EX-10.10 2 0002.txt ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT BY AND BETWEEN HOLLYWOOD.COM, INC AND BROADWAYTHEATER.COM, INC. Dated as of April 19, 2000 ASSET PURCHASE AGREEMENT ------------------------ ASSET PURCHASE AGREEMENT, dated as of April 19, 2000, by and between HOLLYWOOD.COM, INC., a Delaware corporation ("Buyer"), and BROADWAYTHEATER.COM, INC., a New York corporation ("Seller"). W I T N E S S E T H : WHEREAS, upon the terms and subject to the conditions hereinafter set forth, Seller desires to sell, assign and transfer to Buyer, and Buyer desires to purchase and acquire from Seller, all of Seller's right, title and interest in the Assets (as defined herein); WHEREAS, for federal income tax purposes, it is intended that the Acquisition (as defined below) shall qualify as a reorganization under section 368(a)(1)(C) of the Internal Revenue code of 1986, as amended (the "Code"), pursuant to which substantially all of the Assets shall be transferred to Buyer in exchange for Buyer voting stock and other consideration and pursuant to such plan of reorganization Seller shall be liquidated with the stock and other consideration distributed to the shareholders of Seller. NOW THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows: ARTICLE I ACQUISITION AND TRANSFER OF ASSETS Section 1.1. Assets to be Acquired. Upon the terms and subject to the conditions hereinafter set forth, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller (the "Acquisition"), free and clear of all Liens (as defined in Section 1.1(b) below), all right, title and interest of Seller in, to and under all of the assets, properties, rights, contracts, claims, operations and business of Seller (collectively, the "Assets") (but excluding the Excluded Assets, as defined in Section 1.2 below), whether or not appearing on the books of Seller, including, without limitation, the following: (i) all contracts and agreements to which Seller is a party (collectively, the "Assigned Contracts") that are listed on Schedule 1.1(a) hereto; (ii) all of the furniture, supplies, computers, office equipment, fixtures and other fixed assets owned by Seller (the "Fixed Assets"); (iii) all trademarks, tradenames, logos, service marks, brand marks, brand names, domain names, patents, copyrights, inventions, customer lists, and proprietary know-how or information owned or used by Seller and all registrations thereof and pending applications therefor (collectively, the "Intangible Property"); (iv) all trade accounts receivable of Seller; (v) all papers, databases, computer programs, disks, software, and other books, records, documents and materials owned by Seller (the "Books and Records"); (vi) all assets of Seller (other than Excluded Assets) as to which Buyer assumes any liability; (vii) all rights of Seller under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors in connection with any of the foregoing Assets; and (viii) all goodwill relating to the foregoing Assets. (b) For the purposes of this Agreement, "Lien" shall mean any lien, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement or other real estate declaration, covenant, condition, restriction or servitude, transfer restriction under any shareholder or similar agreement, or encumbrance. Section 1.2. Excluded Assets. Notwithstanding anything in Section 1.1 to the contrary, the parties hereto expressly agree that Seller is not hereunder selling, assigning, transferring, conveying or delivering to Buyer, and Buyer is not purchasing, acquiring or accepting, the following assets, rights and properties (collectively, the "Excluded Assets"): (ii) any insurance policies, bonds, letters of credit or other similar items, or any cash surrender value in regard thereto; (ii) any claim, right or interest in or to any refund for federal, state or local franchise, income or other taxes or fees of any nature whatsoever for periods on or prior to the Closing Date (as defined in Section 9.1 below) and any interest (or similar amount) thereon; (iii) any of Seller's corporate books and records of internal proceedings or tax records, and any books and records that Seller is required by law to retain (the "Corporate Records"), but Buyer shall have access to the same to the extent permitted by Section 10.3 below; and (iv) any employment, consulting or similar agreement. Section 1.3. Assumed and Excluded Liabilities. (a) Buyer shall not assume or be bound by any obligations, liabilities (including without limitation, liabilities in respect of Taxes (as defined in Section 3.13(a) below) and "employee benefit plans" (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended) or any other pension plans or employee benefit arrangements) or commitments of Seller or any of its affiliates of any kind, character or description, whether absolute, accrued, known, unknown, asserted, unasserted, due or to become due, contingent or otherwise ("Liabilities"), in connection with the Assets or otherwise, other than the following: 2 (i) obligations and liabilities arising after the Closing Date under the Assigned Contracts in respect of the period following such Closing Date; and (ii) all trade accounts payable arising in the ordinary course of business of Seller. Any ad valorem Taxes relating to a period straddling the Closing Date shall be prorated to the Closing Date, and the portion allocable to the period prior to the Closing Date shall be promptly paid or reimbursed by Seller, and the portion allocable to the period after the Closing Date shall be promptly paid or reimbursed by Buyer. All other Liabilities of Seller shall remain the sole responsibility of Seller. ARTICLE II CONSIDERATION Section 2.1. Amount and Form of Consideration. (a) The aggregate consideration (the "Initial Consideration") to be paid on the Closing Date by Buyer to Seller for the Assets shall consist of the following: (i) $135,000 in cash (the "Cash Consideration"); plus (ii) 83,214 fully paid and nonassessable shares of the common stock, $.01 par value per share (the "Common Stock"), of Hollywood.com, Inc. (the "Parent Company"); a Florida corporation and the wholly owning parent company of Buyer (the "Initial Stock Consideration"); plus (iii) the assumption by Buyer of certain of the obligations and liabilities of Seller pursuant to Section 1.3 above. (b) In addition, Seller shall have the ability to earn additional consideration (the "Additional Consideration" and, together with the Initial Consideration, the "Consideration") payable in Common Stock on the following terms: (i) If the Gross Profit of the Business for the period from April 1, 2000 to March 31, 2001 (a) equals or exceeds $860,724, then Buyer shall cause Parent Company to issue to Seller or its designee on May 15, 2001 shares of Common Stock valued at the Per Share Price with an aggregate value of $400,000, or (b) exceeds $474,676 but is less than $860,724, then Buyer shall cause Parent Company to issue to Seller or its designee on May 15, 2001 shares of Common Stock valued at the Per Share Price with an aggregate value equal to the product of (1) $400,000 and (2) the quotient of the Gross Profit for such period less $474,676 divided by $386,048. (ii) If the Gross Profit of the Business for the period from April 1, 2001 to March 31, 2002 (a) 3 equals or exceeds $1,075,905, then Buyer shall cause Parent Company to issue to Seller or its designee on May 15, 2002 shares of Common Stock valued at the Per Share Price with an aggregate value of $400,000, or (b) exceeds $860,724 but is less than $1,075,905 then Buyer shall cause Parent Company to issue to Seller or its designee on May 15, 2002 shares of Common Stock valued at the Per Share Price with an aggregate value equal to the product of (1) $400,000 and (2) the quotient of the Gross Profit for such period less $860,724 divided by $215,181. (iii) If the Gross Profit of the Business for the period from April 1, 2002 to March 31, 2003 (a) equals or exceeds $1,344,881, then Buyer shall cause Parent Company to issue to Seller or its designee on May 15, 2003 shares of Common Stock valued at the Per Share Price with an aggregate value of $400,000, or (b) exceeds $1,075,905 but is less than $1,344,881 then Buyer shall cause Parent Company to issue to Seller or its designee on May 15, 2003 shares of Common Stock valued at the Per Share Price with an aggregate value equal to the product of (1) $400,000 and (2) the quotient of the Gross Profit for such period less $1,075,905 divided by $268,976. (c) As used in Section 2.1(b) above, the terms set forth below shall have the following meanings: (i) "Business" means the business of selling tickets for live theater performances through the Internet currently operated by Seller and which is being sold to Buyer pursuant to this Agreement. (ii) "Gross Profit" means all revenue generated from the sale of tickets for live theater performances less cost of goods sold and commissions paid in connection therewith. (iii) "Per Share Price" means, as of each date on which Common Stock is issued pursuant to Section 2.1(b), the average of (a) $14.00 and (b) the closing sale price of the Common Stock on the Nasdaq Stock Market for the ten (10) trading days ending on the day immediately preceding such issuance date; provided that the per share price shall in no event be less than $14.00. (d) The payments that may be made pursuant to Section 2.1(b) are not contingent on Matthew Kupchin's or Andrew Kupchin's employment with the Buyer. Section 2.2. Allocation of Purchase Price. The Consideration and other relevant items shall be allocated among the Assets acquired hereunder by Buyer in accordance with the requirements of Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"). Buyer shall provide Seller with a draft of such allocation within 90 days after the Closing Date. Seller shall notify Buyer within thirty (30) days of receipt of such draft allocation of any objection 4 Seller may have thereto. Seller and Buyer agree to resolve any disagreement with respect to such allocation in good faith consistent herewith. Seller and Buyer each agree to report and file all Tax Returns (as defined in Section 3.13(a)) (including amended Tax Returns and claims for refund) consistent with such allocation, and shall take no position contrary thereto or inconsistent therewith (including, without limitation, in any audits or examinations by any taxing authority or any other proceedings). Seller and Buyer shall cooperate in the filing of any forms (including Form 8594) with respect to such allocation, including any amendments to such forms required with respect to any adjustment to the Consideration pursuant to this Agreement. Notwithstanding any other provisions of this Agreement, the foregoing agreement shall survive the Closing Date without limitation. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Buyer as follows: Section 3.1. Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New York, and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. All of the outstanding capital stock of Seller is owned beneficially and of record by Matt Kupchin. Seller does not have any subsidiaries and does not own stock or partnership or membership interests in any entity. Section 3.2. Authorization of Agreement. Seller has full corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Seller in connection with the consummation of the transactions contemplated by this Agreement (all such other agreements, documents, instruments and certificates are hereafter collectively referred to as the "Seller Documents") and to perform fully its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and each of the Seller Documents have been duly and validly authorized and approved by the Board of Directors and shareholders of Seller and by all other necessary corporate action on behalf of Seller. This Agreement has been, and on or prior to the Closing each of the Seller Documents will be, duly and validly executed and delivered by Seller and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each of the Seller Documents when so executed and delivered will constitute, the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its respective terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). Section 3.3. Consents and Approvals; No Violation. 1. No filing with, notification to or consent, authorization, waiver, approval, order, license, certificate or Permit of, any Government Body (as defined in Section 3.14 below) is necessary for Seller's execution, delivery or performance of this Agreement or any of the Seller Documents or the consummation by Seller of the transactions contemplated by this Agreement and the Seller Documents. 5 (b) None of the execution and delivery by Seller of this Agreement and the Seller Documents, the consummation of the transactions contemplated hereby or thereby or compliance by Seller with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or By-laws of Seller, (ii) violate any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award (each, an "Order") or statute, rule or regulation of any Government Body by which Seller or any of its properties or assets is bound, (iii) conflict with, violate, result in the breach or termination of, or (with or without due notice or the lapse of time or both) constitute a default or give rise to any "takeback" right or right of termination or acceleration or right to increase the obligations under or otherwise modify any of the terms, conditions or provisions of any note, bond, mortgage, license, franchise, Permit, indenture, contract, agreement or other instrument or obligation to which Seller is a party, or by which Seller or any of its properties or assets is or may be bound, or (iv) result in the creation of any Lien upon any of the Assets. Section 3.4. Title to Assets. Seller has good and marketable title to all of the Assets, free and clear of all Liens. Upon the sale, assignment, transfer and conveyance of the Assets to Buyer hereunder, there will be vested in Buyer good and marketable title to such Assets, free and clear of all Liens other than those placed thereon by Buyer. Section 3.5 No Undisclosed Liabilities. Schedule 3.5 sets forth all outstanding trade accounts payable of Seller. Except as set forth on Schedule 3.5, Seller has no Liabilities of any kind, and, to Seller's knowledge, there is no basis for the assertion of any claim or Liability of any nature against Seller. Seller has no indebtedness for borrowed money. Section 3.6. Results of Operations. Seller's revenue and gross profit for the first quarter of the year 2000, determined in accordance with generally accepted accounting principles were no less than $966,000 and $118,000, respectively. The foregoing revenue and gross profit amounts do not include any extraordinary or non-recurring sources of revenue or any revenues resulting from contracts that were not negotiated and entered into by Seller on an arm's length basis. Section 3.7. Litigation, etc. There is no judicial, administrative or arbitral action, suit, proceeding (public or private), claim or governmental proceeding (each, a "Legal Proceeding") pending or, to the knowledge of Seller, threatened that questions the validity of this Agreement, the Seller Documents or any action taken or to be taken by Seller in connection with the consummation of the transactions contemplated hereby or thereby. (i) No investigation or review by any Government Body with respect to Seller is pending or, to the knowledge of Seller, threatened, nor has any Government Body indicated to Seller an intention to conduct the same, (ii) there is no Legal Proceeding pending or, to the knowledge of Seller, threatened against or affecting Seller or its assets at law or in equity, or before any Government Body (and, to the knowledge of Seller, there is no basis for any such Legal Proceeding not so set forth which, if adversely determined, could adversely affect Seller or Buyer) and (iii) there is no outstanding or, to the knowledge of Seller, threatened Order of any Government Body against, affecting or naming Seller or affecting any of the Assets. Except as set forth on Schedule 3.7 hereto, during the three years preceding the date of this Agreement, no Legal Proceeding has been commenced or, to the knowledge of Seller, threatened against or affecting Seller or its assets at law or in equity, or before any Government Body. On and after the date hereof 6 until the Closing, Seller will notify Buyer of the existence or threat of any investigation, review, Legal Proceeding or Order which would be required to be disclosed on Schedule 3.7. Section 3.8. Compliance with Law. Seller has not violated or failed to comply in any material respect with any statute, law, ordinance, regulation, rule or Order of any Government Body. Section 3.9. Employment Agreements. Seller is not now and has never been a party to any employment, compensation, consulting, severance or indemnification agreement or any other agreement with a present or former employee of Seller that provides for severance payments or stay bonuses contingent upon a change in control of Seller or a sale of its business or assets. Section 3.10. Certain Agreements. (a) Except as set forth on Schedule 1.1(a) hereto, neither Seller nor any of its properties or assets is a party to or bound by any (i) lease or rental agreement, (ii) non-compete agreement, (iii) contract granting a right of first refusal or for the acquisition, sale or lease of any assets of Seller, (iv) mortgage, pledge, conditional sales contract, security agreement or other similar contract with respect to any property of Seller, (v) loan agreement, credit agreement, promissory note, guarantee, subordination agreement, letter of credit or other similar type of contract, or (vi) any other material contract. Seller has delivered to Buyer true, correct and complete copies of the Assigned Contracts, including all amendments, modifications, supplements, side letters or consents affecting the obligations of any party thereunder. (b) To the best of Seller's knowledge, each Assigned Contract is valid and enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). Seller is not in breach of or in default under any Assigned Contract and, to Seller's knowledge, there has not occurred any event which, after the giving of notice or lapse of time or both, would constitute a default under or result in a breach of an Assigned Contract by any party subject thereto. No previous or current party to any Assigned Contract (i) has given notice of or made a claim with respect to any breach or default under any Assigned Contract or (ii) has given notice of termination or non-renewal of any Assigned Contract. Except as set forth on Schedule 3.10(b), each of the Assigned Contracts is freely transferable by Seller to Buyer and no third party consents are required for such transfer. Section 3.11. Real Property. (a) Seller does not now own and has not ever owned any real property. (b) Other than the lease agreement, dated November 1999 (the "Lease"), between Seller, as occupancy-sub-tenant, and Soups R Us, Inc., as Tenant-landlord, Seller is not a party to any lease, sublease, license, sublicense or other agreement or arrangement with respect to any real property, and has not used or occupied, does not use or occupy, and does not have any right to use or occupy, now or in the future, any real property. 7 Section 3.12. Intangible Property. (a) Schedule 3.12 hereto sets forth a list of each trademark, trade name, logo, service mark, brand mark, brand name, domain name, patent, and copyright owned or used by Seller, and a list of all registrations thereof and pending applications therefor. Except as set forth on Schedule 3.12, each of the foregoing assets listed on such Schedule as being owned by Seller is owned by Seller free and clear of any and all Liens and is in good standing and no other person or entity (including any past or present officer, employee or consultant of Seller) has any claim of ownership or right of use with respect thereto. Except as set forth on Schedule 3.12, to the best of Seller's knowledge, the use, modification, compilation, reproduction, public display or performance, or distribution of the foregoing by Seller does not, and the use, modification, compilation, reproduction, public display or performance, or distribution thereof by Buyer immediately after the Closing will not, conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including, without limitation, any intellectual property right, trademark, trade name, service mark, brand mark, brand name, computer program, domain name, database, patent, industrial design, copyright or any pending application therefor of any other person or entity and there have been no claims made and Seller has not received any notice or otherwise acquired any knowledge that any of the foregoing is invalid or conflicts with the asserted rights of any other person or has not been used or enforced or has been failed to be used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any of the Intangible Property. (b) Seller is not a party to or bound by any contract, license or other agreements relating to the Intangible Property. Section 3.13. Taxes. (a) For purposes of this Agreement: (i) "Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies or other assessments by any governmental authority, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and all interest, penalties, fines, additions to tax or other amounts imposed by any governmental authority which relate in any way to the assessment of collection of any taxes or the filing of any Tax Return, and shall include any transferee or successor liability in respect of Taxes (whether by contract or otherwise) and any liability in respect of any Tax as a result of being a member of any Affiliated Group, including any consolidated, combined, unitary or similar group. (ii) "Tax Return" means any return (including any consolidated, combined or unitary return in which Seller is, or was, included or includible), declaration, report, claim for refund, separate election or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. (iii) "Affiliated Group" means any affiliated group within the meaning of Section 1504 of the Code, or any consolidated, combined, unitary or similar group defined under a similar provision of state, local or foreign law. (b) Seller has (i) filed when due or will file when due (taking into account extensions) with the appropriate federal, state, local, foreign and 8 other governmental agencies, all Tax Returns required to be filed by it or on its behalf, all of which Tax Returns were true or will be true, complete and correct as of the time of filing, (ii) paid when due and payable (and, until the Closing Date, will timely pay) all required Taxes (except for Taxes which are being contested in good faith, and for which adequate reserves will be established in accordance with GAAP). (c) There are no Taxes assessed or asserted or claimed in writing to be due by any governmental authority or otherwise in respect of any Tax Returns filed by Seller or on Seller's behalf, and no issues have been raised (and are currently pending) by any governmental authority in connection with any such Tax returns. (d) Seller has duly and timely withheld and paid over to the appropriate governmental authorities all Taxes and other amounts required to be so withheld and paid over for all periods under all applicable laws in connection with amounts paid or owing to any employee, independent contractor, subcontractor, lender, stockholder or other third party or other personnel supplied by any third party. (e) There is no audit, examination, deficiency, or refund proceeding pending with respect to any Taxes or Tax Returns of Seller, and no governmental authority has given written notice of the commencement of any audit, examination or deficiency proceeding with respect to any Taxes or Tax Returns of Seller. (f) Seller has heretofore provided Buyer with copies of all federal, state, local, and foreign Tax Returns filed by, or on behalf of, Seller for taxable periods commencing on or after January 1, 1995. (g) Seller is not a party to or bound by any Tax sharing, Tax indemnification or similar agreements (or portions of any agreements) with respect to (or which relate to) the Assets. (h) Seller does not have, nor has Seller ever had, with respect to its business or the Assets, a permanent establishment (within the meaning of any applicable tax treaty) in any foreign country, nor do they engage or have they ever engaged in a trade or business in any foreign country that has subjected its business or the Assets to tax in such foreign country. (i) Seller is not, with respect to the Assets, a party to any joint venture, partnership or other arrangement that constitutes a partnership for federal income tax purposes. (j) The performance of the transactions contemplated by this Agreement will not (either alone or upon the occurrence of any additional or subsequent event) result in, nor do the Liabilities assumed by Buyer in Section 1.3 otherwise provide for, any payment by Buyer that would constitute an "excess parachute payment" within the meaning of Section 280G of the Code. (k) None of the Assets are (i) property required to be treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986; (ii) "tax-exempt use property" within the meaning of Section 168(h)(l) of the Code; (iii) tax exempt bond financed property within the meaning of Section 168(g) of the Code, or (iv) property used "predominantly outside of the United States" within the meaning of Section 168(g)(4). 9 (l) Seller (and any predecessor of Seller) has since January 1, 2000 been and will be, up to and including the Closing Date, an S Corporation within the meaning of Section 1361 of the Code and under all corresponding provisions of applicable state and local Tax laws to the extent they recognize S corporation status. (m) Seller is not a "foreign person" within the meaning of Section 1445 of the Code. Section 3.14. Permits. Schedule 3.14 hereto sets forth a list of all approvals, authorizations, consents, franchises, licenses, permits or certificates (collectively, "Permits") granted by any government or governmental or regulatory body thereof or political subdivision thereof, whether federal, state, local or foreign, or any agency or instrumentality thereof, or any court or arbitrator (public or private) (each, a "Government Body") and applications, if any, for any of the foregoing, held by Seller. Seller is the holder of all Permits necessary or appropriate to enable it to continue to conduct its business in all material respects as presently conducted. Each of the Permits is in full force and effect. Section 3.15. Related Parties; Related Party Transactions. Neither Seller nor any shareholder of Seller owns any direct or indirect interest of any kind in, or controls or is a director, officer, employee or partner of, or consultant to, or lender to or borrower from or has the right to participate in the profits of, any Person which is (A) a competitor, supplier, customer, landlord, tenant, creditor or debtor of Seller, (B) engaged in a business related to the business of Seller, (C) participating in any transaction to which Seller is a party, or (D) a party to any contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sale contract, mortgage, license, franchise, insurance policy, commitment or other arrangement or agreement with Seller. Section 3.16. Options. There are no outstanding securities of Seller convertible into or evidencing the right to purchase or subscribe for any shares of capital stock of Seller and there are no outstanding or authorized options, warrants, calls, subscriptions, rights, commitments or any other agreements of any character obligating Seller to issue any shares of its capital stock or any securities convertible into or evidencing the right to purchase or subscribe for any shares of such stock. Section 3.17. Year 2000. Each computer program used by Seller in its business is Year 2000 Compliant. "Year 2000 Compliant" means that such program is capable of managing and manipulating data involving dates after the year 1999 without any functional or data abnormality and without inaccurate results related to such dates. Section 3.18. Investor Representations. The shares of Common Stock received by Seller pursuant to this Agreement will be acquired for Seller's own account and not with a view to or in connection with the sale or distribution of any part thereof except for distributions to the sole shareholder of Seller. Section 3.19. Exemption from Registration; Restricted Securities. Seller understands that the shares of Common Stock received by Seller pursuant to this Agreement will not be registered under the Securities Act on the ground that the sale provided for in this Agreement is exempt from registration under the Securities Act, and that the reliance of Buyer on such exemption is predicated in part on Seller's representations set forth in this Agreement. The certificates representing the shares of Common Stock issued to Seller pursuant to this Agreement will bear an appropriate legend reflecting such exempt issuance without registration. Seller understands that the shares of Common 10 Stock received by Seller pursuant to this Agreement are restricted securities within the meaning of Rule 144 under the Securities Act. Section 3.20. Brokers. Other than compensation payable by Seller to Peter Cane in an amount agreed upon between Seller and Peter Cane, no broker, finder or investment banker is entitled to any brokerage fee, finder's fee or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: Section 4.1. Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Section 4.2. Authorization of Agreement. Buyer has full corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Buyer in connection with the consummation of the transactions contemplated hereby and thereby (all of such agreements, documents, instruments and certificates required to be executed by Buyer being hereinafter referred to, collectively, as the "Buyer Documents"), and to perform fully its obligations hereunder and thereunder. The execution, delivery and performance by Buyer of this Agreement and each Buyer Document have been duly authorized by the Board of Directors of Parent Company and by all other necessary corporate action on the part of Buyer and Parent Company. This Agreement has been, and at or prior to the Closing, each of the Buyer Documents will be, duly and validly executed and delivered by Buyer and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each of the Buyer Documents when so executed and delivered will constitute, the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its respective terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). Section 4.3. Consents and Approvals; No Violations. (a) Assuming the accuracy of Seller's representation and warranty set forth in the last sentence of Section 3.3(a) hereof, except for filings, notifications, authorizations, consents and approvals as may be required under federal and state securities or blue sky laws, no filing with, notification to or consent, authorization, waiver, approval, order, license, certificate or Permit of, any Government Body is necessary for Buyer's execution, delivery or performance of this Agreement or any of the Buyer Documents or the consummation by Buyer or Parent Company of the transactions contemplated by this Agreement and the Buyer Documents. 11 (b) None of the execution and delivery by Buyer of this Agreement or the Buyer Documents, the consummation of the transactions contemplated hereby or thereby or compliance by Buyer with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Articles of Incorporation or By-laws of Buyer, (ii) violate any Order or statute, rule or regulation of any Government Body by which Buyer or any of its properties or assets is bound, or (iii) conflict with, violate, result in the breach or termination of, or (with or without due notice or the lapse of time or both) constitute a default or give rise to any "takeback" right or right of termination or acceleration or right to increase the obligations under or modify any of the terms, conditions or provisions of any note, bond, mortgage, license, franchise, Permit, indenture, agreement or other instrument or obligation to which Buyer is a party, or by which Buyer or any of its properties or assets is or may be bound. Section 4.4. Litigation. There are no Legal Proceedings pending or, to the knowledge of Buyer, threatened that question the validity of this Agreement, the Buyer Documents or any action taken or to be taken by Buyer in connection with the consummation of the transactions contemplated hereby or thereby. On and after the date hereof until the Closing, Buyer will notify Seller of the existence or threat of any such Legal Proceeding. Section 4.5. SEC Reports; Financial Statements. (a) Parent Company has filed all required forms, reports and documents required to be filed by it ("SEC Reports") with the Securities and Exchange Commission ("SEC"), 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 dates such forms, reports and documents were filed. The audited consolidated financial statements of Parent Company included in the SEC Reports were prepared in accordance with generally accepted accounting principles ("GAAP") and present fairly the consolidated financial position of Parent Company and its consolidated subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the periods then ended. (b) Brokers. No broker, finder or investment banker is entitled to any brokerage fee, finder's fee or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer. ARTICLE V COVENANTS OF SELLER Section 5.1 Access to Information. From the date of this Agreement until the Closing Date, Seller shall permit Buyer and its representatives, including, without limitation, its legal counsel and accountants, to conduct an appropriate due diligence examination and investigation with respect to Seller. Seller will reasonably cooperate with Buyer's diligence, and such cooperation will include, without limitation, the following: (i) providing Buyer and its representatives with reasonable access to all data, records and other information that they may request in connection with their evaluation of the transactions contemplated by this Agreement (including, without limitation, lists of contact 12 persons, marketing information, and records of negotiations with existing and prospective customers); (ii) allowing Buyer and its representatives to conduct a business, financial and legal review of all aspects of Seller; (iii) affording Buyer and its representatives the opportunity to discuss the affairs, finances, operations and accounts of Seller with Seller's officers, directors, agents and other appropriate personnel; and (iv) facilitating conversations between Buyer and its representatives and representatives of the other parties to the Assigned Contracts. Section 5.2 Conduct of Business. From the date of this Agreement until the earlier of the Closing Date or the Termination Date (as defined in Section 12.1 below) Seller (i) shall not, without the prior written consent of Buyer, amend or modify (or agree to amend or modify), enter into or cancel any agreement of the type to be included in the Assets, (ii) shall use its best efforts to preserve its present relationships with Persons having business dealings with Seller, (iii) (A) shall maintain the books, accounts and records of Seller in the ordinary course of business consistent with past practices and (B) shall comply in all material respects with all contractual and other obligations applicable to the operations of Seller, (iv) shall not subject any of the properties or Assets (whether tangible or intangible) of Seller to any Lien, or incur any indebtedness for borrowed money, (v) shall not acquire any properties or assets or sell, assign, transfer, convey, lease or otherwise dispose of any of the properties or Assets of Seller, (vi) shall not cancel or compromise any debt or claim or waive or release any right of Seller, (vii) shall not introduce any change with respect to the operation of Seller and (viii) shall operate only in the ordinary course of business. The foregoing shall not restrict Seller from canceling any agreement not included in the Assets. Section 5.3 Public Announcements. Seller agrees that it shall not issue any press release or make any public statement, announcement or filing concerning this Agreement or any aspect of the transactions contemplated hereby, without Buyer's prior written consent. Section 5.4 No Breach of Representations and Warranties. Seller agrees that it shall not take any action, and shall use its reasonable commercial efforts not to permit any event to occur, which would result in any of the representations and warranties of Seller contained in this Agreement not being true and correct in any material respect on and as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date. Section 5.5 Updating Information. Seller shall promptly deliver to Buyer any information concerning events subsequent to the date of this Agreement which is necessary to supplement the representations and warranties contained herein, including the Schedules hereto, or the information delivered by Seller pursuant to any of the covenants contained herein, in order that such representations and warranties (including such Schedules) or the information so delivered be complete and accurate in all material respects, it being understood and agreed that the delivery of such information shall not in any manner constitute a waiver by Buyer of any of the conditions precedent to the Closing hereunder, including, without limitation, the conditions contained in Section 7.1. 13 Section 5.6 Restrictions on Transfer of Stock Consideration. Seller and the Shareholders shall not, directly or indirectly, sell, transfer any beneficial interest in, pledge, hypothecate or otherwise dispose, or offer to sell, transfer any beneficial interest in, pledge, hypothecate or otherwise dispose (collectively, "Transfer"), any shares of Common Stock constituting the Initial Stock Consideration during the 12-month period following the Closing Date. Notwithstanding the foregoing, Seller may distribute the Initial Stock Consideration to the sole shareholder of Seller at any time and the sole shareholder may pledge the Initial Stock Consideration to the Buyer pursuant to the Indemnification Pledge Agreement (as defined in Section 6.3). Section 5.7 Further Actions. Seller agrees to execute and deliver such instruments and promptly take such other actions as may reasonably be required to consummate the transactions contemplated hereby in accordance with the terms hereof. 14 ARTICLE VI COVENANTS OF BUYER Section 6.1 No Breach of Representations and Warranties. Buyer agrees that it shall not take any action, and shall use its reasonable commercial efforts not to permit any event to occur, which would result in any of the representations and warranties of Buyer contained in this Agreement not being true and correct in any material respect on and as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date. Section 6.2 Confidentiality. Buyer agrees that any written information provided to it in connection with this Agreement will be kept confidential by it and its agents, advisors and employees; provided, however, that disclosure of such information may be made (i) to personnel of Buyer and Parent Company, and to the attorneys, accountants and agents of Buyer and Parent Company, (ii) to the extent the same shall be or shall have otherwise become publicly available other than as a result of a disclosure by Buyer, Parent Company or their agents, advisors or employees, (iii) to the extent required to be disclosed by law or during the course of or in connection with any litigation or other proceeding, or (iv) with the written consent of Seller. Section 6.3 Employment Agreements; Indemnification Pledge Agreement. At the Closing, (i) Buyer shall enter into employment agreements, substantially in the form of Exhibit B hereto (the "Employment Agreements"), with each of Matt Kupchin and Andrew Kupchin, and an indemnification pledge agreement, substantially in the form of Exhibit A hereto (the "Indemnification Pledge Agreement"), with Seller and the sole shareholder of Seller. Section 6.4 Consents and Conditions. Buyer shall use its reasonable efforts to assist Seller in causing each of the conditions precedent to the obligations of Seller to be satisfied. Section 6.5 Further Actions. Buyer agrees to execute and deliver such instruments and take such other actions as may reasonably be required to consummate the transactions contemplated hereby in accordance with the terms hereof. ARTICLE VII CONDITIONS PRECEDENT TO buyer's OBLIGATIONS Section 7.1 Conditions. The obligation of Buyer to consummate the Acquisition on the Closing Date is subject to the satisfaction of the following conditions (any or all of which may be waived by Buyer, in its sole discretion, in whole or in part, to the extent permitted by applicable law): (i) each of the representations and warranties of Seller contained herein shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as though the same had been made on and as of the Closing Date; (ii) Seller shall have performed and complied, in all material respects, with the covenants and provisions of this Agreement required to be performed or complied with by it between the date hereof and the Closing Date; 15 (iii) since the date of this Agreement, no event or circumstance shall have occurred that has had, or is reasonably likely to have, a material adverse effect on the business, assets, properties, liabilities, financial condition or results of operations of Seller; (iv) (A) no Legal Proceeding shall have been instituted or threatened or claim or demand made against Seller or Buyer seeking to restrain or prohibit or to obtain damages with respect to the consummation of the transactions contemplated by this Agreement, or which might, in the reasonable opinion of Buyer, result in a material adverse change in the business, assets, properties, liabilities, financial condition or results of operations of Seller and (B) there shall not be in effect any Order of a Government Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement; (v) Theatre Direct International shall have consented to the assignment to Buyer of the contract between Seller and Theatre Direct International, as amended on April 14, 2000; (vi) Buyer shall have received a certificate of the Secretary of Seller, dated the Closing Date, setting forth resolutions of the Board of Directors and of the shareholders of Seller authorizing the execution and delivery of this Agreement and each document and instrument required to be executed and delivered by Seller hereunder and the consummation of the transactions contemplated hereby and thereby, and certifying that such resolutions were duly adopted and have not been rescinded or amended as of the Closing Date; (vii) Seller and the sole shareholder of Seller shall have executed and delivered to Buyer the Indemnification Pledge Agreement in the form of Exhibit A hereto and each of Matt Kupchin and Andrew Kupchin shall have executed and delivered to Buyer the Employment Agreements in the form of Exhibit B hereto; and (viii) Seller shall have executed and delivered to Buyer (A) all documents to be delivered at the Closing in accordance with the terms of this Agreement and (B) such other documents and instruments as Buyer may reasonably request and which Seller can obtain with reasonable commercial efforts in order to consummate the transactions contemplated by this Agreement. 16 ARTICLE VIII CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS Section 8.1 Conditions. The obligation of Seller to consummate the Acquisition on the Closing Date is subject to the satisfaction of the following conditions (any or all of which may be waived by Seller, at the sole option of Seller, in whole or in part to the extent permitted by applicable law): (i) each of the representations and warranties of Buyer contained herein shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as though the same had been made on and as of the Closing Date; (ii) Buyer shall have performed and complied, in all material respects, with the covenants and provisions of this Agreement required to be performed or complied with by it between the date hereof and the Closing Date; (iii) Seller shall have received a certificate of the Secretary of Parent Company, dated the Closing Date, setting forth resolutions of the Board of Directors of Parent Company authorizing the execution and delivery of this Agreement and each document and instrument required to be executed and delivered by Buyer or Parent Company hereunder and the consummation of the transactions contemplated hereby and thereby, and certifying that such resolutions were duly adopted and have not been rescinded or amended as of the Closing Date; and (iv) Buyer shall have executed and delivered to Seller (A) all documents to be delivered at the Closing in accordance with the terms of this Agreement and (B) such other documents and instruments as Seller may reasonably request and which Buyer can obtain with reasonable commercial efforts in order to consummate the transactions contemplated by this Agreement. ARTICLE IX THE CLOSING Section 9.1 Closing Date. Except as hereinafter provided, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at a mutually agreeable place and time or soon as practicable following the date on which each of the conditions specified in Section 7.1 and Section 8.1 (other than those as to which the parties agree will be satisfied at the Closing) of this Agreement has been fulfilled (or waived by the party entitled to waive that condition). The date on which the Closing of the Acquisition occurs is referred to herein as the "Closing Date." Section 9.2 Proceedings at the Closing. All proceedings to be taken and all documents to be executed and delivered by Seller in connection with the Closing shall be reasonably satisfactory in form and substance to Buyer and its counsel. All proceedings to be taken and all documents to be executed and delivered by Buyer in connection with the Closing shall be reasonably satisfactory in form and substance to Seller and its counsel. All proceedings to be taken and all documents to be executed and delivered by both parties at the Closing shall be deemed to have been taken and executed simultaneously, and no proceedings shall be deemed taken nor any documents executed or delivered until all have been taken and delivered. 17 Section 9.3 Deliveries by Seller to Buyer. At the Closing, Seller shall deliver, or shall cause to be delivered, to Buyer the following: (i) a bill of sale and assignment and assumption agreement in the form of Exhibit C hereto (the "Bill of Sale and Assignment and Assumption Agreement"), duly executed by Seller; (ii) an affidavit of Seller, in a form reasonably satisfactory to Buyer, stating, under penalties of perjury, Seller's United States taxpayer identification number and that Seller is not a foreign person within the meaning of Section 1445(b)(2) of the Code; and (iii) all other assignments and other instruments or documents as shall be reasonably necessary in the judgment of Buyer to evidence the sale, assignment, transfer and conveyance by Seller to Buyer of the Assets in accordance with the terms hereof, free and clear of all Liens. 18 ARTICLE X ADDITIONAL POST-CLOSING COVENANTS Section 10.1 Further Assurances by Seller. (b) From time to time after the Closing Date, Seller will, at the request of Buyer, execute and deliver such other and further instruments of sale, assignment, transfer and conveyance and take such other and further actions as Buyer may reasonably request in order to make all the benefits of the Assigned Contracts and rights of Seller included in the Assets available to Buyer, to vest in Buyer and put Buyer in possession of the Assets and to transfer to Buyer any contracts and rights of Seller relating to the Assets and to assure to Buyer the benefits thereof and effectuate fully the purposes of this Agreement. Section 10.2 Seller to Change Name. On the Closing Date or as soon thereafter as practicable (but in no event more than 5 business days thereafter), Seller shall adopt (and shall make all appropriate filings so as to adopt), and shall thereafter do business under, a new name which does not contain the words Broadway or Theater or any variation thereof. Section 10.3 Preservation of Corporate Records. Seller shall preserve and keep the Corporate Records for a period of seven years from the Closing Date and shall make such Corporate Records and personnel, if any, of Seller available to Buyer as Buyer may reasonably require (i) in connection with, among other things, any insurance claims by, Legal Proceedings against or governmental investigations of Buyer or (ii) in order to enable Buyer to comply with its obligations under the Code, any other applicable statute with respect to taxation, this Agreement and each other agreement, document or instrument contemplated hereby. If Seller wishes to destroy such Corporate Records after such seven year period, then Seller shall first give 90 days prior written notice to Buyer and Buyer shall have the right at its option and expense, upon prior written notice given to Seller within that 90 day period, to take possession of the Corporate Records within 180 days after the date of such notice. Section 10.4 Confidentiality. From and after the Closing Date, none of Seller, any of its employees or the Shareholders shall divulge, furnish or make available to any person any knowledge or information with respect to the Assets or Buyer (other than in the regular course and in furtherance of the Buyer's business) which is, or which Seller or the sole shareholder of Seller is advised or has reason to believe is, confidential (including, but not limited to, information relating to any marketing, financial or personnel matters in connection with the Assets). ARTICLE XI INDEMNIFICATION Section 11.1 Indemnification. (a) Seller agrees to indemnify and hold Buyer harmless from and against any and all losses, liabilities, obligations, judgments, damages, 19 deficiencies, costs, penalties and expenses (including, without limitation, reasonable attorneys' fees and expenses) (collectively, "Losses") based upon, attributable to or resulting from: (i) any misrepresentation or breach of warranty on the part of Seller under this Agreement or any of the Seller Documents or (B) any breach of covenant or other agreement on the part of Seller under this Agreement, or any of the Seller Documents; (ii) any Liabilities of Seller not expressly assumed by Buyer under the terms of this Agreement, including, without limitation: (A) any liabilities and obligations arising out of or based upon the conduct of the business of Seller prior to the Closing Date (other than obligations or liabilities that are expressly assumed by Buyer under the terms of this Agreement); (B) any claims for any injury to person or property attributable to any services rendered by Seller prior to the Closing Date, regardless of whether such claims are asserted prior to or after the Closing; (C) any claims by any employee or former employee of Seller arising out of the employment or termination of employment of the employee or former employee on or prior to the Closing Date or as a result of the transactions contemplated by this Agreement; and (D) any third party claims with respect to occurrences or events that occurred on or prior to the Closing Date and relate to Seller, its employees or the Assets; (iii) any liabilities and obligations, based in any way on agreements, arrangements or understandings made by or on behalf of Seller, for any brokerage fees, finder's fees, commissions or like payments in respect of the transactions contemplated by this Agreement; (iv) all actions, suits, proceedings, demands, assessments, judgments, costs, penalties and expenses, including reasonable attorneys' fees, incident to the foregoing. (b) Buyer agrees to indemnify and hold Seller harmless from and against any and all Losses attributable to or resulting from: (i) (A) any misrepresentation or breach of warranty on the part of Buyer under this Agreement or any of the Buyer Documents or (B) any breach of covenant or other agreement on the part of Buyer under this Agreement or any of the Buyer Documents; (ii) any liabilities expressly assumed by Buyer pursuant to Section 1.3 hereof; (iii) to the extent Buyer is not indemnified with respect thereto under Section 11.1(a), any claims that arise from Buyer's ownership or operation of the Assets subsequent to the Closing Date, including, without limitation, any claims by any employee or former employee of Buyer arising out of the employment or termination of employment of the employee or former employee subsequent to the Closing Date or as a result of the transactions contemplated by this Agreement; 20 (iv) any liabilities and obligations, based in any way on agreements, arrangements or understandings made by or on behalf of Buyer, for any brokerage fees, finder's fees, commissions or like payments in respect of the transactions contemplated by this Agreement; and (v) all actions, suits, proceedings, demands, assessments, judgments, costs, penalties and expenses, including reasonable attorneys' fees, incident to the foregoing. Section 11.2 Procedures for Indemnification. Whenever a claim shall arise for indemnification under Section 11.1 above, with the exception of claims for litigation expenses in respect of a litigation as to which a notice of claim, as provided below in this Section 11.2, has previously been given, which expenses shall be funded on an ongoing basis, the party entitled to indemnification (the "Indemnified Party") shall promptly notify the party from whom indemnification is sought (the "Indemnifying Party") of such claim and, when known, the facts constituting the basis for such claim; provided, however, that in the event of any claim for indemnification hereunder resulting from or in connection with any claim or Legal Proceeding by a third party, the Indemnified Party shall give such notice thereof to the Indemnifying Party not later than 10 business days prior to the time any response to the asserted claim is required, if possible, and in any event within 5 business days following receipt of notice thereof. Notwithstanding anything in the preceding sentence to the contrary, the failure of any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability for indemnification it may have if and to the extent that the Indemnifying Party shall not have been prejudiced by such omission. In the event of any such claim for indemnification resulting from or in connection with a claim or Legal Proceeding by a third party, the Indemnifying Party may, at its sole cost and expense, assume the defense thereof; provided, however, that the Indemnifying Party shall first have agreed in writing that it does not and will not contest its responsibility for indemnifying the Indemnified Party in respect of Losses attributable to such claim or Legal Proceeding; and, provided, further, that Seller shall not be entitled to assume the defense of any claim or Legal Proceeding against Buyer for Taxes with respect to a period ending after the Closing Date. If an Indemnifying Party assumes the defense of any such claim or Legal Proceeding, the Indemnifying Party shall be entitled to select counsel and take all steps necessary in the defense thereof; provided, however, that no settlement shall be made without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld (and if the Indemnified Party shall withhold its consent to any monetary settlement proposed by the Indemnifying Party and which the other party to the action has indicated it is prepared to accept, the Indemnified Party shall in no event be deemed for purposes of this Agreement, to have suffered Losses in connection with such claim or proceeding in excess of the proposed amount of such settlement); provided, further, that the Indemnified Party may, at its own expense, participate in any such proceeding with the counsel of its choice without any right of control thereof. So long as the Indemnifying Party is in good faith defending such claim or Legal Proceeding, the Indemnified Party shall not compromise or settle such claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. If the Indemnifying Party does not assume the defense of any such claim or Legal Proceeding in accordance with the terms hereof, the Indemnified Party may defend (and, in the case of any claim or Legal Proceeding against Buyer for Taxes with respect to a period ending after the Closing Date, shall defend) against such claim or Legal Proceeding in such manner as it may deem appropriate, including, but not limited to, settling such claim or litigation (after giving prior 21 written notice of the same to the Indemnifying Party and obtaining the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld) on such terms as the Indemnified Party may deem appropriate, and the Indemnifying Party will promptly indemnify the Indemnified Party in accordance with the provisions of this Section 11.2; provided, however, that if the Indemnified Party does not obtain the prior written consent of the Indemnifying Party to any such settlement, and such written consent is not unreasonably withheld by the Indemnifying Party, the Indemnified Party shall not be entitled to indemnification hereunder from such Indemnifying Party with respect to the claim settled. Notwithstanding anything in this Section 11.2 to the contrary, if, in any claim or Legal Proceeding with respect to which the Indemnified Party has given the notice required under this Section 11.2, (i) the Indemnifying Party shall not have promptly employed counsel reasonably satisfactory to the Indemnified Party or (ii) such Indemnified Party shall have reasonably concluded, based upon the opinion of its outside legal counsel, that there may be one or more legal defenses available to it that are different from or additional to those available to the Indemnifying Party, then in either event (x) the Indemnified Party may participate in any such proceeding with the counsel of its choice, the expense for which shall be borne by the Indemnifying Party (but in no event shall the Indemnifying Party be required to pay the fees and expenses of more than one counsel employed by the Indemnified Party with respect to such claim or proceeding) and (y) the Indemnifying Party shall not have the right to direct the defense of any such action on behalf of the Indemnified Party. Section 11.3 Determination of Damages and Related Matters. (a) For purposes of indemnification under Sections 11.1(a)(i)(A) and 11.1(b)(i)(A), any breach of any representation or warranty shall be deemed to constitute a breach of such representation or warranty notwithstanding any limitation or qualification as to materiality set forth in such representation or warranty on the scope, accuracy or completeness thereto, it being the intention of the parties hereto that, each Indemnified Party shall be indemnified and held harmless from and against any and all Losses arising out of or based upon or with respect to the failure of any such representation or warranty to be true, correct and complete in any respect. Notwithstanding the foregoing, no Indemnifying Party shall be liable for purposes of indemnification under Section 11.1(a)(i)(A) or Section 11.1(b)(i)(A) until the amount of the Losses arising thereunder exceed $20,000, at which time the Indemnifying Party shall be liable for any and all Losses. (a) To the extent any payment under this Article XI cannot properly be treated as an adjustment to the Consideration for Tax purposes, then any such amount shall be increased to take account of any net Tax cost incurred by the Indemnified Party by reason of the receipt of any indemnity payment (grossed-up for such increase). Any payment to an Indemnified Party pursuant to this Article XI shall be reduced to take account of any net Tax benefit actually realized by the Indemnified Party in respect of the taxable year in which such Loss is incurred or paid and, with respect to a Tax benefit arising in a year subsequent to the year in which the Loss is paid or incurred, the Indemnified Party shall pay to the Indemnifying Party the amount of such Tax benefit (including, as relevant, any member of its Affiliated Group) when such Tax benefit is actually realized. 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, liability, claim, damage or expense. 22 (b) In the absence of fraud or willful misconduct on the part of the Indemnifying Party or any of its employees or agents, an Indemnifying Party shall not have liability for Losses indemnifiable under Section 11.1(a) or Section 11.1(b) in excess of $2,500,000 in the aggregate; provided, however, that the foregoing cap shall not apply to any Losses in respect of Taxes for which Seller has indemnified Buyer under Section 11.1(a). (c) Until the earlier of three years after the Closing Date and such time as it is no longer possible in law or fact for the Indemnified Party to sustain Losses by reason of any breach hereof or to assert a claim with respect to any such breach or Losses, except as otherwise provided herein, the indemnification provisions of this Article XI shall survive. ARTICLE XII TERMINATION Section 12.1 Termination. This Agreement may be terminated (i) by the written agreement of Seller and Buyer or, (ii) by either Seller or Buyer by written notice to the other given after the date that is thirty (30) days after the date of this Agreement if the Closing shall not have occurred on or before such date. Section 12.2 Liabilities After Termination. Upon any termination of this Agreement pursuant to Section 12.1 above, no party hereto shall thereafter have any further liability or obligation hereunder; provided, however, that no such termination shall relieve any party hereto of any liability for any breach of this Agreement prior to the date of such termination and provided, further, that Seller shall remain bound by Section 5.3 above, Buyer shall remain bound by Section 6.2 above, and each of Seller and Buyer shall remain bound by Section 13.5 below. ARTICLE XIII MISCELLANEOUS Section 13.1 Survival of Representations and Warranties. Seller and Buyer hereby agree that the representations and warranties contained in this Agreement, as supplemented or modified by any amendments to the Schedules hereto made on or prior to the Closing Date, shall survive the execution and delivery of this Agreement and shall further survive the Closing hereunder for a period of three years from the Closing Date, regardless of any investigation made by the parties hereto; provided, however, that the representations and warranties contained in Section 3.13 shall survive for the applicable statute of limitations plus 90 days. Section 13.2 Entire Agreement. This Agreement (with its Schedules and Exhibits) contains, and is intended as, a complete statement of, all of the terms and the arrangements between the parties hereto with respect to the matters provided for herein, and supersedes any previous agreements and understandings among the parties hereto with respect to those matters. Section 13.3 Governing Law; Construction. This Agreement and all agreements related thereto shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts to be made, executed, delivered and performed wholly in such state, but without regard to conflicts of law principles of such state. The table of contents, captions and headings in this Agreement are for reference purposes only and shall be given no effect in 23 the construction and interpretation of this Agreement. No provision of this Agreement shall be construed against either party because such party drafted or caused to be drafted such provision. Each provision of this Agreement shall be construed as if such provision were proposed by both Buyer and Seller. Section 13.4 Transfer Taxes. Seller shall pay when due (i) all transfer and documentary taxes and fees imposed with respect to instruments of conveyance in the transactions contemplated hereby and (ii) all sales, use and other transfer or similar taxes on the transfer of the Assets contemplated hereby. Buyer shall execute and deliver to Seller at the Closing any certificates or other documents as Seller may reasonably request to perfect any exemption from any such transfer, documentary, sales or use tax. Section 13.5 Expenses. Each of Buyer and Seller shall bear its own expenses (including, without limitation, all fees and expenses of financial institutions, accountants, legal counsel, brokers, investment bankers and other advisors), incurred in connection with the negotiation, preparation, execution, review, delivery and performance of this Agreement, each of the other documents and instruments executed in connection with or contemplated by this Agreement or related hereto, and the consummation of the transactions contemplated hereby and thereby. Section 13.6 Notices. Any notice, request, instruction or other communication to be given under this Agreement or otherwise in connection with the Acquisition shall be in writing and shall be delivered by hand or prepaid telecopy, 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 telecopied, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service) to a party at the following address (or at such other address as such party may have specified by notice given to the other party pursuant to this provision): if to Seller at: 214 West 50th Street, 3R New York, NY 10019 Attention: Matt Kupchin Telecopier No.: (212) 656-1344 with a copy to: David H. Friedlander, Esq. 81 Park Drive Mt. Kisco, NY 10549 Fax (914) 242-9361 24 and if to Buyer at: Hollywood.com, Inc. 2255 Glades Road Suite 237W Boca Raton, Florida 33431 Attention: Mitchell Rubenstein, CEO Telecopier No.: (561) 998-2974 with a copy to: Hollywood.com, Inc. 2255 Glades Road Suite 237W Boca Raton, FL 33431 Attention: W. Robert Shearer, General Counsel Telecopier No.: (561) 998-2974 Section 13.7 Severability. If any provision of this Agreement, or the application of such provision to Buyer, Seller, or any Person or circumstance, shall be held invalid, then the remainder of this Agreement, or the application of such provision to persons, entities or circumstances other than those as to which it is held invalid, shall not be affected thereby. Section 13.8 Binding Effect; No Assignment. (e) This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person not party to this Agreement. Except as expressly permitted below, no assignment of this Agreement or of any rights or obligations hereunder may be made by either party (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without such required consent shall be void. (f) Prior to the Closing, Buyer may assign any and all of its rights and obligations under this Agreement to any third party, if Buyer directly and unconditionally guarantees the obligations of such assignee under this Agreement. After the Closing, Buyer may assign any or all of its rights and obligations with respect to the Assets without the consent of Seller, provided that Buyer shall cause its obligations to Seller under this Agreement in respect of the Acquisition to be binding upon any successor to Buyer and Buyer shall directly and unconditionally guarantee the obligations of such successor. Section 13.9 Amendments. This Agreement may be amended, supplemented or modified, and any provision hereof may be waived, only pursuant to a written instrument making specific reference to this Agreement signed by each of the parties hereto. Section 13.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 25 IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date and year first above written. BROADWAYTHEATER.COM, INC. By:/s/ Matt Kupchin ------------------- Matt Kupchin President HOLLYWOOD.COM, INC. By:/s/ W. Robert Shearer ------------------------ W. Robert Shearer Senior Vice President and General Counsel 26 SCHEDULES 1.1(a) Assigned Contracts 3.5 Liabilities 3.7 Litigation, etc. 3.10(b) Consents 3.12 Intangible Property 3.13 Taxes 3.14 Permits EXHIBITS Exhibit A Form of Indemnification Pledge Agreement Exhibit B Form of Employment Agreements Exhibit C Form of Bill of Sale and Assignment and Assumption Agreement