Item
1.01
|
Entry
into a Material Definitive Agreement.
|
Completion
of the MoviePass Transaction
On
December 11, 2017, Helios and Matheson Analytics Inc. (the “Company” or “HMNY”) completed its acquisition
of a majority interest in MoviePass Inc., a Delaware corporation (“MoviePass”) (such acquisition, the “MoviePass
Transaction”), pursuant to the previously announced Securities Purchase Agreement, dated as of August 15, 2017, between
HMNY and MoviePass (as amended, the “MoviePass SPA”), and the Investment Option Agreement, dated October 11, 2017,
between HMNY and MoviePass (the “MoviePass Option Agreement”).
At the closing of
the MoviePass Transaction (the “Closing”), MoviePass issued HMNY 81,542,016 shares of its common stock representing
51.71% of its outstanding common stock in exchange for the following consideration: (1) a subordinated convertible promissory note
in the principal amount of $12,000,000 (the “Helios Convertible Note”), which is convertible into shares of HMNY’s
common stock, as further described below; (2) a $5,000,000 promissory note issued to MoviePass (the “Helios Note”);
and (3) the cancellation of a convertible promissory note issued by MoviePass to HMNY in an aggregate principal amount of $11,500,000.
In addition, pursuant
to the terms of the Note Purchase Agreement, dated as of December 11, 2017 (the “Kelly Note Purchase Agreement”),
among HMNY, MoviePass and Christopher Kelly, a director, stockholder and noteholder of MoviePass (“Kelly”), HMNY agreed
to purchase from Kelly, within two business days after the Closing, MoviePass convertible promissory notes in an aggregate principal
amount of $1,000,000 (the “Kelly Notes”) for $1,000,000 in cash, which will automatically convert into 6,813,178 shares
of MoviePass’ common stock amounting to an additional 2% of the outstanding shares of MoviePass common stock on a post-transaction
basis within two business days after the Closing, pursuant to a Note Conversion Agreement to be entered into between HMNY and
MoviePass (the “Kelly Note Conversion Agreement”).
Pursuant to the MoviePass
Option Agreement, upon the Closing, the outstanding convertible promissory notes issued by MoviePass to HMNY (each a “MoviePass
Option Note”) in an aggregate principal amount of $12,150,000 as of the Closing date, which includes additional option exercises
by HMNY on December 5, 2017 and December 7, 2017 in an aggregate amount of $2,800,000, were cancelled in exchange for 15,789,764
additional shares of MoviePass’ common stock.
Upon
completion of the above issuances, HMNY will own approximately 57.8% of MoviePass’ issued and outstanding common stock,
which may be increased in connection with additional option exercises following Closing in accordance with the terms of the MoviePass
Option Agreement.
Amendment
No. 2 to the MoviePass SPA and Other Ancillary Agreements
Immediately prior to
the completion of the MoviePass Transaction, HMNY and MoviePass entered into a second amendment to the MoviePass SPA (“Amendment
No. 2”), pursuant to which, in lieu of issuing 4,000,001 unregistered shares of HMNY common stock to MoviePass at the Closing
(the “Helios Shares”), HMNY agreed to issue the Helios Convertible Note to MoviePass, which will convert automatically
upon HMNY’s receipt of approval of its stockholders relating to the issuance of the Helios Shares as required by and in accordance
with Nasdaq Listing Rule 5635 (the “Stockholder Approval”) into 4,000,001 unregistered shares of HMNY common stock
(the “Conversion Shares”). If MoviePass fails to list its common stock on The Nasdaq Stock Market or the New York Stock
Exchange by March 31, 2018, 666,667 of the Conversion Shares will be subject to forfeiture by MoviePass, in HMNY’s sole discretion.
Pursuant to the terms
of a voting agreement (the “Voting Agreement”) entered into at the Closing among HMNY, MoviePass and 5% or greater
stockholders of MoviePass, subject to applicable rules and regulations, the Chief Executive Officer of HMNY has the right to designate
two directors to the board of directors of MoviePass and the Chief Executive Officer of MoviePass has the right to designate three
directors of the board of directors of MoviePass. In accordance with the terms of the Voting Agreement, each party is required
to vote in favor of such designees.
At the Closing,
HMNY, MoviePass and certain stockholders of MoviePass, entered into an investors’ rights agreement (the “Investors’
Rights Agreement”), which provides such investors with certain information rights, including access to financial information
of MoviePass and inspections rights. In addition, HMNY will receive the right to approve certain MoviePass corporate actions and
will require MoviePass to register the shares of its common stock issued to HMNY with the U.S. Securities and Exchange Commission
(the “SEC”).
At the Closing, HMNY
and MoviePass each entered into a lock-up agreement (with respect to HMNY, the “HMNY Lock-Up Agreement” and with respect
to MoviePass, the “MoviePass Lock-Up Agreement” and collectively, the “Lock-Up Agreements”). Pursuant to
the Lock-Up Agreements, each of MoviePass and HMNY agreed that from the date of the Lock-Up Agreement and ending on the later of
one (1) year from the date thereof or six (6) months after the date on which shares of MoviePass’ common stock begin trading
on the Nasdaq Stock Market or the New York Stock Exchange, neither MoviePass nor HMNY (i) shall sell, (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of, or (iii)
permit to exist any security interest, lien, claim, pledge, option, right of first refusal, agreement or limitation on MoviePass’
or HMNY’s voting rights, engage in any hedging or other transaction which is designed to, or which reasonably could be expected
to lead to or result in a sale or disposition of, the shares of MoviePass owned by HMNY or the Conversion Shares, when issued.
At
the Closing, HMNY and MoviePass also entered into a voting proxy agreement, pursuant to which MoviePass granted a proxy in favor
of Theodore Farnsworth, in his capacity as the Chief Executive Officer of HMNY, with respect to the Conversion Shares (the “MoviePass
Voting Proxy”).
The above discussion
does not purport to be a complete description of the MoviePass SPA, MoviePass Option Agreement, Amendment No. 2, the Helios Convertible
Note, the Helios Note, the Kelly Note Purchase Agreement, the Kelly Note Conversion Agreement, the MoviePass Option Notice, the
Voting Agreement, the Investors’ Rights Agreement, the Lock-Up Agreements, and the MoviePass Voting Proxy and is qualified
in its entirety by reference to the full text of such documents, which are attached exhibits to this Current Report on Form 8-K
(this “Current Report”) and incorporated herein by reference.