrant to purchase ____________ shares of Common Stock of Big
Entertainment, Inc., a Florida corporation, and hereby tenders
________________________ constituting full payment of the Exercise Price of the
attached Warrant.
------------------------------------
Signature
------------------------------------
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
----------------------------------
Name
-------------------------------------------------------------
(Please typewrite or print in block letters)
Address
----------------------------------------------------------
- -----------------------------------------------------------------
Taxpayer Identification Number
-----------------------------------
===============================================================================
INVESTOR'S RIGHTS AGREEMENT
between
CBS CORPORATION,
and
BIG ENTERTAINMENT, INC.
Dated ________ ___, 1999
===============================================================================
<PAGE>
INVESTOR'S RIGHTS AGREEMENT
This INVESTOR'S RIGHTS AGREEMENT ("Agreement") is entered into on
this ____ day of _______ 1999 by and between CBS Corporation, a Pennsylvania
corporation ("CBS") and Big Entertainment, Inc., a Florida corporation (the
"Company").
WITNESSETH:
WHEREAS, the Company and CBS have entered into a Stock Purchase
Agreement dated August ___, 1999 (the "Stock Purchase Agreement"), pursuant to
which CBS has agreed to purchase shares of Common Stock (as hereinafter
defined); and
WHEREAS, by this Agreement, the Company and CBS each desire to set
forth certain rights of the parties with respect to the shares of Common Stock
as set forth below.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises and the agreements and covenants contained herein, the parties,
intending to be legally bound, hereby agree as follows:
Defined Terms. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) The term "Approved Transferees" means each of The Times
Mirror Company, Gannett Co., Inc., Mitchell Rubenstein and Laurie S. Silvers.
(b) "Beneficial owner", "beneficially owned" or "beneficial
ownership" have the respective meanings assigned to such terms in Rule 13d-3
under the Exchange Act.
(c) The term "CBS Percentage" means on the date of
determination for purposes of Section 2.4 of this Agreement, the percentage
determined by dividing (i) the number of shares of Common Stock then held by CBS
and its Permitted Transferees by (ii) the aggregate shares of Common Stock
outstanding immediately prior to the event giving rise to the determination of
the CBS Percentage in this Agreement; provided, however, that if the CBS
Percentage has been reduced as a result of (i) an issuance of securities by the
Company after the date hereof pursuant to clause (v) of the definition of New
Securities for which CBS was not offered an opportunity to maintain its
ownership percentage at the level existing before such issuance by the purchase
of additional securities or (ii) an issuance of securities by the Company in an
underwritten offering after the date hereof for which CBS was not permitted to
maintain its ownership percentage at the level existing before such issuance by
the purchase of additional securities as a result of the provisions of Section
2.4(d) hereof, then the CBS Percentage shall be what it otherwise would have
been but for any such issuance. The CBS Percentage shall in no event exceed
29.8% prior to the exercise of the Warrant or 34.8% after the exercise of the
Warrant in full.
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(d) "Change-of-Control Transaction" means any transaction,
upon the consummation of which, any Person or "group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), of Persons (other than CBS, Mitchell Rubenstein, Laurie S.
Silvers, The Times Mirror Company, Gannett Co., Inc. or any of their respective
affiliates) would own in excess of 50% of the outstanding Common Stock.
(e) The term "Closing Date" has the meaning specified in
the Stock Purchase Agreement.
(f) The term "Common Stock" means the common stock, $0.01
par value per share, of the Company.
(g) The term "Derivative Securities" means any options,
warrants, rights, preferred stock or other securities that are convertible,
exercisable or exchangeable into Common Stock or other capital stock of the
Company that is entitled by its terms to vote generally in the election of
directors of the Company.
(h) The terms "Holder" or "Holders" means CBS and any of
its Permitted Transferees.
(i) The term "Initiating Holder" means any Holder or
Holders of 25% or more of the aggregate Registrable Securities
then outstanding.
(j) The term "New Securities" means any Common Stock or
Derivative Securities issued by the Company in either a private placement or a
registered public offering, but excluding (i) any shares of Common Stock
issuable upon the conversion, exercise or exchange of Derivative Securities of
the Company issued and in effect as of the date of this Agreement; (ii) the
issuance or sale by the Company of Common Stock or Derivative Securities to any
directors, officers, employees, contractors, advisors or consultants of the
Company or any of its subsidiaries provided such issuance or sale is pursuant to
agreements or employee plans in the ordinary course of business of the Company
consistent with past practice; (iii) shares of Common Stock issued in connection
with any stock split, stock dividend, recombination or other recapitalization
transaction in respect of the Common Stock; (iv) shares of Common Stock or
Derivative Securities issued as collateral in connection with any equipment
lease, real property lease, loan, credit line, guarantees of indebtedness or
similar financing; (v) Common Stock or Derivative Securities issued in
connection with or pursuant to any merger, acquisition, consolidation,
amalgamation, business combination, reorganization, or reincorporation by or
involving the Company or any of its subsidiaries; or (vi) Common Stock or
Derivative Securities issued by the Company in any arms'-length transaction
whose primary purpose is to provide carriage to the web sites operated by the
Company in an amount not to exceed, in the aggregate, 4.99% of the aggregate
shares of Common Stock outstanding.
(k) The terms "register," "registered" and "registration"
refer to a registration effected by the preparation and filing of a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of the effectiveness of such
registration statement by the SEC.
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<PAGE>
(l) The term "Registrable Securities" means (i) any and all
shares of Common Stock issued to CBS pursuant to the Stock Purchase Agreement;
(ii) any and all shares of Common Stock issued to CBS or any "Permitted
Transferee" (as defined in Section 2.3 hereof) pursuant to the Warrant; and
(iii) any and all shares of Common Stock issued in respect of the securities
referred to in (i) and (ii) as a result of a stock split, dividend,
recapitalization or the like, which has not been sold to the public. As to any
particular Registrable Securities, such securities shall cease to be such when
(i) a registration statement registering such securities under the Securities
Act has been declared or ordered effective by the SEC and such securities have
been sold or otherwise transferred by the holder thereof pursuant to and in
accordance with the plan of distribution with respect to such securities
disclosed in the prospectus (compliant with Rule 424(b) under the Securities
Act) forming part of such registration statement; (ii) such securities have been
sold in accordance with the resale requirements of Rule 144 (or any successor
rule or provision) adopted by the SEC under the Securities Act; (iii) such
securities shall have been transferred, new certificates evidencing such
securities without legends restricting further transfer shall have been
delivered by the Company and subsequent public distribution of such securities
shall neither require registration under the Securities Act nor qualification
(or any similar filing) under any state securities or "blue sky" law then in
effect; or (iv) such securities no longer shall be issued and outstanding.
(m) The term "Registration Expenses" means all expenses
incurred by the Company in complying with Sections 1.2 and 1.3 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of one counsel (or firm of counsel)
for CBS, "blue sky" qualification fees and expenses, and the expenses of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company.)
(n) The term "SEC" means the Securities and Exchange
Commission.
(o) The term "Warrant" means that certain warrant of even
date herewith for the purchase of shares of Common Stock of the Company issued
to and in the name of CBS.
1. Registration Rights.
1.1. Intentionally Omitted.
1.2. Demand Registration.
(a) Request for Registration. If the Company shall receive
from any Initiating Holder a written request that the Company effect any
registration, qualification or compliance with respect to Registrable Securities
(a "Demand"), the Company will:
(i) promptly give written notice ("Company
Notice") of the proposed registration, qualification or compliance to all other
Holders; and
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<PAGE>
(ii) as soon as practicable, use its best
efforts to effect all such registrations, qualifications and compliances
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualifications under applicable "blue
sky" or other state securities laws and appropriate compliance with exemptive
regulations promulgated under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the public sale and distribution of all or such portion of such
Initiating Holder's or Initiating Holders' Registrable Securities as are
specified in such Demand, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such Demand as are specified in a
written request given within 20 days after receipt of the Company Notice;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 1.2:
(A) at any time prior to (i) the effective date
of the registration statement in respect of the first underwritten registered
public offering by the Company next following the date of this Agreement or (ii)
one year after the date of this Agreement, whichever first occurs;
(B) during the period commencing on the 10th day
next preceding the effective date of a registration statement filed with SEC
pursuant to this Section 1.2 and ending on the 180th day next following such
effective date;
(C) during the period commencing on the 60th day
next preceding the Company's good faith estimate of the date of filing of, and
ending on the 60th day next following the effective date of, a Company
registration pursuant to Section 1.3 hereof, provided the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective;
(D) in any particular jurisdiction in which the
Company would be required to qualify to do business or become subject to
taxation or general service of process, unless the Company already is so subject
to service in such jurisdiction; or
(E) after the Company has effected four (4) such
registrations pursuant to this Section 1.2(a) and such registrations have been
declared or ordered effective by the SEC.
Subject to the foregoing clauses (A) through (E), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, but in no event later than 60 days
after receipt of the request(s) of the Initiating Holder(s) therefor; provided,
however, that if the Company shall furnish to such holders a certificate signed
by its Chief Executive Officer or President stating that in the good faith
judgment of the Board of Directors it would be detrimental to the Company and
its stockholders for such registration statement to be filed at or about the
date requested by the Initiating Holders and it is therefore necessary or
commercially desirable to defer the filing of such registration statement, the
Company shall have an additional period of not more than 120 days after the
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<PAGE>
expiration of the initial 60-day period within which to file such registration
statement; provided, however, that the Company shall not be entitled to utilize
this right more than once in any 12-month period.
(b) Underwriting. If the Holders intend to distribute the
Registrable Securities covered by their request by means of an underwritten
offering, they shall so advise the Company as part of their request made
pursuant to this Section 1.2 and the Company shall include such information in
the Company Notice. In such case, the underwriter shall be selected by the
Company and shall be reasonably acceptable to a majority-in-interest of the
Initiating Holders. The right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Company shall (together with all
Holders proposing to distribute their securities by means of such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters. Notwithstanding any other provision of this Section 1.2, if the
"Managing Underwriter" (as such term is used in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be offered or sold, the Initiating Holders shall so advise all
Holders, and the number of shares of Registrable Securities that may be included
in the underwritten registration shall be allocated among all Holders thereof in
the proportion, as nearly as practicable, that the respective amounts of
Registrable Securities held by each such Holder bears to the aggregate amount of
Registrable Securities held by all such Holders. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such Holder may elect
to withdraw its Registrable Securities therefrom by written notice to the
Company, the underwriter and the Initiating Holders. Any Registrable Securities
which are excluded from the underwriting by reason of the Managing Underwriter's
marketing limitation or withdrawn from such underwriting forthwith shall be
withdrawn from such registration.
(c) Company Shares. If the Managing Underwriter has not
limited the number of Registrable Securities to be underwritten, the Company may
include therein securities for its own account or for the account of others if
the Managing Underwriter so agrees and if the number of Registrable Securities
which would otherwise have been included in such registration and underwriting
will not thereby be limited.
1.3. "Piggyback" Registration.
(a) Registration. If at any time or from time to time, the
Company shall determine to register shares of Common Stock for its own account
or the account of any of its stockholders, other than a registration on Form S-1
or S-8 relating solely to employee stock option or purchase plans, or a
registration on Form S-4, or a registration on any other form (other than Form
S-1, S-2, S-3, SB-1 or SB-2, or their successor forms) or any successor to such
forms, which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities, the Company will:
(i) promptly give to each Holder written notice
thereof; and
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(ii) include in such registration, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such written
notice from the Company, by any Holder, except as set forth in Section 1.3(b)
below.
(b) Underwriting. If the registration as to which the
Company gives notice is in respect of a registered underwritten public offering
the Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.3(a)(i). In such event the right of any Holder to
registration pursuant to this Section 1.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. If the Managing Underwriter of an offering of
securities effected pursuant to this Section 1.3 reasonably shall determine and
advise the Company in writing that in its opinion the aggregate number of
Registrable Securities requested to be included in the Company's registration
statement creates a substantial risk that the proceeds or the price per share
that the Company (or in the case of a registration which does not include any
securities being offered or sold for the Company's own account, the person(s)
for whose account the registration statement is filed) would receive pursuant to
the offering would be materially reduced or that the success of the offering
otherwise would be materially adversely affected, then the number of Registrable
Securities to be included in the Company's registration statement for the
account of the Holders thereof shall be reduced pro rata among such Holders to
the aggregate amount deemed appropriate by such Managing Underwriter; provided,
however, if securities are being offered for the account of other persons or
entities as well as the Company, then with respect to the Registrable Securities
intended to be included for the account of the Holder thereof, the proportion by
which the number of Registrable Securities intended to be included by such
Holders is reduced shall not exceed the proportion by which the number of
securities intended to be registered by such other persons or entities is
reduced. If any Holder disapproves of the terms of the underwriting, he may
elect to withdraw therefrom by written notice to the Company and the Managing
Underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting forthwith shall be withdrawn from such registration. No Holder
shall have any right to participate in, and Section 1.3(a) shall not apply to,
the first registered public offering involving an underwriting consummated by
the Company after the date of this Agreement (the "Follow-on Offering");
provided that each such Holder shall have a right to participate in the
Follow-on Offering, irrespective of the date of consummation thereof, if the
Follow-on Offering is not consummated within one year from the date hereof,
subject, however, in any case to approval of such participation by the Managing
Underwriter therefor.
For any selling Holder which is a partnership or
corporation, the partners, retired partners and stockholders of such Holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single selling Holder such that any pro rata reduction with respect to such
selling Holder shall be based upon the aggregate amount of Registrable
Securities owned by all entities and individuals included in such selling
Holder.
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(c) Company shall have the right to withdraw any
"piggyback" registration for any reason upon reasonable notice to each Holder.
1.4. Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 1, Registration Rights shall be borne by the Company,
except as follows:
(a) The Company shall not be required to pay for expenses
of any registration pursuant to Section 1.2 , the request for which has been
subsequently withdrawn by the Initiating Holders, in which case such expenses
shall be borne by the Holders requesting such withdrawal unless, at the time of
such withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known by the
Initiating Holders at the time of their request.
(b) The Company shall not be required to pay underwriters'
fees, discounts or commissions relating to Registrable Securities or any broker
or dealer concessions or allowances relating to the distribution thereof.
1.5. Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Agreement, the Company will keep each Holder participating therein advised
in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. Except as otherwise provided in
Section 1.4, at its expense the Company will:
(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 and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to 180 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or, except as required under
the Securities Act, to file a general consent to service of process in any such
states or jurisdictions.
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(e) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange or U.S. automated
inter-dealer quotation system of a registered national securities association on
which similar securities issued by the Company are then listed.
1.6. Indemnification.
(a) The Company will indemnify and hold harmless each
Holder of Registrable Securities and each of its officers, directors and
partners, and each person controlling such Holder, with respect to which such
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter of the Registrable Securities held by or issuable to such Holder,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or registration
statement (including any supplement or amendment thereto), or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus, in light of the circumstances under which they were made) not
misleading, or any violation or alleged violation by the Company of the
Securities Act, the Exchange Act and any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law and relating to action or inaction legally required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, within a reasonable amount of
time after incurred (not to exceed 45 days) for any reasonable legal and any
other expenses incurred by them in connection with investigating, defending or
settling any such claim, loss, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 1.6(a) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld); and provided further, that the Company will
not be liable in any such case to the extent that any such claim, loss, damage
or liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by an instrument duly executed
by such Holder, controlling person or underwriter specifically for use therein
or upon such Holders failure to deliver a copy of a current prospectus
(compliant with Section 10 of the Securities Act) or any amendment or supplement
thereto (which does not contain any aforesaid misrepresentation or omissions) if
the Company theretofore has furnished such Holder with a sufficient number of
the copies of the same for delivery by the Holder in connection with the offer
and sale of Registrable Securities.
(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected pursuant to this
Agreement, indemnify and hold harmless the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and
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partners and each person controlling such Holder, against all claims, losses,
expenses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement or prospectus (including any
supplement or amendment thereto) or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein (in case of any prospectus, in light of the circumstances
under which they were made) not misleading, and will reimburse the Company, such
Holders, such directors, officers, partners, persons or underwriters for any
reasonable legal or any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement or prospectus (including any supplement or
amendment thereto) in reliance upon and in conformity with written information
furnished to the Company by the Holder in an instrument duly executed by such
Holder specifically for use therein; provided, however, that the indemnity
agreement contained in this Section 1.6(b) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); and provided further, that the total amount for
which any Holder shall be liable under this Section 1.6(b) shall not in any
event exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in connection with the offering that
gave rise to this indemnification obligation.
(c) Each party entitled to indemnification under this
Section 1.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense; and provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
material prejudice to the Indemnifying Party; and provided further, that an
Indemnified Party (together with all other Indemnified Parties which may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel (or firm of counsel), with the fees and expenses to be paid by
the Indemnifying Party, if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, 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) If recovery is not available under the foregoing
indemnification provisions for any reason or reasons other than as specified
therein, any person who otherwise
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would be entitled to indemnification by the terms thereof nevertheless shall be
entitled to contribution with respect to any losses with respect to which such
person would be entitled to such indemnification but for such reason or reasons.
In determining the amount of contribution to which the respective persons are
entitled, there shall be considered the persons' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission, and
other equitable considerations appropriate under the circumstances. It is hereby
agreed that it would not necessarily be equitable if the amount of such
contribution were determined by pro rata or per capita allocation. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
found guilty of such fraudulent misrepresentation. Notwithstanding the
foregoing, no Holder of Registrable Securities shall be required to make a
contribution in excess of the aggregate proceeds received by such Holder from
the sale of Registrable Securities held by such Holder in connection with the
offering that gave rise to the contribution obligation.
(e) The obligations of the Company and Holders under this
Section 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.7. Information by Holder. Any Holder or Holders of
Registrable Securities included in any registration shall promptly furnish to
the Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to herein.
1.8. Rule 144 Reporting. From and after such time as the
Holders are eligible under Rule 144 to effect resales of Registrable Securities
held by them, the Company hereby agrees to file with the SEC all periodic and
other reports required to be so filed by it under the Securities Act and the
Exchange Act and the rules and regulations thereunder (or, if the Company is not
then required to file such reports, it shall, as promptly as reasonably
practicable after the written request of any Holder of Registrable Securities
therefor, make publicly available the requisite "Rule 15c2-11 information" in
respect of the Company so long as and solely to the extent necessary to permit
resales of Registrable Securities pursuant to Rule 144), and it shall take such
further reasonable action, to the extent required from time to time, to enable
such Holder to resell Registrable Securities without registration under the
Securities Act. Upon the reasonable request of any Holder of Registrable
Securities, the Company shall as promptly as reasonably practicable deliver to
such Holder a written statement as to whether it has complied with the foregoing
information and filing requirements.
1.9. "Market Stand-Off" Agreement. Each Holder hereby
agrees that, during the period (not to exceed 180 days with respect to the
Follow-on Offering, provided the Follow-on Offering is consummated within one
year from the date hereof, and 90 days with respect to every other registration)
specified by the Company and an underwriter of Common Stock or other securities
of the Company following the effective date of a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without
11
<PAGE>
limitation, any short sale), grant any option to purchase, pledge or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company held by it at any time during such period except
securities included in such registration; provided, however, that such agreement
shall not be required unless all officers and key employees of the Company enter
into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to any securities of the Company
held by any Holder (and the shares of securities of every other person subject
to the foregoing restriction) until the end of such period.
2. Right of First Refusal.
2.1. Restrictions on Transfer. No Holder may effect any
sale, exchange, transfer, assignment, gift, pledge, encumbrance, hypothecation
or alienation of any shares of any series or class of capital stock of the
Company (the "Stock") or any direct or indirect interest in or right to such
shares, now held by or hereafter acquired by such stockholder, whether
voluntarily or involuntarily or by operation of law (hereinafter collectively
referred to as a "Transfer"), for a period of one year after the date hereof,
except to a Permitted Transferee.
2.2. Right of First Refusal. Until the seventh anniversary
of the date hereof, if a Holder of Stock (an "Offering Stockholder") desires to
Transfer any or all of the shares of Stock then owned by such Offering
Stockholder (the "Transfer Stock") to any person other than a Permitted
Transferee of such Holder or in any manner other than in a bona fide public
distribution pursuant to an effective registration statement under the
Securities Act, such Offering Stockholder shall give written notice (the "Offer
Notice") to the Company of the terms and conditions of the proposed sale, and
the Company shall have the right and option (but not the obligation) to purchase
the Transfer Stock at the price and upon the other terms and conditions set
forth in the Offer Notice. The right of first refusal provided for herein shall
be exercisable by the Company upon delivery of written notice (the "Purchase
Notice") to the Offering Stockholder not more than 10 business days after
receipt by the Company of the Offer Notice (the "Exercise Period"). If the
Company exercises its right of first refusal hereunder, consummation of the
purchase of the Transfer Stock pursuant thereto shall occur on such date as the
Company and the Offering Stockholder mutually shall agree, but in no event later
than 10 business days next following the date on which the Company shall have
delivered the Purchase Notice to the Offering Stockholder; subject to extension
of such 10-day period as necessary to comply with applicable securities and
other laws and regulations. Upon exercise of the foregoing right of first
refusal, the Company and the Offering Stockholder shall be contractually
obligated to consummate the purchase contemplated thereby and shall use their
reasonable best efforts to obtain all requisite consents and approvals in
connection therewith. If the Company declines to purchase the Transfer Stock as
provided in this Section 2.2, the Offering Stockholder thereafter shall have the
right for a period of 120 days next following the expiration of the Exercise
Period (the "Open Sale Period") to transfer all or any portion of the Transfer
Stock subject to the Transfer Offer, free and clear of the restrictions and
limitations of this Section 2.2, in one or a series of bona fide transactions;
provided, however, that such transfer may only be effected pursuant to general
terms and conditions (including price) not more beneficial to the Offering
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<PAGE>
Stockholder than those contained in the Offer Notice. If any Transfer Stock is
not sold or transferred pursuant to the provisions of this Section 2.2 prior to
the expiration of the Open Sale Period, such Transfer Stock again shall become
subject to the provisions and restrictions hereof. The Company may assign its
rights under this Section 2.2 to Approved Transferees who shall be entitled to
deliver the Purchase Notice and purchase the Transfer Stock in accordance with
the identical terms of this Section 2.2.
Notwithstanding any of the foregoing, the provisions of
this Section 2.2 no longer shall be of any force or effect (a) at such time as
Mitchell Rubenstein and Laurie S. Silvers shall have sold 60% or more of the
Common Stock beneficially owned by them on the date hereof; provided, however,
that Transfers of Common Stock by them to family members, to charitable
organizations or to trusts for estate planning purposes shall not constitute
Transfers for purposes of this paragraph; or (b) if at any time after the second
anniversary of this agreement, 15% or less of the Common Stock is beneficially
owned by CBS and its Permitted Transferees. The terms of clause (b) in the
preceding sentence shall not be applicable if CBS and its Permitted Transferees
beneficially own 15% or less of the Common Stock as a result of Transfers by CBS
or its Permitted Transferees of at least 50% of the Common Stock acquired by CBS
or its assignees pursuant to the Stock Purchase Agreement and the Warrant.
2.3. Permitted Transferees. "Permitted Transferee" shall
mean any subsidiary of CBS that owns interests in multiple Internet businesses
and which agrees to be bound by the terms and subject to the conditions of this
Agreement. All Stock transferred to a Permitted Transferee shall continue to
constitute and remain "Stock" hereunder and each such transferee shall be
treated as a Holder for all purposes of this Agreement. The prohibitions and
restrictions contained in Section 2.1 and 2.2 hereof shall not apply to transfer
to any Permitted Transferees.
Notwithstanding the foregoing, any attempt by CBS to
transfer Stock in violation of this Section 2, whether voluntary or involuntary,
shall be null and void, and the Company neither shall effect such a transfer nor
treat any purported transferee as a Holder in respect of any shares intended to
be transferred.
2.4. Preemptive Rights.
(a) Until the seventh anniversary of the date hereof and
subject to the terms and conditions specified in this Section 2.4, CBS shall
have the right to purchase the CBS Percentage of all (or any portion of) New
Securities that the Company may from time to time issue.
(b) If the Company proposes to issue New Securities, it
shall give CBS written notice of its intention to do so (the "Notice"),
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue such New Securities. CBS shall have five business days
from the date of delivery of any such Notice to agree in writing to purchase for
cash up to the CBS Percentage of such New Securities for the price and upon the
terms specified in the Notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased (not to exceed
the CBS Percentage).
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<PAGE>
(c) If CBS fails to exercise such right to purchase within
such five business day period, then the Company shall have 120 days thereafter
to sell the New Securities specified in the Notice, at a price and upon general
terms not more favorable to the purchaser thereof than specified in the Notice.
(d) Notwithstanding any other provision of this Section
2.4, if an issuance of New Securities by the Company is by means of an
underwritten offering, and the managing underwriter advises the Company in
writing that marketing or other factors require a limitation on the number of
shares to be acquired by CBS in such offering, then the Company shall so advise
CBS, and CBS's right to acquire New Securities in such offering shall be so
limited.
2.5. Assignment of TMC's Rights of First Refusal. Until the
seventh anniversary of the date hereof and with respect to the right of first
refusal in favor of the Company heretofore granted by The Times Mirror Company
("TMC") to the Company as set forth in Section 4 of that certain Shareholder
Agreement (the "TMC Shareholder Agreement") dated as of January 10, 1999 (the
"TMC Right of First Refusal"), in the case of any proposed sale or transfer by
TMC of shares of Common Stock, the Company shall in a timely fashion (and
consistent with the TMC Right of First Refusal) determine whether to exercise
such right. If the Company either declines to exercise such right or elects to
exercise such right for less than all of TMC's shares of Common Stock, the
Company promptly shall so notify CBS and thereupon assign to CBS the TMC Right
of First Refusal and provide to CBS all such information reasonably requested by
CBS in connection therewith. Thereafter (but nevertheless in a timely fashion in
accordance with all notice and time periods required by the TMC Right of First
Refusal), CBS may elect (subject to the restrictions in Section 3.1(i) hereof)
to purchase all or any portion of TMC's shares of Common Stock upon the
identical terms and conditions as specified in the TMC Shareholder Agreement.
2.6. Legends. Each certificate representing shares of
Common Stock will be endorsed with the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED, EXCEPT
(i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) IN
COMPLIANCE WITH THE RESALE LIMITATIONS OF RULE 144 UNDER THE ACT, OR (iii)
PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUBJECT
TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED AS TO SAID SALE, OFFER OR TRANSFER.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN
AGREEMENT BETWEEN THE COMPANY AND THE HOLDER DATED AS OF _________ ___, 1999,
THAT RESTRICTS THE SALE, ASSIGNMENT AND TRANSFER OF THE
14
<PAGE>
SECURITIES REPRESENTED HEREBY. A COPY OF SUCH AGREEMENT IS AVAILABLE, WITHOUT
CHARGE, FROM THE SECRETARY OF THE COMPANY.
(b) Other Legends. Any other legends required by applicable
state securities or "blue-sky" laws.
(c) The Company need not register a transfer of legended
shares of Common Stock and may also instruct its transfer agent not to register
the transfer of the shares of Common Stock, unless the conditions specified in
each of the foregoing legends are satisfied.
2.7. Removal of Legend and Transfer Restrictions. Any
legend endorsed on a certificate pursuant to subsection 2.7(a) and/or 2.7(b) and
the "stop transfer" instructions with respect to such legended securities shall
be removed, and the Company shall issue a certificate without such legend to the
holder of such securities if (a) such securities are registered and sold
pursuant to an effective registration statement under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available and delivered in connection with such sale or (b) if the Holder
satisfies the requirements of Rule 144(k) and, where reasonably deemed necessary
by the Company, if the Company is provided with an opinion of counsel
(reasonably satisfactory to the Company), to the effect that the Holder meets
the requirements of Rule 144(k) and a public sale, transfer or assignment of
such Securities may be made without registration under the Securities Act.
3. Other Covenants.
3.1. Standstill. Until the seventh anniversary of the date
hereof, CBS agrees (and shall cause its Permitted Transferees to agree) that
except as specifically permitted or contemplated by this Agreement or the Stock
Purchase Agreement, CBS and its Permitted Transferees and each of their
respective Affiliates shall not, directly or indirectly, in one or in a series
of related transactions (and whether acting alone or together in concert with
others):
(i) acquire, or offer or agree, attempt, seek or
propose to acquire, directly or indirectly, any equity securities, voting debt
securities or property of the Company or any of its successors or subsidiaries
(or any direct or indirect beneficial ownership rights, options or interests
therein), if, after giving effect thereto, CBS and its affiliates beneficially
own (as defined in Rule 13d-3 under the Exchange Act) in excess of 34.8% of the
outstanding Common Stock;
(ii) solicit proxies or consents or become a
"participant" in a "solicitation" (as such terms are defined or used in
Regulation 14A under the Exchange Act), of proxies or consents with respect to
any securities of the Company (or any of its successors or subsidiaries) or
initiate, encourage, entice or induce the submission of any stockholder proposal
or "election contest" (as such term is defined or used in Rule 14a-11 under the
Exchange Act) with respect to the Company (or any of its successors or
subsidiaries) or, directly or indirectly, act to facilitate, encourage, or
induce others to take any such action;
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<PAGE>
(iii) take any action for the purpose of
convening a meeting of the stockholders the Company (or any of its successors or
subsidiaries) or initiate any process to solicit or obtain consents of
stockholders in lieu of a meeting or, directly or indirectly, act to facilitate,
encourage, or induce others to take such action;
(iv) except as may be required by applicable
laws, rules or regulations, make any public announcement or disclosure in
respect of any plan, commitment, contract, arrangement or understanding relating
to any acquisition of capital stock of the Company or a merger, business
combination, sale of assets, liquidation, restructuring, recapitalization or
other extraordinary corporate transaction relating to the Company or any of its
successors or subsidiaries;
(v) deposit capital stock of the Company into a
voting trust or subject capital stock of the Company to voting agreements, or
grant to or constitute any Persons(s) with any proxy or power-of-attorney with
respect to any capital stock of the Company to any person not designated by the
Company who is not an officer, director or employee of CBS or a Permitted
Transferee;
(vi) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) for the
purpose of acquiring, holding, voting or disposing of securities of the Company
or any of its successors or subsidiaries or otherwise with respect to the
Company or taking any other actions restricted or prohibited under any clause of
this Section 3.1;
(vii) disclose publicly any intention, plan or
arrangement inconsistent with the foregoing or the other provisions of this
Agreement relating to any capital stock of the Company; or
(viii) enter into any discussions, negotiations,
arrangements or understandings with any third party with a view to, or advising,
aiding, abetting, soliciting, inducing or encouraging, any action prohibited by
any of the foregoing.
Notwithstanding the foregoing, if the Company's Board of
Directors approves and/or recommends to its stockholders for approval any
Change-in-Control Transaction, then the restrictions contained in this Section
3.1 shall not apply to CBS during the pendency of any such approved or
recommended Change-in-Control Transaction and said restrictions shall cease to
be of any further force or effect upon the consummation of any such approved or
recommended Change-in-Control Transaction.
3.2. Voting by CBS and its Affiliates.
(a) Until the seventh anniversary of the date hereof,
notwithstanding the number of shares of Common Stock owned by CBS and its
Affiliates, CBS shall only have the discretionary right to vote up to 34.8% of
the outstanding shares of the Common Stock at any meeting of the shareholders of
the Company or otherwise at any time that a vote of the shareholders of the
Company is taken (by written consent or otherwise). CBS and its Affiliates
16
<PAGE>
shall vote all shares of Common Stock beneficially owned by them in excess of
34.8% of the outstanding shares of the Common Stock in the same proportion as
all other shareholders (other than CBS and its Affiliates) of the Company vote
on any matter.
(b) Until the seventh anniversary of the date hereof, CBS
and its Affiliates, as holders of Common Stock, shall be present, in person or
by proxy, at all meetings of shareholders of the Company so that all shares of
Common Stock directly or indirectly owned by them may be counted for the purpose
of determining the presence of a quorum at any such meeting.
3.3. Financial Information. Until such time as the CBS
Percentage is equal to or less than 10%, beginning with the first full monthly
period after the date hereof, the Company shall provide CBS with unaudited
monthly, quarterly, and annual financial information, as appropriate, consisting
of summarized financial information as described in SEC Regulation S-X, each
prepared in accordance with generally accepted accounting principles in the U.S.
("GAAP") within 30 days following each period end. The Company will promptly
notify CBS of any adjustment made to this financial information. In addition,
the Company shall provide CBS with annual audited financial statements prepared
in accordance with GAAP, together with an audit opinion from a "Big 5" public
accounting firm no later than 90 days following period end.
Until such time as the CBS Percentage is equal to or less
than 10%, if CBS or any of its Affiliates notifies the Company that it is
required to include summarized Company financial information in its consolidated
financial statements, then the Company shall provide CBS or the affiliate with
(a) audited annual financial statements of the Company prepared in accordance
with GAAP and applicable SEC regulations within 75 days following period end;
and (b) reviewed (by a "Big 5" public accounting firm) quarterly financial
statements within 40 days following period end.
Until such time as the CBS Percentage is equal to or less
than 10%, if CBS or any of its Affiliates notifies the Company that it has
determined that the Company constitutes an unconsolidated subsidiary qualifying
as a "significant subsidiary" (as defined by SEC Regulation S-X) at the 20%
level, then the Company shall provide to CBS or the Affiliate (w) draft audited
annual financial statements within 50 days following period end, (x) audited
annual financial statements within 75 days following period end; (y) reviewed
(by a "Big 5" public accounting firm) quarterly financial statements within 35
days following period end; and (z) final quarterly financial statements within
40 days following period end in accordance with the requirements of Form 10-QSB
promulgated by the SEC.
4. General.
4.1. Amendments. Any amendment or modification to this
Agreement or the rights of either party must be by the written agreement of the
parties hereto.
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4.2. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of New York as such laws are applied to
agreements between New York residents entered into and to be performed entirely
within New York.
4.3. Successors and Assigns. Nothing in this Agreement,
express or implied, is intended to confer on any party other than the
signatories hereto any rights, remedies, obligations or liabilities under of by
reason of this Agreement. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.4. Entire Agreement. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof, and this Agreement shall supersede and cancel all prior agreements
between the parties hereto with regard to the subject matter hereof.
4.5. Severability. If any provision of this Agreement, or
the application thereof, is for any reason and to any extent determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to other persons or
circumstances will be interpreted so as best to reasonably effect the intent of
the parties hereto. The parties agree to use their best efforts to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision which will achieve, to the extent greatest possible, the economic,
business and other purposes of the void or unenforceable provision.
4.6. Notices, etc. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent, postage prepaid, by registered, certified or express
mail or reputable overnight courier service and shall be deemed given when so
delivered by hand, or if mailed, three days after mailing (one business day in
the case of express mail or overnight courier service), as follows:
if to CBS, to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Fredric G. Reynolds, Executive Vice President and
Chief Financial Officer
with a copy to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Louis J. Briskman, Executive Vice President and
General Counsel
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if to the Company, to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, FL 33431-7383
Attention: Mitchell Rubenstein, Chief Executive Officer
with a copy to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, FL 33431-7383
Attention: W. Robert Shearer, General Counsel
with a copy (which shall not constitute notice
pursuant to this Section 4.6) to:
Greenberg Traurig
MetLife Building, 15th Floor
200 Park Avenue
New York, NY 10166
Attention: Clifford E. Neimeth, Esq.
4.7. Titles and Subtitles The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
4.8. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereby have executed this Agreement on the date
first above written.
CBS CORPORATION
By:
---------------------------------------
Name:
Title:
BIG ENTERTAINMENT, INC.
By:
---------------------------------------
Name:
Title:
20
===============================================================================
VOTING AGREEMENT
among
CBS CORPORATION,
BIG ENTERTAINMENT, INC.,
AND EACH OF THE OTHER PARTIES SIGNATORY HERETO
Dated ______ ___, 1999
===============================================================================
<PAGE>
VOTING AGREEMENT
This VOTING AGREEMENT ("Agreement") is entered into on this ____ day
of ___________ 1999 by and among CBS Corporation, a Pennsylvania corporation
("CBS"), Big Entertainment, Inc., a Florida corporation with principal offices
located at 2255 Glades Road, Suite 237 W, Boca Raton, Florida 33431-7383 (the
"Company"), and each of the other parties signatory hereto (each a "Stockholder"
and collectively, the "Stockholders").
WITNESSETH:
WHEREAS, CBS has entered into a Stock Purchase Agreement with the
Company dated July ___, 1999 (the "Stock Purchase Agreement") pursuant to which
CBS has agreed to purchase shares of common stock, $.01 par value, (the "Common
Stock") of the Company; and
WHEREAS, each of the Stockholders own shares of Common Stock
("Shares") of the Company; and
WHEREAS, as an inducement and condition for CBS and the Company to
enter into the Stock Purchase Agreement, each of CBS, the Company and the
Stockholders have agreed to enter into a voting agreement as hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual agreements and covenants contained herein, the parties, intending to be
legally bound, hereby agree as follows:
1.1 Voting Covenants by the Company. As of the date of this
Agreement, the Company's Board of Directors ("Board") comprises nine directors.
CBS shall have the right from time to time to nominate for election to the Board
a number of individuals (the "CBS Designees") equal to the product of the CBS
Percentage (as defined below) and the total number of members of the Board
(rounded down to the nearest whole number); provided that so long as the
Advertising and Promotion Agreement between CBS and Hollywood.com, Inc. or the
Content License Agreement between CBS and Hollywood.com, Inc., each of even date
herewith, have not terminated or expired, CBS shall have the right to nominate
at least one CBS Designee. CBS shall designate the CBS Designees each year
sufficiently in advance of the Company's distribution of its annual proxy
statement. The Company shall use its reasonable best efforts to cause the
nomination and election from time to time of the CBS Designees. In connection
therewith, the Company agrees to solicit proxies for, and recommend that its
stockholders vote in favor of, each of the CBS Designees. If a CBS Designee
shall cease to be a member of the Board for any reason other than expiration of
his or her term, the Company shall promptly, upon the request of CBS, use its
reasonable best efforts to cause the election or appointment of a person
selected by CBS to replace such designee. For purposes of this Section 1.1, the
"CBS
<PAGE>
Percentage" shall mean, on any date of determination, that percentage determined
by dividing (a) the number of outstanding shares of Common Stock CBS (or a CBS
affiliate) then holds, by (b) the total number of shares of Common Stock of the
Company then outstanding.
1.2 Voting Covenants by Stockholders. In any and all elections for
members of the Board (whether at a meeting or by written consent in lieu of a
meeting), each of the Stockholders shall vote or cause to be voted all shares of
the Common Stock now or hereinafter directly or indirectly owned (of record or
beneficially) by it, or over which it has voting control, and otherwise shall
use its best efforts so as to elect to the Company's Board the CBS Designees.
1.3 Voting Covenants by CBS. In any and all elections for members of
the Board (whether at a meeting or by written consent in lieu of a meeting), CBS
shall vote or cause to be voted all shares of the Common Stock owned by it (or
its affiliates), or over which it has voting control, and otherwise shall use
its best efforts so as to elect to the Company's Board (a) each individual
nominated for election to the Board by the Company and (b) each individual
nominated for election to the Board by The Times Mirror Company, pursuant to the
terms and conditions of Section 7.1 of that certain Shareholder Agreement, dated
January 10, 1999, between the Company and The Times Mirror Company, and a
renewal or extension of the term of Section 7.1 of such Shareholder Agreement
(without otherwise modifying or amending any other term or condition of Section
7.1), which renewal or extension period shall not extend beyond the term of this
Agreement.
2. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a member of the Board makes any agreement or
understanding herein in his or her capacity as such member of the Board. Each
Stockholder who signs this Agreement signs solely in his or her capacity as the
record and/or beneficial owner of shares of Common Stock of the Company.
3. General.
3.1. Waivers and Amendments. Any amendment or modification
to this Agreement or the rights of any party hereto must be by the written
agreement of the parties hereto.
3.2. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of New York as such laws are applied to
agreements between New York residents entered into and to be performed entirely
within New York.
3.3. Successors and Assigns. Except as specifically set
forth in this Agreement, nothing in this Agreement, express or implied, is
intended to confer on any party other than the signatories hereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
3.4. Entire Agreement. Except as set forth below, this
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and
2
<PAGE>
agreement between the parties with regard to the subjects hereof and thereof,
and this Agreement shall supersede and cancel all prior agreements between the
parties hereto with regard to the subject matter hereof.
3.5. Severability. If any provision of this Agreement, or
the application thereof, is for any reason and to any extent determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to other persons or
circumstances will be interpreted so as best to reasonably effect the intent of
the parties hereto. The parties agree to use their best efforts to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision which will achieve, to the extent greatest possible, the economic,
business and other purposes of the void or unenforceable provision.
3.6. Notices, etc. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent, postage prepaid, by registered, certified or express
mail or reputable overnight courier service and shall be deemed given when so
delivered by hand, or if mailed, three days after mailing (one business day in
the case of express mail or overnight courier service), as follows:
if to CBS, to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Fredric G. Reynolds, Executive Vice
President and Chief Financial Officer
with a copy to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Louis J. Briskman, Executive Vice
President and General Counsel
if to the Company, to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, FL 33431-7383
Attention: Mitchell Rubenstein, Chief Executive
Officer
3
<PAGE>
with a copy to:
Big Entertainment, Inc.
2255 Glades Road, Suite 237 W
Boca Raton, FL 33431-7383
Attention: W. Robert Shearer, General Counsel
with a copy (which shall not
constitute notice pursuant to this Section 3.6) to:
Greenberg Traurig
MetLife Building, 15th Floor
200 Park Avenue
New York, NY 10166
Attention: Clifford E. Neimeth, Esq.
if to any of the Stockholders, at the address set forth
on Schedule I hereto.
3.7. Titles and Subtitles The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
3.8. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
3.9. Termination of Board Rights. Notwithstanding anything
to the contrary set forth herein, the Company's obligations under Section 1.1
and the Stockholders' obligations under Section 1.2 shall terminate and be of no
further force and effect upon the acquisition ("Competitor Acquisition") by CBS
(or any of its affiliates or its assignees hereunder), directly or indirectly,
of an equity interest in excess of 15% in any entity who, directly or
indirectly, owns, operates or controls a Competitive Site. CBS shall remain
subject to its obligations under Section 1.3 of this Agreement following any
Competitor Acquisition, provided that CBS's voting obligations shall be limited
to the number of individuals that would have been nominated for election to the
Board by the Company and The Times Mirror Company if CBS's rights under Section
1.1 remained in effect at the time of any such nominations. As used herein, a
"Competitive Site" means a website that has as its primary function and its
principal theme the delivery of news or information related to movies, movie
celebrities or the motion picture industry or the sale of movie- or
television-related merchandise. The definition of "Competitive Site" shall not
include a website that has as its primary function and its principal theme the
sale of music to consumers in CD, cassette or music video format or in or
through any and all other
4
<PAGE>
formats, media, methods, processes or technologies (including, but not limited
to, Internet streaming), whether now known or hereafter invented.
3.10. Term. This Agreement, and all rights and obligations
hereunder shall become effective on the date first set forth above, and shall
terminate on the earlier of: (a) seven years thereafter; (b) the termination or
expiration of the Advertising and Promotion Agreement between CBS and
hollywood.com, Inc. and the Content License Agreement between CBS and
hollywood.com, Inc., each of even date herewith, whichever later occurs; and (c)
the date on which the CBS Percentage is less than 10% as a result of CBS's sale
of its Common Stock (and excluding, for avoidance of doubt, any other diminution
or dilution of the CBS Percentage or any transfer of Common Stock to an
affiliate of CBS), at which time this Agreement, and all rights and obligations
hereunder, shall cease to be of further force or effect.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement
on the date first above written.
CBS CORPORATION
By:
---------------------------------------------
Name: Fredric G. Reynolds
Executive Vice President
and Chief Financial Officer
BIG ENTERTAINMENT, INC.
By:
---------------------------------------------
Name: Mitchell Rubenstein
Chief Executive Officer
---------------------------------------------
Mitchell Rubenstein
---------------------------------------------
Laurie S. Silvers
---------------------------------------------
Martin H. Greenberg
---------------------------------------------
Rosalind Greenberg
THE TIMES MIRROR COMPANY
By:
---------------------------------------------
Name:
Title:
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<PAGE>
SCHEDULE I TO VOTING AGREEMENT
------------------------------
Number of Shares of
Stockholder Name and Address Common Stock Beneficially Owned
- ---------------------------- -------------------------------
Mitchell Rubenstein
c/o Big Entertainment, Inc.
2255 Glades Road
Suite 237 West
Boca Raton, FL 33431-7383
Laurie S. Silvers
c/o Big Entertainment, Inc.
2255 Glades Road
Suite 237 West
Boca Raton, FL 33431-7383
Mr. and Mrs. Martin H. Greenberg
1524 University Avenue, Suite 305
Green Bay, WI 54302
The Times Mirror Company
220 West First Street
Los Angeles, California 90012
Attention: Thomas Unterman
I-1
__________, 1999
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attn: Frederic G. Reynolds
Ladies and Gentlemen:
Reference is made to that certain Employment Agreement entered into
as of July 1, 1993 by and between Big Entertainment, Inc. and [Executive] (the
"Executive"), as amended by that certain Extension and Amendment Agreement dated
July 1, 1998 (the "Employment Agreement"). In connection with the closing of the
transactions contemplated by the Stock Purchase Agreement, dated August __, 1999
(the "Stock Purchase Agreement"), by and between CBS Corporation and Big
Entertainment, Inc., Executive hereby acknowledges and agrees that the
consummation of the transactions contemplated by the Stock Purchase Agreement
(and the "Ancillary Agreements", as defined therein), including, but not limited
to, the issuance of Common Stock by Big Entertainment, Inc. to CBS Corporation
pursuant to the Stock Purchase Agreement, shall not constitute a "Change of
Control" under Section 6 of the Employment Agreement. This agreement shall not
limit Executive's rights under the Employment Agreement with respect to the
acquisition of securities of the Company by any person other than CBS
Corporation and its affiliates, or the acquisition of securities of the Company
by CBS Corporation or its affiliates beyond that permitted by the Stock Purchase
Agreement or the Ancillary Agreements as of the date hereof.
Sincerely,
[Executive]
CBS CORPORATION AND BIG ENTERTAINMENT SIGN DEFINITIVE
AGREEMENT FOR EXPANSION OF PREVIOUSLY ANNOUNCED
RELATIONSHIP WITH HOLLYWOOD.COM
CBS TO RECEIVE 30% EQUITY STAKE IN BIG ENTERTAINMENT
BIG ENTERTAINMENT TO RECEIVE $105 MILLION OF ADVERTISING, PROMOTION, CONTENT
AND OTHER CONSIDERATION
HOLLYWOOD.COM TO BE PROMOTED ON CBS
NEW YORK, NY and BOCA RATON, FL, September 1, 1999 -- CBS Corporation
(NYSE:CBS) and Big Entertainment, Inc. (NASDAQ:BIGE) today announced that they
have signed a definitive agreement, expanding on the relationship the two
companies first announced in April.
Under the terms of the agreement, CBS will receive an approximately
30% ownership interest in Big Entertainment, which includes Big Entertainment's
Hollywood.com and Big's entertainment properties. At the same time, Big will
receive approximately $105 million in advertising, promotion, content and other
consideration, over a term of seven years. Advertising and promotion will take
place across the full range of CBS properties, including television, radio and
outdoor. Infinity Broadcasting Corporation (NYSE: INF), a majority-owned
subsidiary of CBS Corporation, will receive a pro rata interest in the
investment.
Additionally, CBS will receive a warrant to purchase an additional
five percent interest in Big Entertainment. CBS Corporation will hold three
seats on Big's Board of Directors.
The agreement provides for a broader transaction than originally
announced by the parties on April 12, 1999 -- CBS's investment will now be made
directly in Big Entertainment rather than in a subsidiary of Big Entertainment.
The revised agreement adjusts CBS's consideration and equity stake to reflect
the additional agreed-upon value in Big's overall businesses.
"By joining forces with CBS, and harnessing their powerhouse of
promotional and advertising strengths to promote and brand Hollywood.com, we
anticipate that Hollywood.com will quickly become one of the most recognized
names on the Internet," said Mitchell Rubenstein, Chairman and Chief Executive
Officer, Big Entertainment. "We welcome CBS to our family of strategic
shareholders, which includes Gannett and Times Mirror."
Wasserstein Perella & Co., Inc. initiated this transaction and acted
as financial advisor to Big Entertainment.
-more-
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Completion of this transaction is subject to approval by the
shareholders of Big Entertainment. The two companies plan for CBS's promotion of
Hollywood.com to commence during the fall television season.
Big Entertainment, Inc. was founded by Mitchell Rubenstein and Laurie
S. Silvers, who earlier founded the Sci-Fi Channel(TM). Big Entertainment owns
Hollywood.com, bigE.com, and CinemaSource, a combination of movie-related
Internet businesses that are being combined under the "Hollywood.com" brand. Big
Entertainment has entered into a definitive agreement to acquire pkbaseline.com,
a comprehensive online film database. Big Entertainment also owns entertainment
properties created for it by best-selling authors and media celebrities,
including Leonard Nimoy and Mickey Spillane.
Hollywood.com (www.hollywood.com) is a premier website for movies.
The award-winning website features one of the Web's largest collections of
movie-related multimedia, including movie trailers, movie soundtracks, movie
reviews, photos and exclusive interactive games. Hollywood.com also offers users
current movie, laserdisc and movie soundtrack information, as well as local
movie theaters' showtimes, daily Hollywood news, celebrity interviews, listings
of movies on TV, a searchable database with over 130,000 movies and 850,000 cast
and crew credits, movie reviews, box office charts and interactive forums.
Hollywood.com also offers a weekly email dispatch and coverage of premieres,
film festivals and movie events.
CBS Corporation, the world's largest pure-play media company, is
composed of CBS Television, Cable and a majority stake in Infinity Broadcasting
Corporation, its radio and outdoor business. CBS Television is comprised of the
CBS Television Network and 15 CBS owned television stations, seven of which are
in the Top 10 markets. CBS Cable consists of two country networks and regional
sports operations. Infinity Broadcasting Corporation operates 163 radio stations
and TDI, the Company's outdoor business. Infinity recently entered into an
agreement to acquire Outdoor Systems, Inc.
(The matters discussed herein that are forward-looking statements are based on
current management expectations that involve risks and uncertainties that may
result in such expectations not being realized. Potential risks and
uncertainties include, but are not limited to, the risks described in CBS
Corporation's and Big Entertainment's filings with the Securities and Exchange
Commission.)
Press Contacts: Dana McClintock Mitch Rubenstein
CBS Corporation Big Entertainment, Inc.
(212) 975-1077 (561) 998-8000
[email protected]
--------------
-or-
Mark Cohen
The Pinnacle Group
516-773-2477
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