the amount of the payments due upon a sale of Theatre Direct (which would constitute a “change of control” under each of their employment agreements) would be reduced from $4.14 million in the aggregate to $3 million in the aggregate with the balance of $1.14 million being deferred and paid if Mr. Rubenstein and Ms. Silvers continue to be employed by Hollywood Media on the first anniversary following the consummation of the sale of Theatre Direct pursuant to the Stock Purchase Agreement (or if such employment is terminated on or before such date by Hollywood Media without “cause” or by Mr. Rubenstein or Ms. Silvers for “good reason”) as follows: (i) 50% of the balance paid on a pro rata basis as Hollywood Media receives payments on account of the promissory note that is part of the consideration in the proposed sale of Theatre Direct; and (ii) 50% of the balance paid on a pro rata basis as Hollywood Media receives payments on account of the first tranche of the earnout that is part of the consideration in the proposed sale of Theatre Direct.

On December 23, 2009, Hollywood Media entered into (i) an Amendment to Amended and Restated Employment Agreement with Mitchell Rubenstein and (ii) an Amendment to Amended and Restated Employment Agreement with Laurie S. Silvers. See “PROPOSAL #1: PROPOSAL TO SELL THEATRE DIRECT—Terms of the Stock Purchase Agreement – Ancillary Agreements – Deferral of Change of Control Payments Pursuant to Amendments to Employment Agreements of Mr. Rubenstein and Ms. Silvers” beginning on page 79.

In addition, for no additional consideration, in connection with the closing of the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Mr. Rubenstein and Ms. Silvers have each agreed, as a condition required by Key Brand, to enter into non-competition agreements with Key Brand. See “PROPOSAL #1: PROPOSAL TO SELL THEATRE DIRECT—Terms of the Stock Purchase Agreement – Ancillary Agreements – Non-Competition Agreements of Mr. Rubenstein and Ms. Silvers” beginning on page 79.

Past Contacts, Transactions or Negotiations

Other than as described in the “Background of the Sale of Theatre Direct,” we and Key Brand have not had prior contacts, transactions, or negotiations.

Reasons for the Sale of Theatre Direct

In reaching its decision to approve the Stock Purchase Agreement and the transactions contemplated thereby, and to recommend that Hollywood Media’s shareholders vote to approve the sale of Theatre Direct as contemplated by the Stock Purchase Agreement, our board of directors consulted with management and financial and legal advisors. Our board of directors considered a number of factors and potential benefits of the proposed sale of Theatre Direct, each of which our board of directors believed supported its decision, including the following:

•

the alternatives to the proposed sale of Theatre Direct, including maintaining the operations of our Broadway Ticketing Division, and the risks associated with such alternatives, each of which our board of directors determined not to pursue in light of its belief, and the belief of Hollywood Media’s management, that the proposed sale of Theatre Direct maximized shareholder value and was more favorable to shareholders than any other alternative reasonably available to Hollywood Media and its shareholders given the potential risks, rewards and uncertainties associated with those alternatives;

•

the extensive sale process conducted by Hollywood Media and Peter J. Solomon Company with respect to the sale of Theatre Direct, which involved discussions with multiple parties to determine their potential interest in purchasing Theatre Direct and which did not lead to any proposals more favorable to Hollywood Media and its shareholders than the proposal by Key Brand;

•

the price proposed by Key Brand represented the highest definitive offer that Hollywood Media received for the acquisition of Theatre Direct;

•

that Hollywood Media will retain ownership of its Ad Sales Division, its Intellectual Properties Division and its minority equity interest in MovieTickets.com, Inc.;

•

information regarding the financial performance, business operations, capital requirements and future prospects of Hollywood Media and Theatre Direct and the potential uses of net cash proceeds received from the proposed sale of Theatre Direct;

•

the opinion of Peter J. Solomon Company that, as of the date of the opinion and based upon and subject to the factors and assumptions set forth in such opinion, the aggregate consideration to be received by Hollywood Media for all of the outstanding shares of Theatre Direct common stock pursuant to the Stock Purchase Agreement was fair from a financial point of view to Hollywood Media;

•

shareholders of Hollywood Media would continue to own stock in Hollywood Media and participate in future earnings and potential growth of Hollywood Media’s Ad Sales Division, Intellectual Properties Division and other remaining businesses, including Hollywood Media’s minority equity interest in MovieTickets.com, Inc., Hollywood Media’s right to earnout payments from the sale of its former subsidiary, Hollywood Media’s right to exercise or put the Warrant issued pursuant to the Stock Purchase Agreement, and Hollywood Media’s right to payments under the Promissory Note and the earnout in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement; and

•

the terms of the Stock Purchase Agreement, including:

•

the $20 million in cash to be paid by Key Brand (subject to a working capital adjustment) and Hollywood Media being released from $1.6 million of liabilities associated with employment agreements with certain employees of Theatre Direct, which provides certainty in value and would allow Hollywood Media to pay a special dividend to its shareholders or engage in a self-tender offer to purchase shares of Hollywood Media’s common stock;

•

our ability to terminate the Stock Purchase Agreement in order to accept a superior proposal, subject to paying a termination fee of $1.2 million;

•

the view of our board of directors, after consulting with the Company’s legal counsel and financial advisors, that the termination fee of $1.2 million to be paid by Hollywood Media if the Stock Purchase Agreement is terminated under certain circumstances was within the range reflected in similar transactions and not likely to prevent Hollywood Media from terminating the Stock Purchase Agreement or accepting superior offers to purchase Theatre Direct;

•

our ability, under certain circumstances, to furnish information to and conduct negotiations with third parties regarding other unsolicited acquisition proposals; and

•

the ability of our board of directors, under certain circumstances, to change its recommendation that our shareholders vote in favor of the Proposal to Sell Theatre Direct.

Our board of directors also considered and balanced against the potential benefits of the proposed sale of Theatre Direct a number of potentially adverse and other factors concerning the proposed sale of Theatre Direct, including the following:

•

the risk that not all of the conditions to the parties’ obligations to complete the proposed sale of Theatre Direct will be satisfied or waived in a timely manner or at all, and, as a result, it is possible that the proposed sale of Theatre Direct may not be completed even if approved by our shareholders;

•

the requirement that we pay Key Brand a termination fee of $1.2 million if the Stock Purchase Agreement is terminated under certain circumstances;

•

the restrictions on the conduct of our business prior to the completion of the sale of Theatre Direct, requiring us to conduct the Theatre Direct business only in the ordinary course, subject to specific limitations and exceptions, which may delay or prevent us from undertaking business opportunities that may arise pending the completion of the sale of Theatre Direct; and

•

the risk of disruption to Hollywood Media’s Ad Sales Division, Intellectual Properties Division, and our other businesses and interests as a result of the proposed sale of Theatre Direct and market reaction to the proposed sale of Theatre Direct.

After taking into account all of the factors set forth above, as well as other factors, our board of directors agreed that the benefits of the proposed sale of Theatre Direct outweigh the risks and that the Stock Purchase Agreement and the proposed sale of Theatre Direct are advisable, fair to and in the best interests of Hollywood Media and its shareholders. Our board of directors did not assign relative weights to the above factors or other factors it considered. In addition, our board of directors did not reach any specific conclusion on each factor considered, but conducted an overall analysis of such factors. Individual members of our board of directors may have given different weights to different factors.

Opinion of Hollywood Media’s Financial Advisor

Pursuant to an engagement letter dated March 24, 2009 between Peter J. Solomon Company and Hollywood Media, Hollywood Media engaged Peter J. Solomon Company to act as its financial and strategic advisor with respect to a possible transaction or series or combination of transactions regarding Hollywood Media’s Broadway Ticketing Division and, if requested by Hollywood Media, to render an opinion as to the fairness, from a financial point of view, to Hollywood Media, of the aggregate consideration to be received by Hollywood Media pursuant to any such transaction. Hollywood Media retained Peter J. Solomon Company based upon Peter J. Solomon Company’s experience and expertise. Peter J. Solomon Company, as part of its investment banking business, is continually engaged in the valuation of businesses and securities in connection with business combinations and acquisitions and for other purposes.

At the December 18, 2009 meeting of Hollywood Media’s board of directors, Peter J. Solomon Company rendered its oral opinion to Hollywood Media’s board of directors, which opinion was subsequently confirmed by delivery of a written opinion, to the effect that, as of December 18, 2009 and based upon and subject to various assumptions made, matters considered and limitations set forth in such opinion, the aggregate consideration proposed to be received by Hollywood Media in connection with the proposed sale of Theatre Direct to Key Brand pursuant to the transactions contemplated by the Stock Purchase Agreement was fair, from a financial point of view, to Hollywood Media.

In reaching the conclusions presented in its opinion, Peter J. Solomon Company did not receive any instructions from Hollywood Media in terms of what conclusions it should reach, and Hollywood Media did not impose any limitation on Peter J. Solomon Company on the scope of its investigation in preparation of its opinion.

The full text of Peter J. Solomon Company’s opinion, dated December 18, 2009, which sets forth assumptions made, procedures followed, matters considered, limitations on and scope of the review undertaken by Peter J. Solomon Company in rendering Peter J. Solomon Company’s opinion, is attached to this proxy statement as Annex E. Peter J. Solomon Company’s opinion was directed only to the fairness, from a financial point of view, as of December 18, 2009, to Hollywood Media, of the aggregate consideration proposed to be received by Hollywood Media in connection with the proposed sale of Theatre Direct to Key Brand pursuant to the Stock Purchase Agreement, was provided to Hollywood Media’s board of directors in connection with its evaluation of the sale of Theatre Direct to Key Brand pursuant to the Stock Purchase Agreement, did not address any other aspect of such transaction and did not, and does not, constitute a recommendation to any shareholder of Hollywood Media as to how such shareholder or any other person should vote or act on any matter relating to such sale. The summary of Peter J. Solomon Company’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion, which is incorporated herein by reference. The shareholders of Hollywood Media common stock are encouraged to read Peter J. Solomon Company’s opinion carefully and in its entirety. Peter J. Solomon Company consented to the use of its opinion in this proxy statement.

In connection with Peter J. Solomon Company’s opinion, Peter J. Solomon Company:

•

reviewed certain publicly available financial statements and/or other information of Hollywood Media, Theatre Direct and Key Brand;

•

reviewed certain internal financial statements and other financial and operating data concerning Hollywood Media, Theatre Direct and Key Brand prepared by the management of Hollywood Media, Theatre Direct and Key Brand, respectively;

•

reviewed certain financial projections for Theatre Direct and Key Brand prepared by the management of Theatre Direct and Key Brand, respectively;

•

discussed the past and current operations, financial condition and prospects of Hollywood Media, Theatre Direct and Key Brand with management of Hollywood Media, Theatre Direct and Key Brand, respectively;

•

compared the financial performance and condition of Theatre Direct with that of certain other comparable publicly traded companies;

•

reviewed publicly available information regarding the financial terms of certain transactions Peter J. Solomon Company considered comparable, in whole or in part, to the sale of Theatre Direct pursuant to the Stock Purchase Agreement;

•

participated in certain discussions among representatives of each of Hollywood Media, Theatre Direct and Key Brand;

•

reviewed the Stock Purchase Agreement, substantially in the form of the draft dated December 12, 2009;

•

reviewed the terms of the Promissory Note, the form of the Warrant, the form of selling stockholder release to be delivered by Hollywood Media to Key Brand pursuant to the Stock Purchase Agreement, the form of transition services agreement to be entered into by Hollywood Media and Theatre Direct pursuant to the Stock Purchase Agreement, and the form of non-competition agreements to be entered into by Key Brand and each of Mitchell Rubenstein, Hollywood Media’s Chairman and Chief Executive Officer, and Laurie S. Silvers, Hollywood Media’s Vice-Chairman, President and Secretary, pursuant to the Stock Purchase Agreement, each substantially in the form of the drafts dated December 12, 2009 (the “Ancillary Agreements”), and certain related documents; and

•

performed such other analyses as it deemed appropriate.

Peter J. Solomon Company assumed and relied upon the accuracy and completeness of the information reviewed by Peter J. Solomon Company for the purposes of this opinion and Peter J. Solomon Company did not assume any responsibility for independent verification of such information and relied on such information being complete and correct. With respect to the financial projections of Theatre Direct and Key Brand, Peter J. Solomon Company assumed that the financial projections were reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of Theatre Direct and Key Brand, respectively. Peter J. Solomon Company did not conduct a physical inspection of the facilities or property of Theatre Direct, Hollywood Media or Key Brand. Peter J. Solomon Company did not assume any responsibility for any independent valuation or appraisal of the assets or liabilities of Theatre Direct, Hollywood Media or Key Brand, nor was Peter J. Solomon Company furnished with any such valuation or appraisal. Peter J. Solomon Company did not make any independent valuation or appraisal of Hollywood Media, and Peter J. Solomon Company does not express any opinion as to the consideration proposed to be received by Hollywood Media pursuant to the Stock Purchase Agreement relative to the price of Hollywood Media’s common stock. Furthermore, Peter J. Solomon Company did not consider any tax, accounting or legal effects of the sale of Theatre Direct pursuant to the Stock Purchase Agreement or the transaction structure on any person or entity.

Peter J. Solomon Company assumed that the final form of the Stock Purchase Agreement and each Ancillary Agreement would be substantially the same as the last draft of each document reviewed by Peter J. Solomon Company. Peter J. Solomon Company also assumed that the Transaction would be consummated in accordance with the terms of the Stock Purchase Agreement and the Ancillary Agreements, without waiver, modification or amendment of any material term, condition or agreement (including, without limitation, the consideration proposed to be received by Hollywood Media in connection with the Transaction), and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the Transaction, no delay, limitation, restriction or condition would be imposed that would have a material adverse effect on Theatre Direct or Hollywood Media or the contemplated benefits of the Transaction. Peter J. Solomon Company further assumed that all representations and warranties set forth in the Stock Purchase Agreement and Ancillary Agreements were and would be true and correct as of all the dates made or deemed made and that all parties to the Stock Purchase Agreement and Ancillary Agreements would comply with all covenants of such party thereunder.

Peter J. Solomon Company’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to Peter J. Solomon Company as of, December 18, 2009. Peter J. Solomon Company did not express any opinion as to what the value of common stock of Theatre Direct Stock would be at any future time, which may vary depending upon, among other things, market conditions, general economic conditions and other factors that generally influence the price of securities. Peter J. Solomon Company did not express any opinion as to whether the warrants issued by Theatre Direct to Hollywood Media pursuant to the Stock Purchase Agreement would be exercised, redeemed or put at any future time in accordance with the terms thereof or what the redemption or put price would be at any future time or what the value of the shares of Theatre Direct stock issuable upon exercise of the warrants would be when (and if) issued. Events occurring after December 18, 2009 may affect Peter J. Solomon Company’s opinion and the assumptions used in preparing such opinion, and Peter J. Solomon Company did not assume any obligation to update, revise or reaffirm its opinion. Peter J. Solomon Company’s opinion did not address the fairness of the terms of the warrants issued by Theatre Direct to Hollywood Media pursuant to the Stock Purchase Agreement or the Promissory Note. Peter J. Solomon Company did not express any opinion as to the likelihood that Theatre Direct would achieve any of the milestones upon which the earnouts contemplated by the Stock Purchase Agreement are conditioned nor did Peter J. Solomon Company conduct any analysis as to Key Brand’s ability to fulfill its future obligations to Hollywood Media, including the payment of the warrants issued by Theatre Direct to Hollywood Media pursuant to the Stock Purchase Agreement and the Promissory Note. Furthermore, Peter J. Solomon Company’s opinion did not address Hollywood Media’s underlying business decision to undertake the Transaction, and Peter J. Solomon Company’s opinion did not address the relative merits of the Transaction as compared to any alternative transactions that might be available to Hollywood Media.

Peter J. Solomon Company’s Financial Analyses

The following summarizes the material financial analyses performed by Peter J. Solomon Company and reviewed with Hollywood Media’s board of directors on December 18, 2009 in connection with the delivery of Peter J. Solomon Company’s opinion. The order of the financial analyses does not represent relative importance or weight given to those analyses by Peter J. Solomon Company. The financial analyses summarized below include information presented in tabular format. In order to fully understand Peter J. Solomon Company’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Peter J. Solomon Company’s financial analyses.

Analysis of Transaction Consideration

In preparing its opinion, Peter J. Solomon Company reviewed the consideration proposed to be received by Hollywood Media in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement. As set forth in the Stock Purchase Agreement and Ancillary Agreements, Hollywood Media would receive (i) an amount in cash equal to $20 million, subject to adjustments pursuant to the Stock Purchase Agreement, plus (ii) the Promissory Note, in the initial principal amount of $8.5 million, subject to downward adjustments (as to which adjustments Peter J. Solomon Company expressed no opinion), plus (iii) the Warrant to purchase shares representing 5% of outstanding shares of common stock of Theatre Direct as of the closing date on a fully diluted basis, plus (iv) earnout payment amounts, if any, representing up to $14 million in the aggregate, subject to upward adjustments (as to which adjustments Peter J. Solomon Company expressed no opinion) (the “Earnout Payments”), plus (v) the assumption by Key Brand of certain liabilities of Theatre Direct payable upon consummation of the sale of the Theatre Direct (clauses (i) through (v) in the aggregate, the “Aggregate Consideration”). The terms and conditions of the sale of Theatre Direct are more fully set forth in the Stock Purchase Agreement and Ancillary Agreements.

Peter J. Solomon Company noted that at the closing of the sale of Theatre Direct pursuant to the Stock Purchase Agreement (i) Hollywood Media would receive $20 million in cash, (ii) Hollywood Media would be released from $1.6 million of liabilities associated with employment agreements with certain employees of Theatre Direct, and (iii) Hollywood Media would receive $1.9 million in cash as a working capital adjustment from Key Brand based on estimates provided by Hollywood Media’s management (collectively, the “Closing Consideration”). Based on certain assumptions and valuations as described below, Peter J. Solomon Company further evaluated the present value of contingent or deferred payments, including interest earned on the Promissory Note, combined with the Closing Consideration, to determine a range for the total transaction consideration (“Total Consideration”).

			Present Value of Consideration
Consideration	Nominal Amount (in millions)		Low Estimate (in millions)		High Estimate (in millions)

Cash Consideration (paid by Key Brand to Hollywood Media at closing)	$	20.0	$	20.0	$	20.0

Working Capital Adjustment	$	1.9	$	1.9	$	1.9

Release at closing from liabilities associated with employment agreements with certain employees of Theatre Direct	$	1.6	$	1.6	$	1.6

Promissory Note (issued by Key Brand to Hollywood Media at closing)	$	13.6	$	7.1	$	8.7

Warrant (issued by Theatre Direct to Hollywood Media at closing)	$	1.0 (minimum)	$	0.4	$	1.8

Earnout (paid by Key Brand to Hollywood Media pursuant to the Stock Purchase Agreement)	$	14.0	$	3.8	$	7.3

Total Consideration	$	52.1	$	34.8	$	41.2

In analyzing the terms of the Promissory Note, Peter J. Solomon Company analyzed Key Brand’s financial performance and current leverage ratios and reviewed current credit indices to determine an appropriate range of discount rates to calculate the present value of the principal and interest to be paid pursuant to the Promissory Note. In preparing the low estimate of the present value of the Promissory Note, Peter J. Solomon Company (i) assumed the Promissory Note would be held until maturity (5 years) and (ii) applied an 18% discount rate. In preparing the high estimate of the present value of the Promissory Note, Peter J. Solomon Company (i) assumed the Promissory Note would be held until maturity (5 years) and (ii) applied a 12% discount rate.

Peter J. Solomon Company used various discount rates and basic assumptions to derive a range of present values for the contingent or deferred components of Total Consideration, specifically the Promissory Note, including interest earned, the Warrant and the Earnout Payments.

(i)

Promissory Note and interested earned: Peter J. Solomon Company assumed the Promissory Note would be held until maturity, Hollywood Media would receive interest thereon at a rate of 12% per annum, paid quarterly in cash, and applied discount rates between 12%-18% to determine the present value thereof.

(ii)

Warrant: Peter J. Solomon Company considered the present value of (i) the minimum value of the Warrant pursuant to its terms, assuming exercise of the put option by Hollywood Media on the seventh anniversary of the issue date and (ii) an assumed maximum value of the Warrant equal to 5% of a potential future implied enterprise value of Theatre Direct calculated based on projections of EBITDA and excess cash accumulation provided by the management of Hollywood Media, in the case of each of (i) and (ii) applying a 12% discount rate.

(iii)

Earnout Payments: Peter J. Solomon Company applied discount rates between 10%-14% and assumed the Earnout Payment milestones were achieved in various years during the Earnout Period to determine a range of present values of the Earnout Payments.

Accordingly, Peter J. Solomon Company determined the present value of Total Consideration would be a minimum of the Closing Consideration ($23.5 million) and could potentially range from $34.8 to $41.2 million depending on the amount of contingent or deferred consideration received, if any. In analyzing the valuation ranges discussed herein, Peter J. Solomon Company considered each of these values.

Analysis of Selected Publicly Traded Comparable Companies

Peter J. Solomon Company performed a comparable public company analysis, which is intended to provide an implied value of Theatre Direct by comparing certain financial information of Theatre Direct with corresponding financial information of similar public companies. Given the limited nature of Theatre Direct’s business operations, its limited market size and historical financial performance, Peter J. Solomon Company determined, based on its experience, there was one comparable company appropriate to be included in this comparison analysis, Ticketmaster Entertainment, Inc. . Peter J. Solomon Company reviewed and compared selected financial data of Theatre Direct with similar publicly available information and estimates for Ticketmaster Entertainment, Inc.

For this analysis, Peter J. Solomon Company calculated and compared various financial multiples and ratios, including, among others enterprise value (which represents total equity value plus book values of total debt, preferred stock and minority interests less cash) as a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA), for Ticketmaster Entertainment, Inc. for the last twelve months (LTM) based on the most recent publicly filed data, and for projected calendar year 2009 (FY 2009E).

For purposes of this analysis, Peter J. Solomon Company obtained the projected EBITDA estimates for the public comparable company by using the mean of Wall Street analysts’ estimates as reported by Thomson One Analytics on December 10, 2009 for the selected company.

Based on this data, as of December 18, 2009, Peter J. Solomon Company developed a summary valuation analysis based on the LTM and FY 2009E trading valuation multiples for the selected comparable company. This analysis resulted in the following implied multiples and ratios:

Enterprise Value as a Ratio of:		Implied Trading Multiples

LTM EBITDA		4.1x

FY 2009E EBITDA		4.1x

Peter J. Solomon Company then calculated a range of implied enterprise values of Theatre Direct using the multiples from the selected company and applying them to the historical financial information of Theatre Direct and the financial projections provided to Peter J. Solomon Company by Hollywood Media’s management. The range of implied enterprise values were based on Company LTM EBITDA as of October 31, 2009 and FY 2009E EBITDA.

Based on this analysis, Peter J. Solomon Company derived a reference range of implied enterprise values for Theatre Direct of $17.7 million to $23.3 million. Peter J. Solomon Company noted that the present value of the Total Consideration to be received by Hollywood Media pursuant to the Stock Purchase Agreement ranges from a minimum of $23.5 million in Closing Consideration to $41.2 million comprised of the Closing Consideration plus potential additional value from the contingent or deferred components of the Total Consideration.

Analysis of Selected Precedent Transactions

To analyze the proposed consideration to be received pursuant to the Stock Purchase Agreement relative to the consideration received in selected other similar precedent transactions. Peter J. Solomon Company determined, based on its experience, there was one precedent transaction appropriate to be included in this analysis, the proposed transaction between Live Nation Inc. and Ticketmaster Entertainment, Inc.

Peter J. Solomon Company calculated the multiple of LTM EBITDA paid in this comparable transaction, resulting in the following multiple:

Enterprise Value as a Ratio of:		Implied Multiple

LTM EBITDA		3.8x

Based on this analysis, Peter J. Solomon Company derived a reference range of implied enterprise values using Company LTM EBITDA and FY 2009E EBITDA of $16.4 million to $21.6 million. Peter J. Solomon Company noted that the present value of the Total Consideration to be received by Hollywood Media pursuant to the Stock Purchase Agreement ranges from a minimum of $23.5 million in Closing Consideration to $41.2 million comprised of the Closing Consideration plus potential additional value from the contingent or deferred components of the Total Consideration.

Discounted Cash Flow Analysis

Peter J. Solomon Company performed a discounted cash flow analysis to calculate the theoretical enterprise value of Theatre Direct based on the value of the forecasted future free cash flows of Theatre Direct from March 31, 2010 through December 31, 2013, as provided and estimated by Hollywood Media management.

In performing its discounted cash flow analysis, Peter J. Solomon Company considered various assumptions that it deemed appropriate based on a review with Hollywood Media’s and Theatre Direct’s management of Theatre Direct’s prospects and risks. Peter J. Solomon Company believed it appropriate to utilized discount rates ranging from 10% to 14%, and EBITDA terminal value multiples ranging from 4.0x to 4.5x.

Based on this analysis, Peter J. Solomon Company derived a reference range of implied enterprise values of $34.7 million to $42.2 million. Peter J. Solomon Company noted that the present value of the Total Consideration to be received by Hollywood Media pursuant to the Stock Purchase Agreement ranges from a minimum of $23.5 million in Closing Consideration to $41.2 million comprised of the Closing Consideration plus potential additional value from the contingent or deferred components of the Total Consideration.

Miscellaneous

In arriving at its opinion, Peter J. Solomon Company performed a variety of financial analyses, the material portions of which are summarized above. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, such an opinion is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Peter J. Solomon Company did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to significance and relevance of each analysis and factor. Accordingly, Peter J. Solomon Company believes that its analyses must be considered as a whole and that selecting portions of its analyses or of the summary set forth above, without considering all such analyses, could create an incomplete view of the process underlying Peter J. Solomon Company’s opinion.

In performing its analyses, Peter J. Solomon Company relied on numerous assumptions made by the management of Hollywood Media and made numerous judgments of its own with regard to current and future industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Hollywood Media and Theatre Direct. Actual values will depend upon several factors, including changes in interest rates, dividend rates, market conditions, general economic conditions, Theatre Direct’s ability to meet its contingent payment targets and other factors. The analyses performed by Peter J. Solomon Company are not necessarily indicative of actual values or future results. Such analyses were prepared solely as a part of Peter J. Solomon Company’s analysis of the fairness, from a financial point of view, to Hollywood Media of the consideration proposed to be received by Hollywood Media in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement, and were provided to Hollywood Media’s board of directors solely in connection with the delivery of Peter J. Solomon Company’s opinion. The analyses do not purport to be appraisals or necessarily reflect the values at which businesses or securities might actually be sold, which may be higher or lower than the consideration proposed to be received by Hollywood Media in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement, and which are inherently subject to uncertainty. Because such analyses are inherently subject to uncertainty, Peter J. Solomon Company does not assume responsibility for their accuracy.

With regard to the comparable public company analysis and the precedent transactions analysis summarized above, Peter J. Solomon Company selected such public company on the basis of various factors for reference purposes only; however, no public company or transaction utilized as a comparison is identical to Theatre Direct or the sale of Theatre Direct pursuant to the Stock Purchase Agreement. Accordingly, an analysis of the foregoing was not mathematical; rather, it involved complex considerations and judgments concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the acquisition or public trading values of the selected companies and transactions to which Theatre Direct and the sale of Theatre Direct pursuant to the Stock Purchase Agreement were being compared. The consideration proposed to be received by Hollywood Media in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement was determined through negotiations between Hollywood Media and Key Brand, and was approved by Hollywood Media’s board of directors. Peter J. Solomon Company did not recommend any specific consideration to Hollywood Media’s board of directors or that any given consideration constituted the only appropriate consideration for the sale of Theatre Direct. In addition, as described elsewhere in this proxy statement, Peter J. Solomon Company’s opinion was one of many factors taken into consideration by Hollywood Media’s board of directors in evaluating the sale of Theatre Direct. Consequently, the Peter J. Solomon Company analyses described above should not be viewed as determinative of the opinion of Hollywood Media’s board of directors with respect to the sale of Theatre Direct.

The financial advisory services Peter J. Solomon Company provided to Hollywood Media in connection with the sale of Theatre Direct were not limited to the delivery of its opinion. Peter J. Solomon Company acted as financial and strategic advisor to Hollywood Media in connection with the sale of Theatre Direct and received a fee of $250,000 for its services payable upon delivery of its opinion. In addition, Hollywood Media also agreed to reimburse Peter J. Solomon Company for its out-of-pocket expenses, including fees and disbursements of its counsel, incurred in connection with its engagement and to indemnify Peter J. Solomon Company and certain related persons against liabilities and expenses, including liabilities under the federal securities laws, relating to or arising out of its engagement. In performing its work as financial advisor to Hollywood Media, Peter J. Solomon Company solicited interest from other parties with respect to a merger or other business combination transaction involving Theatre Direct. Except in its role as financial advisor to Hollywood Media in connection with the sale of Theatre Direct, during the past two years, Peter J. Solomon Company has not provided financial advisory services to Hollywood Media, Theatre Direct, Key Brand or any of their affiliates.

Governmental and Regulatory Approvals

We are not aware of any federal or state regulatory requirements that must be complied with or approvals that must be obtained to complete the sale of Theatre Direct, other than the filing of this proxy statement with the SEC. If any additional approvals or filings are required, we will use our commercially reasonable efforts to obtain those approvals and make any required filings before completing the transactions contemplated by the Stock Purchase Agreement.

Effects on Hollywood Media if the Sale of Theatre Direct is Completed and Nature of Hollywood Media’s Business Following the Sale of Theatre Direct

If the Proposal to Sell Theatre Direct is approved by our shareholders and the sale of Theatre Direct is completed, we will no longer conduct our Broadway Ticketing Business. Instead, we will focus on our remaining businesses and interests, which are: (i) our Ad Sales Division, (ii) our Intellectual Properties Division, (iii) our 26.2% equity interest in MovieTickets.com, Inc., (iv) an earnout from the sale of the Hollywood.com business, (v) the right to exercise or put the Warrant issued pursuant to the Stock Purchase Agreement, and (vi) the right to receive payments under the Promissory Note and earnout in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement. The assets of Hollywood Media that are currently used in connection with these businesses and interests will not be transferred to Key Brand as part of the sale of Theatre Direct.

Following the closing of the sale of Theatre Direct to Key Brand, we expect (i) our Ad Sales Division to continue to operate out of our headquarters in Boca Raton, Florida and our offices in England and (ii) our Intellectual Properties Division to continue to operate out of our offices in Green Bay, Wisconsin.

Our reporting obligations as a U.S. public company will not be affected as a result of completing the sale of Theatre Direct.

We also intend to continue to evaluate and potentially explore other available strategic options. We will continue to work to maximize shareholder interests with a goal of returning value to our shareholders. The sale of Theatre Direct will not alter the rights, privileges or nature of the issued and outstanding shares of our common stock. A shareholder who owns shares of our common stock immediately prior to the closing of the sale of Theatre Direct will continue to hold the same number of shares immediately following the closing. Our reporting obligations as a U.S. public company will not be affected as a result of completing the sale of Theatre Direct.

Effects on Hollywood Media if the Sale of Theatre Direct is Not Completed

If the Proposal to Sell Theatre Direct is not approved by our shareholders, and therefore not completed, we will continue to conduct our Broadway Ticketing Business, and we may consider and evaluate other strategic opportunities. In such a circumstance, there can be no assurances that our continued operation of our Broadway Ticketing Business or any alternative strategic opportunities will result in the same or greater value to our shareholders as the Proposal to Sell Theatre Direct. If the sale of Theatre Direct does not occur, we will not be able to use the proceeds in connection with our Ad Sales Division, Intellectual Properties Division, and other remaining businesses and interests, and we will not be able to use the net proceeds to fund a special cash dividend to our shareholders or engage in a self-tender offer to purchase shares of Hollywood Media’s common stock.

If the Stock Purchase Agreement is terminated under certain circumstances described in this proxy statement and set forth in the Stock Purchase Agreement (including Hollywood Media entering into an acquisition agreement for a superior proposal), Hollywood Media may be required to pay Key Brand a termination fee of $1.2 million. Except in certain circumstances, Hollywood Media will not be required to pay Key Brand a termination fee if the Stock Purchase Agreement is terminated because the Proposal to Sell Theatre Direct is not approved by Hollywood Media’s shareholders.

If the Stock Purchase Agreement is validly terminated by Hollywood Media under certain conditions set forth in the Stock Purchase Agreement and the Escrow Agreement, Hollywood Media may be entitled to receive up to approximately $2.4 million, consisting of the $1.2 million deposit (including any earnings thereon) from the Escrow Agent, plus reimbursement for all of Hollywood Media’s costs and expenses incurred in connection with the transactions contemplated by the Stock Purchase Agreement not to exceed $1.2 million.

Use of Proceeds from the Sale of Theatre Direct

Net proceeds from the sale of Theatre Direct will be used in connection with our Ad Sales Division, Intellectual Properties Division, and other remaining businesses and interests. In addition, following the sale of Theatre Direct pursuant to the Stock Purchase Agreement and subject to compliance with Florida law and federal laws and regulations, Hollywood Media expects to either (i) pay a one-time special cash dividend to its shareholders of approximately $0.60 per share of Hollywood Media common stock, totaling approximately $18 million, or (ii) engage in a self-tender offer to purchase shares of Hollywood Media common stock at a per-share price to be determined in the future, totaling approximately $18 million. However, (i) the actual amount of a one-time special cash dividend or self-tender offer may be lower or higher than this amount depending on the amount of Hollywood Media’s liabilities following the sale of Theatre Direct and other factors and (ii) the timing of the payment of a one-time special cash dividend or offer period for a self-tender offer may vary depending on a number of factors, including any contingent liabilities or other unforeseen matters. Hollywood Media’s board of directors has made no final decision whether to pay a one-time special cash dividend or engage in a self-tender offer, and such decision will be based on what Hollywood Media’s board of directors determines is in the best interest of Hollywood Media and its shareholders. If Hollywood Media elects to pay a one-time special cash dividend, prior to making such one-time special cash dividend, Hollywood Media will announce, at least ten days in advance, the record date for such distribution. Only holders of Hollywood Media’s common stock on the record date for a one-time special cash dividend will be entitled to receive a one-time special cash dividend. Please note that if Hollywood Media elects to pay a one-time special cash dividend, the record date for such one-time special cash dividend will be after the closing date of the sale of Theatre Direct and is different from the record date for determining which holders of Hollywood Media’s common stock are entitled to vote on the matters described in this proxy statement. If Hollywood Media elects to engage in a self-tender offer, Hollywood Media will announce the offer period and the per-share purchase price on or prior to the commencement date of such self-tender offer.

N o Appraisal or Dissenters’ Rights

No appraisal or dissenters’ rights are available to our shareholders under the Florida Business Corporation Act or our articles of incorporation or bylaws in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement.

Interests of Certain Persons in the Sale of Theatre Direct

In considering the recommendation of Hollywood Media’s board of directors with respect to the Stock Purchase Agreement, Hollywood Media shareholders should be aware that some of Hollywood Media’s directors and executive officers and some of Theatre Direct’s executive officers have interests in the sale of Theatre Direct that are different from, or in addition to, the interests of Hollywood Media’s shareholders generally. As described below, such interests include the accelerated vesting of certain restricted shares of Hollywood Media’s common stock and change of control payments to certain employees of Hollywood Media and Theatre Direct. Hollywood Media’s board of directors was aware of these interests and considered them in adopting and approving the Stock Purchase Agreement and the sale of Theatre Direct and recommending that the shareholders of Hollywood Media approve the sale of Theatre Direct pursuant to the Stock Purchase Agreement. In addition, the independent members of Hollywood Media’s board of directors (meeting without the non-independent members of Hollywood Media’s board of directors) unanimously approved the Stock Purchase Agreement and the sale of Theatre Direct and recommended that the shareholders of Hollywood Media approve the sale of Theatre Direct pursuant to the Stock Purchase Agreement.

Accelerated Vesting of Restricted Shares of Hollywood Media Common Stock

Upon the consummation of the sale of Theatre Direct pursuant to the Stock Purchase Agreement, all of the unvested restricted shares of Hollywood Media common stock granted to Mitchell Rubenstein, our Chairman and Chief Executive Officer, and Laurie S. Silvers, our Vice-Chairman, President and Secretary, pursuant to Hollywood Media’s 2004 Stock Incentive Plan will immediately vest and no longer be restricted shares. As of January 25, 2010, Mr. Rubenstein held 145,834 unvested restricted shares of Hollywood Media common stock and Ms. Silvers held 87,500 unvested restricted shares of Hollywood Media common stock.

Change of Control Payments to Certain Employees of Hollywood Media

In connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Hollywood Media will pay an aggregate amount of approximately $400,000 in change of control payments to two executives in Hollywood Media’s legal department, each of whom will receive these payments in accordance with their retention agreements, with such amounts payable at the closing of sale of Theatre Direct pursuant to the Stock Purchase Agreement (provided that Hollywood Media may defer one-half of these payments by up to one year if it elects to require the continued employment of one or both of these executives during a transition period of up to one year).

The employment agreements of Mitchell Rubenstein, our Chairman and Chief Executive Officer, and Laurie S. Silvers, our Vice-Chairman, President and Secretary, as amended by the amendments to such employment agreements (see “PROPOSAL #1: PROPOSAL TO SELL THEATRE DIRECT—Terms of the Stock Purchase Agreement – Ancillary Agreements – Deferral of Change of Control Payments Pursuant to Amendments to Employment Agreements of Mr. Rubenstein and Ms. Silvers” beginning on page 79), also provide for payments upon the occurrence of a “change of control.” The employment agreements of Mr. Rubenstein and Ms. Silvers provide that the sale of Theatre Direct pursuant to the Stock Purchase Agreement will constitute a “change of control.” Mr. Rubenstein and Ms. Silvers are contractually entitled under their employment agreements to change of control payments of approximately $2.3 million and $1.8 million, respectively, in connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement. Mr. Rubenstein and Ms. Silvers have voluntarily agreed to defer $812,501 and $332,189, respectively, in change of control payments that would otherwise be owed by Hollywood Media to them pursuant to each of their employment agreements upon the consummation of the sale of Theatre Direct pursuant to the Stock Purchase Agreement. Accordingly, upon the consummation of the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Hollywood Media will pay $1.5 million in change of control payments to Mr. Rubenstein and $1.5 million in change of control payments to Ms. Silvers.

If Mr. Rubenstein and Ms. Silvers continue to be employed by Hollywood Media on the first anniversary of the consummation of the sale of Theatre Direct pursuant to the Stock Purchase Agreement (or if such employment is terminated on or before such date by Hollywood Media without “cause” or by Mr. Rubenstein or Ms. Silvers for “good reason”), one-half of the deferred change of control payments to Mr. Rubenstein and Ms. Silvers will be paid to them as payments are received by Hollywood Media on the Promissory Note, on a pro rata basis, and one-half of such payments will be paid to Mr. Rubenstein and Ms. Silvers as payments are received by Hollywood Media on the first half of the earnout to be paid by Key Brand pursuant to the Stock Purchase Agreement, on a pro rata basis, according to the following schedule:

•

Mr. Rubenstein will receive (i) 4.76% of all payments of principal and interest received by Hollywood Media on account of the Promissory Note, and (ii) 5.79% of the first $7 million of earnout payments received by Hollywood Media pursuant to the Stock Purchase Agreement; and

•

Ms. Silvers will receive (i) 1.94% of all payments of principal and interest received by Hollywood Media on account of the Promissory Note, and (ii) 2.36% of the first $7 million of earnout payments received by Hollywood Media pursuant to the Stock Purchase Agreement.

Change of Control Payments to Certain Employees of Theatre Direct

In connection with the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Theatre Direct is obligated to pay an aggregate amount of approximately $1.6 million in change of control payments to Matt Kupchin, the President of Theatre Direct, and Jerome Kane, the Vice-President of Theatre Direct. Pursuant to the Stock Purchase Agreement, up to a maximum amount of $1.6 million of these change of control obligations will be or remain the liabilities of Theatre Direct from and after the closing of the sale of Theatre Direct and Hollywood Media will have no obligation with respect to such liabilities up to a maximum of $1.6 million.

Terms of the Stock Purchase Agreement

The following summarizes certain material provisions of the Stock Purchase Agreement. This summary does not purport to be complete, and the rights and obligations of the parties are governed by the express terms of the Stock Purchase Agreement and not by this summary or any other information contained in this proxy statement. The summary of the Stock Purchase Agreement below and elsewhere in this proxy statement is subject to, and qualified in its entirety by, reference to the full text of the Stock Purchase Agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate herein by reference.

The Stock Purchase Agreement is described in, and included as an annex to, this proxy statement only to provide you with information regarding its terms and conditions and not to provide any factual information regarding Hollywood Media, Theatre Direct, Key Brand or their respective businesses. The representations and warranties in the Stock Purchase Agreement and the description of them in this proxy statement (i) may not describe the actual state of affairs as of the date they were made or at any other time and (ii) should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and documents Hollywood Media publicly files with the SEC. Additional information about Hollywood Media may be found elsewhere in this proxy statement and Hollywood Media’s other public files, which are available without charge through the SEC’s website at http://www.sec.gov.

The Sale of Theatre Direct

Upon the terms and subject to the conditions set forth in the Stock Purchase Agreement, the sale contemplated by the Stock Purchase Agreement will consist of Hollywood Media selling its Broadway Ticketing Division, through the sale of all of the outstanding capital stock of Hollywood Media’s wholly-owned subsidiary, Theatre Direct, to Key Brand.

Hollywood Media or Key Brand may terminate the Stock Purchase Agreement prior to the consummation of the sale in certain specified circumstances, whether before or after the approval of the sale of Theatre Direct by Hollywood Media’s shareholders. Additional details on termination of the Stock Purchase Agreement are described below in the section labeled “Termination” beginning on page 75.

Purchase Price

If the sale of Theatre Direct is completed pursuant to the Stock Purchase Agreement (i) Hollywood Media will receive $20 million in cash (subject to working capital adjustments described below and in the Stock Purchase Agreement), (ii) Key Brand will issue Hollywood Media a five-year second lien secured Promissory Note in the initial principal amount of $8.5 million at an interest rate of 12% per annum, (iii) Theatre Direct will issue Hollywood Media the Warrant to purchase 5% of the outstanding shares of common stock of Theatre Direct as of the closing date on a fully diluted basis at an exercise price of $.01 per share, (iv) Hollywood Media will receive earnout payments from Key Brand of up to $14 million contingent upon Theatre Direct achieving certain revenue targets during the Earnout Period, and (v) up to a maximum amount of $1.6 million of liabilities with respect to any payment associated with change of control obligations under the employment agreements with certain employees of Theatre Direct will be or remain the liabilities of Theatre Direct from and after the closing date of the sale of Theatre Direct and Hollywood Media will have no obligation with respect to such liabilities up to a maximum of $1.6 million.

Purchase Price Adjustment

Prior to the closing of the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Hollywood Media will deliver to Key Brand its good faith estimate of Theatre Direct’s working capital as of the closing date determined in the manner described in the Stock Purchase Agreement. If the working capital as reflected on this estimated statement exceeds $500,000, then the cash consideration of $20 million to be delivered at closing will be adjusted upward by such difference. If the working capital as reflected on this estimated statement is less than $500,000, then the cash consideration of $20 million will be adjusted downward by such difference.

After the closing date of the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Hollywood Media will deliver to Key Brand a closing statement setting forth Hollywood Media’s calculation of Theatre Direct’s working capital as of the closing date determined in the manner described in the Stock Purchase Agreement. Key Brand has the right to challenge Hollywood Media’s determination of Theatre Direct’s working capital and any disputes between Key Brand and Hollywood Media as to Theatre Direct’s working capital that cannot be settled by the parties within 15 days will be settled by an independent accounting firm. If Theatre Direct’s working capital set forth on the closing statement is greater than the working capital set forth on the estimated statement described above, then Key Brand shall pay Hollywood Media the amount of the difference plus accrued interest at the prime rate on such difference. If Theatre Direct’s working capital set forth on the closing statement is less than the working capital set forth on the estimated statement described above, then Hollywood Media shall pay Key Brand the amount of the difference plus accrued interest at the prime rate on such difference.

Promissory Note and Related Agreements

On the closing date of the sale of Theatre Direct pursuant to the Stock Purchase Agreement, Key Brand will deliver to Hollywood Media the Promissory Note in the initial principal amount of $8.5 million. The Promissory Note will (i) accrue interest at the rate of 12% per annum with interest payable quarterly in cash, and (ii) be payable in full on the fifth anniversary of the closing date of the transactions contemplated by the Stock Purchase Agreement.

The obligations under the Promissory Note will be secured on a second priority basis by (i) a perfected pledge of the capital stock of Theatre Direct and each direct or indirect subsidiary of Theatre Direct (subject, in the case of any foreign direct subsidiary, to a pledge of 65% of the capital stock of such foreign subsidiary), and (ii) a perfected security interest in substantially all tangible and intangible assets of Theatre Direct and each direct or indirect US domestic subsidiary of Theatre Direct (including equipment, investment property, intellectual property, other general intangibles, real property and proceeds of the foregoing). The obligations under the Promissory Note and the security interest of Hollywood Media securing the obligations of Key Brand under the Promissory Note will be subordinated to senior indebtedness of Key Brand (plus all interest accrued thereon from and after the closing of the transactions contemplated by the Stock Purchase Agreement), including amounts outstanding under the Credit Agreement, up to an amount of $15 million.

Upon any adverse change in state or federal ticketing regulations that takes effect within two years of the closing of the transactions contemplated by the Stock Purchase Agreement that restricts or limits the amount of services fees that may be charged on the resale of tickets, the principal amount of the Promissory Note will be reduced by the amount of any such reduction in value up to a maximum of $5 million, and such amount shall be added pro-rata to the remaining earnout amounts payable to Hollywood Media pursuant to the Purchase Agreement (such amounts are referred to as, the “Note Adjustment Amounts”), provided that, there will be no reduction in the Promissory Note if the entire earnout has already been earned at the time of any such adverse change. The obligations of Key Brand under the Promissory Note will accelerate and become immediately due and payable upon any event of default under the Promissory Note or a “change of control” of Key Brand or Theatre Direct.

The debt facilities evidenced by the Promissory Note will also be documented pursuant to a loan agreement, security documents and other ancillary documents containing terms and conditions (including representations, warranties, affirmative covenants, negative covenants and events of default) which are substantially the same as those set forth for the Credit Agreement (with certain exceptions). In addition, an intercreditor agreement will be executed between Hollywood Media, Key Brand, and JPMorgan Chase Bank, N.A., which shall contain market standard provisions as between first lien and second lien facilities and any other conditions agreed to by JPMorgan Chase Bank, N.A. and Hollywood Media.

The foregoing summary of certain material provisions of the Promissory Note and the debt facilities evidenced by the Promissory Note does not purport to be complete, and the rights and obligations of the parties are governed by the express terms of the Promissory Note, the loan agreement, the security documents, the intercreditor agreement and the other ancillary documents, and not by this summary or any other information contained in this proxy statement. The summary of the Promissory Note and the debt facilities evidenced by the Promissory Note set forth above and elsewhere in this proxy statement is subject to, and qualified in its entirety by, reference to (i) the full text of the Stock Purchase Agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate herein by reference and (ii) the full text of the terms of the Promissory Note, a copy of which is attached to this proxy statement as Annex B and which we incorporate herein by reference.

Warrant

On the closing date, Key Brand will deliver to Hollywood Media the Warrant to purchase 5% of the outstanding shares of common stock of Theatre Direct as of the closing date on a fully diluted basis at an exercise price of $.01 per share. At any time after the first (1st) anniversary of the issue date of the Warrant, Theatre Direct may elect to redeem the Warrant (or the shares of common stock of Theatre Direct issued upon exercise of the Warrant), in whole and not in part, by paying to Hollywood Media an amount in cash equal to the greater of (x) the aggregate fair market value (as defined below) of the shares of common stock of Theatre Direct issuable upon exercise of the Warrant and (y) $1 million. At any time after the seventh (7th) anniversary of the issue date of the Warrant, Hollywood Media may elect to put the Warrant, in whole and not in part, to Theatre Direct in exchange for a cash payment by Theatre Direct to Hollywood Media equal to the greater of (x) the aggregate fair market value of the shares of common stock of Theatre Direct issuable upon exercise of the Warrant, and (y) $1 million.

The Warrant may be exercised by Hollywood Media, in whole and not in part, upon the consummation or occurrence of (A) any direct or indirect, whether occurring in any transaction or a series of related transactions, (i) sale, lease, license, exchange or other disposition of all or substantially all of the assets of Theatre Direct and its subsidiaries taken as a whole (including securities of Theatre Direct’s directly or indirectly owned subsidiaries), (ii) merger, consolidation, share purchase, share exchange, business combination or recapitalization, tender or exchange offer or other similar transaction involving Theatre Direct or any of its subsidiaries (other than solely among or between Theatre Direct and any of its subsidiaries), in which Theatre Direct is not the continuing or surviving entity, in which the stockholders of Theatre Direct immediately prior to such transaction or transactions do not hold at least 50% of the voting power of the continuing or surviving entity immediately after such transaction or transactions, or pursuant to which the common stock of Theatre Direct and/or securities of Theatre Direct that are convertible into or exercisable for the common stock of Theatre Direct would be converted to cash, securities or other property, (B) any public offering of the common stock of Theatre Direct or any other equity securities of Theatre Direct or any of its successors, (C) any transaction or series of related transactions, whether or not Theatre Direct is a party thereto, in which, after giving effect to such transaction or transactions, the outstanding common stock of Theatre Direct and/or securities of Theatre Direct that are convertible into or exercisable for the common stock of Theatre Direct (on an as-converted or as-exercised basis) then representing in excess of fifty percent (50%) of the voting power or economic rights of Theatre Direct are owned directly by any person or group of persons, other than Key Brand and/or its affiliates, including any wholly-owned subsidiary of Key Brand, or (D) any liquidation, dissolution or winding up of Theatre Direct.

The exercise price and the number of shares of common stock of Theatre Direct issuable upon exercise of the Warrant will be adjusted upon the occurrence of certain events, including stock splits, subdivisions, reclassifications or combinations, and certain issuances of Theatre Direct securities.

If Theatre Direct shall (i) declare and pay a dividend or make a distribution on its common stock in shares of its common stock, (ii) subdivide or reclassify the outstanding shares of its common stock into a greater number of shares, or (iii) combine or reclassify the outstanding shares of its common stock into a smaller number of shares, the number of shares of common stock of Theatre Direct issuable upon exercise of the Warrant at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that Hollywood Media after such date shall be entitled to purchase the number of shares of common stock of Theatre Direct which Hollywood Media would have owned or been entitled to receive in respect of the shares of common stock subject to the Warrant after such date had the Warrant been exercised immediately prior to such date. In such event, the exercise price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be adjusted to the number obtained by dividing (x) the product of (1) the number of shares of common stock of Theatre Direct issuable upon the exercise of the Warrant before such adjustment and (2) the exercise price in effect immediately prior to the record or effective date, as the case may be, for the dividend, distribution, subdivision, combination or reclassification giving rise to this adjustment by (y) the new number of shares of common stock of Theatre Direct issuable upon exercise of the Warrant determined pursuant to the immediately preceding sentence.

If Theatre Direct shall issue any of its common stock or any security of Theatre Direct that is convertible into, exercisable or exchangeable for, or options, warrants or other rights to acquire, directly or indirectly, common stock of Theatre Direct (other than in certain specified transactions) without consideration or at a consideration per share of common stock of Theatre Direct (or having a conversion or exercise price per share of common stock of Theatre Direct) that is less than the current fair market value of the common stock of Theatre Direct, in such event:(i) the number of shares of common stock of Theatre Direct issuable upon the exercise of the Warrant immediately prior to such issuance (the “Initial Number”) shall be increased to the number obtained by multiplying the Initial Number by a fraction (A) the numerator of which shall be the sum of (x) the number of shares of common stock of Theatre Direct outstanding on such date and (y) the number of additional shares of common stock of Theatre Direct issued (or into which any security of Theatre Direct that is convertible into, exercisable or exchangeable for, or options, warrants or other rights to acquire, directly or indirectly, common stock of Theatre Direct may be exercised or converted) and (B) the denominator of which shall be the sum of (x) the number of shares of common stock of Theatre Direct outstanding on such date and (y) the number of shares of common stock of Theatre Direct which the aggregate consideration receivable by Theatre Direct for the total number of shares of common stock so issued (or into which any security of Theatre Direct that is convertible into, exercisable or exchangeable for, or options, warrants or other rights to acquire, directly or indirectly, common stock of Theatre Direct may be exercised or converted) would purchase at the fair market value on the date of such issuance; and (ii) the exercise price payable upon exercise of the Warrant shall be adjusted by multiplying such exercise price in effect immediately prior to the date of such issuance by a fraction, the numerator of which shall be the number of shares of common stock of Theatre Direct issuable upon exercise of the Warrant prior to such date and the denominator of which shall be the number of shares of common stock of Theatre Direct issuable upon exercise of the Warrant immediately after the adjustment described in clause (i) of this sentence.

For purposes of the Warrant, “fair market value” means fair market value as mutually agreed by Theatre Direct and Hollywood Media; provided, however, that if Theatre Direct and Hollywood Media are unable to reach such agreement within a fifteen business day period after one party delivers written notice to the other party that the notifying party desires to determine the fair market value of the shares of common stock of Theatre Direct issuable upon exercise of the Warrant, they shall promptly thereafter submit the matter to a mutually agreeable (acting reasonably and in good faith) nationally recognized appraisal firm with experience in such matters for a binding determination. Upon selection of the appraiser, Theatre Direct and Hollywood Media shall submit to the appraiser each of their proposed determinations of fair market value and agree to execute a reasonable engagement letter with the appraiser in connection therewith. Theatre Direct and Hollywood Media shall cooperate with the appraiser and promptly provide all documents and information requested by the appraiser. The appraiser’s determination of fair market value shall not be less than Theatre Direct’s submitted determination of fair market value or more than Hollywood Media’s submitted determination of fair market value. The appraiser shall deliver to Theatre Direct and Hollywood Media, as promptly as practicable (but in any case no later than 30 days from the date of engagement of the appraiser), a report setting forth its calculation of fair market value, including the basis and explanation therefor. Such report shall be final and binding upon Theatre Direct and Hollywood Media, shall be deemed a final arbitration award that is binding on Theatre Direct and Hollywood Media, and neither Theatre Direct nor Hollywood Media shall seek further recourse to courts or other tribunals, other than to enforce such report. Judgment may be entered to enforce such report in any court of competent jurisdiction. The appraiser will determine the allocation of the cost of its review and report based on the inverse of the percentage its determination (before such allocation) bears to the total amount of the differential between the fair market values as originally submitted by Theatre Direct and Hollywood Media to the Appraiser (for example, should the differential in the fair market values submitted by the parties amount to $1,000 and the Appraiser awards $600 more than Theatre Direct’s original determination of fair market value, then 60% of the costs of its review would be borne by Theatre Direct and 40% of the costs would be borne by Hollywood Media). The fair market value determined under the Warrant shall be the fair market value for a redemption provided that notice of such redemption is given within 60 days after such determination is made. In the event that, between the date the Warrant is issued and the date of any determination of the fair market value under the Warrant (whether by mutual agreement of by the Appraiser), Theatre Direct shall make any payment, dividend or distribution in the form of indebtedness, assets, cash, rights or other property (with certain exceptions set forth in the Warrant) on or with respect to any equity securities (or securities exercisable for or convertible into any equity securities) of Theatre Direct owned of record or beneficially by (i) Key Brand , (ii) any of its direct or indirect stockholders, (iii) any person of which Key Brand and/or any stockholder of Key Brand owns or is the beneficiary of, directly or indirectly through one or more intermediaries, 50% or more of the economic interests, income, profits, distributions or other similar rights or payments, whether through ownership of equity interests, by contract or otherwise or (iv) any person which owes to Key Brand and/or any stockholder of Key Brand, directly or indirectly through one or more intermediaries, indebtedness in an amount (including any interest, premium or other payments) that represents more than 50% of the total enterprise value of such person, the fair market value of the Warrant shall include or take into account the value of any and all such payments, dividends and distributions.

The foregoing summary of certain material provisions of the Warrant does not purport to be complete, and the rights and obligations of the parties are governed by the express terms of the Warrant and not by this summary or any other information contained in this proxy statement. The summary of the Warrant set forth above and elsewhere in this proxy statement is subject to, and qualified in its entirety by, reference to (i) the full text of the Stock Purchase Agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate herein by reference and (ii) the full text of the form of Warrant, a copy of which is attached to this proxy statement as Annex C and which we incorporate herein by reference.

Earnout

Following the end of each full fiscal year of Theatre Direct during the period from the closing date of the sale of Theatre Direct pursuant to the Stock Purchase Agreement until the end of the tenth full fiscal year of Theatre Direct which occurs after the closing date of the sale of Theatre Direct pursuant to the Stock Purchase Agreement (which we refer to as, the “Earnout Period”), Key Brand will prepare and deliver, or cause to be prepared and delivered, to Hollywood Media financial statements of Theatre Direct and its subsidiaries for the applicable fiscal year, along with a statement setting forth Key Brand’s calculation of revenues (as defined below). Additionally, as soon as reasonably practicable after the end of each fiscal quarter during the Earnout Period, Key Brand shall prepare and deliver, or cause to be prepared and delivered, to Hollywood Media unaudited quarterly financial statements of Theatre Direct and its subsidiaries. Hollywood Media has the right to challenge Key Brand’s calculations set forth on such earnout statements and any disputes between Key Brand and Hollywood Media as to Key Brand’s calculations set forth on such earnout statements that cannot be settled by the parties within 15 days will be settled by an independent accounting firm.

If Theatre Direct and its subsidiaries achieve revenues greater than or equal to $125 million in any full fiscal year ending during the Earnout Period, then Key Brand will pay to Hollywood Media an amount equal to $7 million, plus the applicable portion of any reduction to the principal amount of the Promissory Note as a result of any adverse ticketing regulations. In addition, if Theatre Direct and its subsidiaries achieve revenues greater than or equal to $150 million during any full fiscal year ending during the Earnout Period, then Key Brand will pay to Hollywood Media an additional amount equal to $7 million, plus the applicable portion of any reduction to the principal amount of the Promissory Note as a result of any adverse ticketing regulations in accordance with the Stock Purchase Agreement.

During the Earnout Period, neither Key Brand or any of its affiliates (or any acquirer of Key Brand) shall (i) liquidate, dissolve or wind up Theatre Direct and its subsidiaries, (ii) compete with Theatre Direct and its subsidiaries with respect to the sale of tickets to live musical, live theatrical or live entertainment performances in New York City, New York or divert any business or opportunities away from Theatre Direct and its subsidiaries with respect to the sale of tickets to live musical, live theatrical or live entertainment performances in New York City, New York (except as contemplated in the definition of “Revenues” set forth in the Stock Purchase Agreement), or (iii) take any other actions, not in the ordinary course of business, with the actual knowledge and intent that such actions are for the primary purpose of avoiding or delaying payment of an earnout amount.

In addition, during the Earnout Period, Theatre Direct and its subsidiaries shall not enter into any transaction, agreement or arrangements under which Theatre Direct and its subsidiaries engage or otherwise use a third party to conduct more than an incidental portion of the sale of tickets business conducted by Theatre Direct and its subsidiaries prior to that time in exchange for a royalty, charge, fee or any other payment, which royalty, charge, fee or other payment is less than the price which would be paid to Theatre Direct and its subsidiaries if Theatre Direct and its subsidiaries sold the tickets in question, in lieu of Theatre Direct and its subsidiaries conducting such sale of tickets business itself.

If Key Brand or any of its affiliates sell, transfer or dispose (through merger, consolidation, reorganization, sale of assets, sale of stock or otherwise) of Theatre Direct or its subsidiaries or any material part of Theatre Direct or its subsidiaries’ businesses or assets, such successor, assignee, purchaser or other acquiror of Theatre Direct or its subsidiaries shall assume the applicable obligations of Key Brand under the Stock Purchase Agreement relating to the earnout; provided that no such sale, transfer or disposal shall relieve Key Brand of its obligations under the Stock Purchase Agreement unless agreed to in writing by Hollywood Media.

For purposes of the Stock Purchase Agreement, “revenues” means, for any full fiscal year of Theatre Direct during the Earnout Period, the aggregate gross revenues of Theatre Direct and its subsidiaries and their respective businesses for such full fiscal year of Theatre Direct during the Earnout Period, determined in accordance with United States generally accepted accounting principles as in effect (i) with respect to financial information prepared on or after the closing date, as of December 22, 2009, and (ii) with respect to historical financial information prepared prior to the closing date, as in effect as such applicable time, consistently applied using the accounting principles, policies, procedures, practices, applications and methodologies used in preparing the unaudited consolidated balance sheet of Theatre Direct and its subsidiaries at December 31, 2008 and 2007 and September 30, 2009 and the related unaudited consolidated statement of income of Theatre Direct and its subsidiaries for the years and nine month period then ended that were included as a schedule to the Stock Purchase Agreement; provided, however, that, (i) with respect to any tickets sold above face value, revenues shall be based on the gross ticket price plus all service fees charged in connection with such sale (and shall in no event be less than the total amounts paid by any customer) and (ii) with respect to any tickets sold at a discount to face value, revenues shall be based on the actual ticket sales price plus all service fees charged in connection with such sale. Revenues shall expressly include (i) any and all revenues from transactions between Theatre Direct and its subsidiaries, on the one hand, and Key Brand or any of its affiliates (other than Theatre Direct and its subsidiaries), on the other hand, (ii) any and all additional revenues of Key Brand and its affiliates (other than Theatre Direct and its subsidiaries) from the resale of tickets acquired from or through Theatre Direct and its subsidiaries, (iii) any and all revenues derived or generated from all primary and secondary ticketing sales, including those sold (a) from the license or use of, or by otherwise transacting or operating under, through or with, the domain names www.Broadway.com, www.Theater.com or www.Theatre.com or any similar or derivative internet domain names, or any other internet domain names owned by Theatre Direct and its subsidiaries as of the closing date, (b) over the phone via 1-800-Broadway, or (c) by, through or under any related trade or business names or intellectual property (as defined in the Stock Purchase Agreement) of Theatre Direct and its subsidiaries, (iv) any and all revenues derived or generated from any social networking website and/or mobile platform established, owned or operated by Theatre Direct and its subsidiaries, Key Brand and/or any of its affiliates as described in that certain Theater Community Segment Draft of Business Plan, dated July 10, 2009 which was previously provided to Key Brand, or any similar website, (v) any and all revenues associated with the sale by Key Brand or any of its affiliates (including Theatre Direct and its subsidiaries) of tickets to live musical, live theatrical or other live entertainment performances in New York City, New York, (vi) group ticket sales through Theatre Direct or ShowTix to venues that they service as of the closing date and any other venues that they service thereafter other than the group ticket sales for shows (A) presented by Broadway Across America, Key Brand or any of its affiliates outside of New York City, New York or (B) at venues located outside of New York City, New York which are owned by Key Brand or any of its affiliates, (vii) any and all sales derived from sponsorships and/or sales of advertisements to shows and/or theaters, to the extent not otherwise included in revenues and (viii) the aggregate amount of any business interruption insurance proceeds received by or on behalf of Theatre Direct and it subsidiaries in respect of any business interruption(s) net of all costs of obtaining and maintaining such insurance policies. Unless included above, revenues shall exclude any and all revenues derived or generated from any business contributed to, or processed through, Theatre Direct and its subsidiaries after the closing date by Key Brand or any of its affiliates, including revenues derived from ticket sales for performances presented outside of New York City, New York by Broadway Across America, Key Brand or any affiliate of Key Brand.

The Escrow Agreement and Deposit and Expenses Reimbursement

In connection with the Stock Purchase Agreement, on December 22, 2009, Hollywood Media, Key Brand and the Escrow Agent entered into the Escrow Agreement. On December 22, 2009, pursuant to the Stock Purchase Agreement and the Escrow Agreement, Key Brand deposited $1.2 million with the Escrow Agent. This amount (and any earnings thereon) will be credited toward the cash consideration contemplated by the Stock Purchase Agreement and paid to Hollywood Media at the closing of the sale of Theatre Direct.

Hollywood Media will be entitled to receive the $1.2 million deposit (including any earnings thereon) from the Escrow Agent if the Stock Purchase Agreement is validly terminated:

•

after the Termination Date (as defined in “PROPOSAL #1: PROPOSAL TO SELL THEATRE DIRECT—Terms of the Stock Purchase Agreement—Termination—Termination Rights” beginning on page 75) and at the time of such termination (i) Key Brand has not received a written consent from the requisite lenders under the debt facilities provided to Key Brand pursuant to the Credit Agreement for Key Brand to consummate the transactions contemplated by the Stock Purchase Agreement and Key Brand is not entitled to borrow up to $15 million under the Credit Agreement towards the payment of the cash consideration pursuant to the Stock Purchase Agreement, and (ii) there has not been any breach by Key Brand of its obligations under the Stock Purchase Agreement relating to using its commercially reasonable efforts to satisfy conditions pursuant to the Credit Agreement which is capable of being cured and which has not been cured; or

•

when all of the conditions to closing, other than the condition relating to Key Brand receiving a written consent from the requisite lenders under the Credit Agreement and Key Brand being entitled to borrow up to $15 million under the Credit Agreement to pay the cash consideration contemplated by the Stock Purchase Agreement, have been satisfied or waived or are capable of being satisfied at closing, and the condition relating to Key Brand receiving a written consent from the requisite lenders under the Credit Agreement and Key Brand being entitled to borrow up to $15 million under the Credit Agreement to pay the cash consideration contemplated by the Stock Purchase Agreement is not satisfied within thirty (30) days thereafter, and at the time of such termination, there has not been any breach by Key Brand of its obligations under the Stock Purchase Agreement relating to using its commercially reasonable efforts to satisfy conditions pursuant to the Credit Agreement which is capable of being cured and which has not been cured.

Hollywood Media will be entitled to receive up to approximately $2.4 million, consisting of the $1.2 million deposit (including any earnings thereon) from the Escrow Agent, plus reimbursement for all of Hollywood Media’s costs and expenses incurred in connection with the transactions contemplated by the Stock Purchase Agreement not to exceed $1.2 million, if the Stock Purchase Agreement is validly terminated by Hollywood Media due to a material breach of the Stock Purchase Agreement by Key Brand (and Key Brand has received a written consent from the requisite lenders under the Credit Agreement for Key Brand to consummate the transactions contemplated by the Stock Purchase Agreement and Key Brand is entitled to borrow up to $15 million under the Credit Agreement towards the payment of the cash consideration pursuant to the Stock Purchase Agreement).

Notwithstanding the foregoing, if Hollywood Media validly terminates the Stock Purchase Agreement and is entitled to receive the $1.2 million deposit (including any earnings thereon) from the Escrow Agent and, if applicable, reimbursement for all of Hollywood Media’s costs and expenses not to exceed $1.2 million pursuant to the Stock Purchase Agreement, and if, at the time of such termination, a Material Adverse Effect (as defined in “PROPOSAL #1: PROPOSAL TO SELL THEATRE DIRECT—Terms of the Stock Purchase Agreement—Representations and Warranties—Definition of Knowledge and Material Adverse Effect” beginning on page 63) exists which would permit Key Brand to validly terminate the Stock Purchase Agreement if such Material Adverse Effect could not be cured by the Termination Date and which has not been cured by the time of such termination, then the $1.2 million deposit (including any earnings thereon) shall be returned to Key Brand (and not paid to Hollywood Media) and Hollywood Media shall not be entitled to reimbursement of any of Hollywood Media’s costs and expenses incurred in connection with the transactions contemplated by the Stock Purchase Agreement.

If Key Brand does not receive a written consent from the requisite lenders under the Credit Agreement for Key Brand to consummate the transactions contemplated by the Stock Purchase Agreement or Key Brand is not entitled to borrow up to $15 million under the Credit Agreement towards the payment of the cash consideration pursuant to the Stock Purchase Agreement because Hollywood Media fails to execute any document or agreement required by any lender under the Credit Agreement, other than any document or agreement that modifies or is inconsistent with any Material Note Term (as defined in the Stock Purchase Agreement) in a manner adverse to Hollywood Media (except such document or agreement may restrict Hollywood Media’s remedies or actions upon the occurrence of any of the events of default or change in control included as a Material Note Term), then the $1.2 million deposit (including any earnings thereon) shall be returned by the Escrow Agent to Key Brand. For the avoidance of doubt, if any restriction on Hollywood Media’s remedies or actions upon the occurrence of any of the events of default or change in control included as a Material Note Term is not satisfactory to Hollywood Media and Hollywood Media does not execute the agreement or document containing such restriction and the closing of the transactions contemplated by the Stock Purchase Agreement does not occur, then the $1.2 million deposit (including any earnings thereon) shall be returned by the Escrow Agent to Key Brand.

Hollywood Media’s right to receive the $1.2 million deposit (including any earnings thereon) from the Escrow Agent (as described above) and reimbursement for all of Hollywood Media’s costs and expenses incurred in connection with the transactions contemplated by the Stock Purchase Agreement not to exceed an additional $1.2 million as described above is Hollywood Media’s exclusive remedy against Key Brand for a termination of the Stock Purchase Agreement.

If the Stock Purchase Agreement is validly terminated for any other reason, the Escrow Agreement and the Stock Purchase Agreement provide for the return of the $1.2 million deposit (including any earnings thereon) to Key Brand.

The foregoing summary of certain material provisions of the Escrow Agreement and the transactions contemplated thereby does not purport to be complete, and the rights and obligations of the parties are governed by the express terms of the Escrow Agreement and the Stock Purchase Agreement and not by this summary or any other information contained in this proxy statement. The summary of the Escrow Agreement set forth above and elsewhere in this proxy statement is subject to, and qualified in its entirety by, reference to (i) the full text of the Stock Purchase Agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate herein by reference and (ii) the full text of the Escrow Agreement, a copy of which is attached to this proxy statement as Annex D and which we incorporate herein by reference.

BY AND BETWEEN

HOLLYWOOD MEDIA CORP.

AND

KEY BRAND ENTERTAINMENT INC.

Dated as of December 22, 2009

TABLE OF CONTENTS

ARTICLE I	DEFINITIONS	1

1.1	Certain Definitions	1

1.2	Terms Defined Elsewhere in this Agreement	7

1.3	Other Definitional and Interpretive Matters	9

ARTICLE II	SALE AND PURCHASE OF SHARES	11

2.1	Sale and Purchase of Shares	11

ARTICLE III	PURCHASE PRICE	11

3.1	Purchase Price	11

3.2	Deposit Amount; Payment of Purchase Price	11

3.3	Purchase Price Adjustment	12

3.4	Delivery of Shares	14

3.5	Other Closing Deliveries by the Selling Stockholder	14

3.6	Closing Deliveries by Purchaser	14

3.7	Earnout	15

ARTICLE IV	CLOSING AND TERMINATION	18

4.1	Closing Date	18

4.2	Termination of Agreement	18

4.3	Procedure Upon Termination	20

4.4	Effect of Termination	20

4.5	Termination Fee	22

ARTICLE V	REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER	23

5.1	Organization and Good Standing	23

5.2	Authorization of Agreement	24

5.3	Conflicts; Consents of Third Parties	24

5.4	Capitalization	25

5.5	Ownership of Assets and Shares and Transfer of Shares	25

5.6	Subsidiary	25

5.7	Financial Statements	26

5.8	No Undisclosed Liabilities	26

5.9	Absence of Certain Changes or Events	27

5.10	Taxes	27

5.11	Real Property	28

5.12	Tangible Personal Property	28

5.13	Intellectual Property	28

5.14	Material Contracts	29

5.15	Employee Benefits Plans	31

5.16	Labor	32

5.17	Litigation	32

5.18	Compliance with Laws; Permits	32

5.19	Environmental Matters	33

5.20	Financial Advisors	33

5.21	Insurance	34

5.22	Bank Accounts	34

5.23	Net Operating Losses	34

5.24	No Other Representations or Warranties; Schedules	34

ARTICLE VI	REPRESENTATIONS AND WARRANTIES OF PURCHASER	34

6.1	Organization and Good Standing	34

6.2	Authorization of Agreement	35

6.3	Conflicts; Consents of Third Parties	35

6.4	Litigation	35

6.5	Investment Intention	35

6.6	Financial Advisors	36

6.7	Financial Capability	36

6.8	No Discussions	36

6.9	No Other Representations by Selling Stockholder	36

ARTICLE VII	COVENANTS	37

7.1	Access to Information	37

7.2	Preparation of the Proxy Statement; Shareholders Meeting	38

7.3	Conduct of the Business Pending the Closing	38

7.4	Non-Solicitation	42

7.5	Reasonable Best Efforts	45

7.6	Selling Stockholder Guarantees	45

7.7	Public Announcements	46

iii

7.8	Consents	46

7.9	Non-Competition Agreements	46

7.10	Further Assurances	47

7.11	Preservation of Records	47

7.12	Use of Name	48

7.13	Employment and Employee Benefits.	48

7.14	Financing	49

7.15	Customer Lists and Data Base	50

ARTICLE VIII		50

8.1	Conditions Precedent to Each Party’s Obligation to Effect the Transactions	50

8.2	Conditions Precedent to Obligations of Purchaser	50

8.3	Conditions Precedent to Obligations of the Selling Stockholder	51

ARTICLE IX	TERMINATION OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; SECTION 338(H)(10) ELECTION	52

9.1	Termination of Representations and Warranties	52

9.2	Indemnification by the Selling Stockholder	53

9.3	Indemnification by Purchaser	53

9.4	Procedures	54

9.5	Limits on Indemnification	55

9.6	Section 338(h)(10) Election	57

9.7	Tax Indemnification	58

ARTICLE X	MISCELLANEOUS	58

10.1	Payment of Sales, Use or Similar Taxes	58

10.2	Expenses	58

10.3	Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial	58

10.4	Entire Agreement; Amendments and Waivers	59

10.5	Governing Law	59

10.6	Notices	60

10.7	Severability	61

10.8	Binding Effect; Assignment	61

10.9	Non-Recourse	61

10.10	Counterparts	61

10.11	Specific Enforcement	61

10.12	Attorneys' Fees	62

Exhibits

Exhibit A:	Terms of Note
Exhibit B:	Form of Warrant
Exhibit C:	Form of Selling Stockholder Release
Exhibit D	Form of Transition Services Agreement
Exhibit E:	Form of Non-Competition Agreement

Schedules

Schedule 1.1(a)	Closing Working Capital Sample Calculations
Schedule 1.1(b)	Knowledge of the Purchaser
Schedule 1.1(c)	Knowledge of the Selling Stockholder
Schedule 5.3(a)	Selling Stockholder’s Conflicts
Schedule 5.3(b)	Selling Stockholder’s Consents
Schedule 5.4(b)	Capitalization
Schedule 5.5(b)	Options/Warrants
Schedule 5.5(c)	Sufficiency of Assets
Schedule 5.6(a)	Subsidiary
Schedule 5.6(b)	Ownership of Subsidiary’ Shares
Schedule 5.7(a)	Financial Statements
Schedule 5.7(b)	GAAP Matters
Schedule 5.8	Undisclosed Liabilities
Schedule 5.10	Taxes
Schedule 5.11	Real Property Leases
Schedule 5.12	Personal Property Leases
Schedule 5.13(a)	Intellectual Property
Schedule 5.13(b)	Intellectual Property Licensing
Schedule 5.13(c)	Intellectual Property Infringement
Schedule 5.14(a)	Material Contracts
Schedule 5.14(b)	Material Contract Defaults
Schedule 5.15(a)	Employee Benefit Plans
Schedule 5.16(a)	Labor and Collective Bargaining Agreements
Schedule 5.16(b)	Labor
Schedule 5.16(c)	List of Employees
Schedule 5.17	Litigation
Schedule 5.18(a)	Violation of Laws
Schedule 5.19	Environmental Matters
Schedule 5.20	Financial Advisors
Schedule 5.21	Insurance Policies

Schedule 5.22	Bank Accounts
Schedule 5.23	Net Operating Losses
Schedule 6.3(a)	Purchaser’s Conflicts
Schedule 6.3(b)	Purchaser’s Consents
Schedule 6.6	Financial Advisors
Schedule 7.3(a)(iii)	Transactions with Third Party
Schedule 7.3(b)	Conduct of the Business
Schedule 7.6	Assurance Agreements
Schedule 7.9	Purchaser Competition Covenant
Schedule 7.12	Purchased Marks

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of December 22, 2009, is by and between Key Brand Entertainment Inc. a Delaware corporation (“Purchaser”), and Hollywood Media Corp., a Florida corporation (the “Selling Stockholder”).

WITNESSETH:

WHEREAS, the Selling Stockholder owns an aggregate of 100 shares of common stock, $0.01 par value per share, of Theatre Direct NY, Inc., a Delaware corporation (“Theatre Direct”), which constitutes all of the issued and outstanding shares of capital stock of Theatre Direct (collectively, the “Shares”);

WHEREAS, the Selling Stockholder desires to sell to Purchaser, and Purchaser desires to purchase from the Selling Stockholder, the Shares for the purchase price and upon the terms and conditions hereinafter set forth; and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions.

(a) For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

“Accounting Principles” means GAAP consistently applied using the accounting principles, policies, procedures, practices, applications and methodologies used in preparing the Financial Statements.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, Dancap Private Equity Inc., Lawson Ticket, Inc. and Tokyo Broadcasting System, Inc. shall not be deemed Affiliates of Purchaser, and the entity set forth on Schedule 7.9, shall not be deemed an Affiliate of the Selling Stockholder or the Companies.

“Business Day” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

“Closing Working Capital” means the consolidated combined net current assets of the Companies (including all cash and cash equivalents, restricted cash and collateral for bonds), reduced by the consolidated combined current liabilities of the Companies (including any gift cards and gift certificates issued and not redeemed, but excluding any Indebtedness), in each case as of the close of business on the day immediately preceding the Closing Date determined in accordance with the Accounting Principles and disregarding any intercompany balances between the Companies, consistent with the sample calculations set forth on Schedule 1.1(a).

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the common stock, par value $0.01, of Selling Stockholder.

“Companies” means Theatre Direct and its Subsidiaries.

“Confidentiality Agreement” means the confidentiality agreement between Purchaser and Theatre Direct, dated June 27, 2008.

“Contract” means any written contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease or license.

“Earnout Amount” means the Level 1 Earnout Amount plus the Level 2 Earnout Amount.

“Earnout Period” means the period from the Closing Date until the end of the tenth full fiscal year of Theatre Direct which occurs after the Closing Date; provided; however, that if the fiscal year of Theatre Direct is changed to any year other than a calendar year after the Closing Date, then the Earnout Period shall be automatically extended to ensure that the Earnout Period includes at least ten full (i.e. 12 month) fiscal years after the Closing Date.

“Earnout Year” means any and each full fiscal year of Theatre Direct during the Earnout Period.

“Environmental Law” means any applicable Law currently in effect relating to the protection of the environment or natural resources, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), as each has been amended, and the regulations promulgated pursuant thereto.

“Escrow Agent” shall mean The Bank of New York Mellon.

“Escrow Agreement” means an escrow agreement among Escrow Agent, Purchaser and Selling Stockholder dated as of the date hereof.

“GAAP” means United States generally accepted accounting principles as in effect (i) with respect to financial information prepared on or after the Closing Date, as of the date of this Agreement, and (ii) with respect to historical financial information prepared prior to the Closing Date, as in effect as such applicable time.

“Governmental Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

“Hazardous Material” means any substance, material or waste which is regulated by any Governmental Body including petroleum and its by-products, asbestos, and any material or substance which is defined as a “hazardous waste,” “hazardous substance,” “hazardous material,” “restricted hazardous waste,” “industrial waste,” “solid waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance” under any provision of Environmental Law.

“Indebtedness” of any Person means, without duplication, (i) the principal of, and accreted value and accrued and unpaid interest in respect of, (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities); (iii) all obligations under capital leases (determined in accordance with GAAP); (iv) all obligations of the type referred to in clauses (i) through (iii) of any Persons the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise; and (v) all obligations of the type referred to in clauses (i) through (iv) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).

“Intellectual Property” means all of the following: (i) patents and applications therefor (along with all patents issuing thereon), including continuations, divisionals, continuations-in-part, reissues, reexaminations and extensions thereof (ii) trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, corporate names and trademark rights in internet domain names, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof, (collectively, “Marks”), (iii) copyrights and registrations and applications therefor, copyrightable works of authorship and mask work rights, (iv) internet domain names and (v) all trade secrets, inventions, formulae, data, improvements, know-how, confidential information, material computer software (including any source code and object code) documentation, engineering and technical drawings, processes, methodologies, and all other proprietary technology utilized in the businesses of the Companies, and all common law rights relating to the foregoing, excluding in this clause (v) any rights in respect of any of the foregoing that comprise or are protected by patents.

“IRS” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

“Knowledge of the Purchaser” means the actual knowledge of those Persons identified on Schedule 1.1(b).

“Knowledge of the Selling Stockholder” means the actual knowledge of those Persons identified on Schedule 1.1(c).

“Law” means any federal, state, local or foreign law, statute, code, ordinance, rule or regulation.

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits or proceedings (public or private) by or before a Governmental Body.

“Level 1 Earnout Amount” means $7,000,000 plus the Level 1 Regulatory Earnout Amount, if any.

“Level 1 Regulatory Earnout Amount” means the applicable portion of any reduction to the principal amount of the Note (in accordance with the terms of the Note) as a result of any Adverse Ticketing Regulations (as defined in Exhibit A).

“Level 2 Earnout Amount” means $7,000,000 plus the Level 2 Regulatory Earnout Amount, if any.

“Level 2 Regulatory Earnout Amount” means the applicable portion of any reduction to the principal amount of the Note (in accordance with the terms of the Note) as a result of any Adverse Ticketing Regulations (as defined in Exhibit A).

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude or transfer restriction.

“Material Adverse Effect” means a material adverse effect on (i) the business, results of operations or financial condition of the Companies (taken as a whole) or (ii) the ability of the Selling Stockholder to consummate the Transactions, in each case, other than an effect resulting from or related to an Excluded Matter. “Excluded Matter” means any one or more of the following: (i) the effect of any change in the United States or foreign economies or securities or financial markets in general; (ii) the effect of any change that generally affects any industry in which the Companies operate; (iii) the effect of any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions, whether arising before, on or after the date hereof; (iv) the effect of any action by or omission of Purchaser or its Affiliates with respect to the Transactions or with respect to the Companies (including any breach of this Agreement or the Confidentiality Agreement by Purchaser or its Affiliates); (v) the effect of any changes in applicable Laws or in generally accepted accounting principles or any other applicable accounting standards, or changes in general legal, regulatory or political conditions; (vi) the failure by any of the Companies or the Selling Stockholder to meet internal projections or forecasts (including any projections or forecasts provided to the Purchaser or its Affiliates), analyst expectations or publicly announced earnings or revenue projections, or decreases in Selling Stockholder’s stock price (including as a result of failure to meet such projections, forecasts or analyst expectations); (vii) any action taken by the Selling Stockholder or any of the Companies as contemplated or permitted by this Agreement or with Purchaser’s consent; and (viii) any effect pertaining to the negotiation, execution, announcement, pendency or performance of this Agreement or the consummation of the Transactions, including (1) the impact thereof on relationships, contractual or otherwise, with customers, suppliers, theaters, distributors or partners, (2) any resulting shortfalls or declines in revenue, margins or profitability, (3) the failure to obtain the consent of a counterparty under any Contract listed in Schedule 5.3(a) in connection with the Transactions and (4) any claim or litigation arising from allegations of breach of fiduciary duty with respect to the Selling Stockholder or any of the Companies relating to this Agreement or the Transactions, or disclosure violations in securities filings made in connection with the Transactions.

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body.

“Ordinary Course of Business” means the ordinary and usual course of normal day-to-day operations of the Companies.

“Permits” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

“Permitted Exceptions” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance provided or made available to Purchaser; (ii) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings; (iii) mechanics’, landlords’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business; (iv) zoning, entitlement and other land use and environmental regulations by any Governmental Body; (v) title of a lessor under a capital or operating lease; and (vi) such other imperfections in title, charges, easements, restrictions and encumbrances which do not interfere with the operation of the Companies.

“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“Revenues” means, for any Earnout Year, the aggregate gross revenues of the Companies and their respective businesses for such Earnout Year determined in accordance with the Accounting Principles; provided, however, that, (i) with respect to any tickets sold above face value, revenues shall be based on the gross ticket price plus all service fees charged in connection with such sale (and shall in no event be less than the total amounts paid by any customer) and (ii) with respect to any tickets sold at a discount to face value, revenues shall be based on the actual ticket sales price plus all service fees charged in connection with such sale. Revenues shall expressly include (i) any and all revenues from transactions between the Companies, on the one hand, and the Purchaser or any of its Affiliates (other than the Companies), on the other hand, (ii) any and all additional revenues of Purchaser and its Affiliates (other than the Companies) from the resale of tickets acquired from or through the Companies, (iii) any and all revenues derived or generated from all primary and secondary ticketing sales, including those sold (a) from the license or use of, or by otherwise transacting or operating under, through or with, the domain names www.Broadway.com, www.Theater.com or www.Theatre.com or any similar or derivative internet domain names, or any other internet domain names owned by the Companies as of the Closing Date, (b) over the phone via 1-800-Broadway, or (c) by, through or under any related trade or business names or Intellectual Property of the Companies, (iv) any and all revenues derived or generated from any social networking website and/or mobile platform established, owned or operated by the Companies, Purchaser and/or any of its Affiliates as described in that certain Theater Community Segment Draft of Business Plan, dated July 10, 2009 which was previously provided to the Purchaser, or any similar website, (v) any and all revenues associated with the sale by Purchaser or any of its Affiliates (including the Companies) of tickets to live musical, live theatrical or other live entertainment performances in New York City, New York, (vi) group ticket sales through Theatre Direct or ShowTix to venues that they service as of the Closing Date and any other venues that they service thereafter other than the group ticket sales for shows (A) presented by Broadway Across America, Purchaser or any of its Affiliates outside of New York City, New York or (B) at venues located outside of New York City, New York which are owned by Purchaser or any of its Affiliates, (vii) any and all sales derived from sponsorships and/or sales of advertisements to shows and/or theaters, to the extent not otherwise included in Revenues and (viii) the aggregate amount of any business interruption insurance proceeds received by or on behalf of the Companies in respect of any business interruption(s) net of all costs of obtaining and maintaining such insurance policies. Unless included above, revenues shall exclude any and all revenues derived or generated from any business contributed to, or processed through, the Companies after the Closing Date by the Purchaser or any of its Affiliates, including revenues derived from ticket sales for performances presented outside of New York City, New York by Broadway Across America, Purchaser or any Affiliate of Purchaser.

“Subsidiary” means any Person of which a majority of the outstanding share capital, voting securities or other voting equity interests are owned, directly or indirectly, by Theatre Direct.

“Tax” or “Taxes” means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, 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 other Tax Authority charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i).

“Taxing Authority” means the IRS and any other Governmental Body responsible for the administration of any Tax.

“Tax Return” means any return, report or statement required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes the Selling Stockholder, the Companies, or any of their Affiliates.

“Working Capital Target” means $500,000.

1.2 Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the following terms have meanings set forth in the sections indicated:

Term		Section

Acquisition Agreement		7.4(b)
Acquisition Proposal		7.4(d)
Adverse Recommendation Change		7.4(b)
Agreement		Preamble
Allocation Statement		9.6(d)
Assurance Agreements		7.6
Balance Sheets		5.7(a)
Balance Sheet Date		5.7(a)
Balance Sheet Liabilities		5.8
Board of Directors		7.2(b)
Board Recommendation		7.2(b)
Cash Consideration		3.1
Closing		4.1
Closing Cash Consideration		3.3(a)
Closing Date		4.1
Closing Statement		3.3(b)
Closing Working Capital		3.3(b)

Term		Section

Company Benefit Plan		5.15(a)
Company Employee		7.13(a)
Company Pension Plan		5.15(b)
Company Shareholder Approval		5.2
Deposit Account		3.2(a)
Deposit Amount		3.2(a)
Earnout Payment Amount		3.7(c)
Environmental Permits		5.19(a)
ERISA		5.15(a)
Estimated Losses		9.5(f)
Estimated Working Capital		3.3(a)
Excluded Matter		1.1 (in definition of Material Adverse Effect)
Final Working Capital		3.3(e)
Financial Statements		5.7(a)
Financing		6.7
Fundamental Representations		9.1
Indemnified Party		9.4(a)
Indemnifying Party		9.4(a)
Independent Accountant		3.3(c)
Intentional Breach		9.1
JPM		6.7
JPM Consent		8.2(d)
JPM Letter		6.7
Losses		9.2
Marks		1.1 (in Intellectual Property definition)
Material Contracts		5.14(a)
Material Note Term		4.4(d)
Multiemployer Plan		5.15(f)
Note		3.1
Notice of Disagreement		3.3(b)
Offerees		7.13(a)
Personal Property Leases		5.12
Proxy Statement		7.2(a)
Purchased Marks		7.12
Purchase Price		3.1
Purchaser		Preamble
Purchaser 401(k) Plan		7.13(c)
Purchaser Documents		6.2
Purchaser Indemnified Parties		9.2
Purchaser’s 125 Plan		7.13(d)
Real Property Lease		5.11
Real Property Leases		5.11
Reimbursement Accounts		7.13(d)
Representatives		7.4(a)

Term		Section

Restraints		8.1(b)
Restricted Business		7.9(a)
Retained Marks		7.12
Section 338(h)(10) Election		9.6(a)
SEC		7.2(a)
Securities Act		6.5
Seller Benefit Plan		5.15(a)
Seller Indemnified Parties		9.3
Selling Stockholder		Preamble
Selling Stockholder Documents		5.2
Selling Stockholder’s 125 Plan		7.13(d)
Shares		Recitals
Shareholders Meeting		7.2(b)
Superior Proposal		7.4(d)
Termination Date		4.2(a)
Termination Fee		4.5
Termination Waiting Period		4.2(h)
Theatre Direct		Recitals
Theatre Direct Common Stock		5.4(a)
Third Party Claim		9.4(a)
Transactions		2.1
Warrant		3.1
WARN Act		5.16(d)

1.3 Other Definitional and Interpretive Matters.

(a) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Dollars. Any reference in this Agreement to “$” shall mean U.S. dollars.

Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part 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 matter or item disclosed on one Schedule shall be deemed to have been disclosed on each other Schedule with respect to other representations and warranties relating to such matter or item to the extent, based on the substance of the disclosure on its face, its relevance to such other Schedule is reasonably apparent. Disclosure of any item on any Schedule shall not constitute an admission that such item or matter is material or would have a Material Adverse Effect. No disclosure on a Schedule relating to a possible breach or violation of any Contract, Law or Order shall be construed as an admission that a breach or violation exists or has actually occurred. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement. The Selling Stockholder may, at its option, include in the Schedules items that are not material in order to avoid any misunderstanding, and such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgement or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

Reflected On or Set Forth In. An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on” or “set forth in” a balance sheet or financial statements, to the extent any such phrase appears in such representation or warranty, if (a) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that related to the subject matter of such representation, (b) such item is otherwise specifically set forth on the balance sheet or financial statements or (c) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.

(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II

SALE AND PURCHASE OF SHARES

2.1 Sale and Purchase of Shares. Upon the terms and subject to the conditions contained herein, on the Closing Date, the Selling Stockholder agrees to sell to Purchaser, and Purchaser agrees to purchase from the Selling Stockholder, the Shares (together with all other transactions contemplated by this Agreement, the “Transactions”).

ARTICLE III

PURCHASE PRICE

3.1 Purchase Price. The aggregate consideration for the Shares shall be (i) an amount in cash equal to $20,000,000 (the “Cash Consideration”), subject to adjustments pursuant to Section 3.3, plus (ii) a second lien secured promissory note, in the initial principal amount of $8,500,000 issued by the Purchaser to the Selling Stockholder with the terms set forth on Exhibit A (the “Note”), plus (iii) a Warrant, in substantially the form attached as Exhibit B (the “Warrant”), plus (iv) the payments, if any, under Section 3.7, minus (v) the aggregate amount of all Indebtedness of the Companies immediately prior to Closing (other than any such Indebtedness that is intercompany Indebtedness owed by any of the Companies to each other) that is not being retired concurrently with the Closing (clauses (i) through (v), in the aggregate shall be referred to herein as, the “Purchase Price”).

3.2 Deposit Amount; Payment of Purchase Price. The Purchase Price shall be paid as follows:

(a) On the date hereof Purchaser shall deliver to the Escrow Agent the sum of $1,200,000 (the “Deposit Amount”) by wire transfer of immediately available funds into an account designated by the Escrow Agent prior to the date hereof (the “Deposit Account”) to be held in accordance with the Escrow Agreement. The Escrow Agent shall retain the Deposit Amount (and all earnings thereon) in the Deposit Account until the earlier of (i) the Closing or (ii) the release thereof in accordance with Section 4.4(d) and the Escrow Agreement. No other funds shall be deposited into the Deposit Account other than earnings on the Deposit Amount.

(b) On the Closing Date, Purchaser shall pay to the Selling Stockholder an amount equal to the Closing Cash Consideration minus the Deposit Amount (and any earnings thereon) by wire transfer of immediately available funds into an account designated by the Selling Stockholder prior to the Closing and the Escrow Agent shall deliver the Deposit Amount and any earnings thereon to the Selling Stockholder in accordance with the Escrow Agreement.

(c) On the Closing Date, Purchaser shall deliver to Selling Stockholder the Note, in form and substance reasonably acceptable to Purchaser and Selling Stockholder, duly executed by Purchaser.

(d) On the Closing Date, Purchaser shall deliver to Selling Stockholder the Warrant, duly executed by Theatre Direct.

3.3 Cash Consideration Adjustment.

(a) At least three (3) Business Days prior to the Closing Date, the Selling Stockholder shall deliver to Purchaser in writing its good faith estimate of Closing Working Capital, which shall be derived from the applicable amounts contained in the most recent completed financial statements for the calendar month ending prior to the Closing Date (the “Estimated Working Capital”). If the Estimated Working Capital exceeds the Working Capital Target, then the amount of the Cash Consideration to be paid by Purchaser to the Selling Stockholder at Closing (the “Closing Cash Consideration”) shall equal the Cash Consideration plus the amount of such excess, or if the Working Capital Target exceeds the Estimated Working Capital then the Closing Cash Consideration shall equal the Cash Consideration minus the amount of such excess. If the Estimated Working Capital equals the Working Capital Target, then there shall be no adjustment to the Cash Consideration under this Section 3.3(a).

(b) As promptly as practicable, but no later than ninety (90) days after the Closing Date, the Selling Stockholder shall cause to be prepared and delivered to Purchaser a closing statement (the “Closing Statement”) setting forth the Selling Stockholder’s calculation of Closing Working Capital. If Purchaser disagrees with the Selling Stockholder’s calculation of Closing Working Capital set forth in the Closing Statement, Purchaser may, within 30 days after delivery of the Closing Statement, deliver a notice to the Selling Stockholder stating that Purchaser disagrees with such calculation and specifying in reasonable detail those items or amounts as to which Purchaser disagrees and the basis therefor (the “Notice of Disagreement”) and reasonable documentation and evidence of such basis. Purchaser shall be deemed to have agreed with all other items and amounts contained in the Closing Statement and the calculation of Closing Working Capital set forth therein.

(c) If a Notice of Disagreement shall be duly delivered pursuant to Section 3.3(b), the Selling Stockholder and Purchaser shall, during the fifteen (15) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Closing Working Capital. If during such period, the Selling Stockholder and Purchaser are unable to reach such agreement, they shall promptly thereafter submit the unresolved issues to Grant Thornton LLP or such other independent accounting firm they mutually agree to select, as the case may be, the “Independent Accountant”) for a binding determination. Each of Purchaser and the Selling Stockholder agree that it shall not engage, or agree to engage the Independent Accountant to perform any services other than as the Independent Accountant pursuant hereto until the Closing Statement and Final Working Capital have been finally determined pursuant to this Section 3.3. Each party agrees to execute, if requested by the Independent Accountant, a reasonable engagement letter. Purchaser and the Selling Stockholder shall cooperate with the Independent Accountant and promptly provide all documents and information requested by the Independent Accountant. In making its determination, the Independent Accountant shall consider only those items or amounts set forth in the Notice of Disagreement (and not resolved by the parties) and matters affected thereby, and its determination of the Closing Working Capital shall not be less than the Closing Working Capital set forth in the Notice of Disagreement or more than the Closing Working Capital set forth in the Closing Statement. The Independent Accountant shall deliver to the Selling Stockholder and Purchaser, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Independent Accountant), a report setting forth its calculation of Closing Working Capital, including the basis for and explanation of any difference from the Closing Statement and the Notice of Disagreement. Such report shall be final and binding upon the Selling Stockholder and Purchaser, shall be deemed a final arbitration award that is binding on Purchaser and the Selling Stockholder, and neither Purchaser nor the Selling Stockholder shall seek further recourse to courts or other tribunals, other than to enforce such report. Judgment may be entered to enforce such report in any court of competent jurisdiction. The Independent Accountant will determine the allocation of the cost of its review and report based on the inverse of the percentage its determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the Independent Accountant. For example, should the items in dispute total in amount to $1,000 and the Independent Accountant awards $600 in favor of the Selling Stockholder’s position, 60% of the costs of its review would be borne by Purchaser and 40% of the costs would be borne by the Selling Stockholder.

(d) The Selling Stockholder, Purchaser and the Companies shall, and shall cause their respective representatives to, cooperate and assist in the preparation of the Closing Statement and the calculation of Closing Working Capital and in the conduct of the review referred to in this Section 3.3, including the making available to the extent necessary of books, records, work papers and personnel.

(e) If the Final Working Capital exceeds the Estimated Working Capital, the Purchaser shall pay to the Selling Stockholder the amount of such excess as an adjustment to the Cash Consideration, in the manner and with interest as provided in Section 3.3(f). If the Estimated Working Capital exceeds the Final Working Capital, the Selling Stockholder shall pay to the Purchaser the amount of such excess as an adjustment to the Cash Consideration, in the manner and with interest as provided in Section 3.3(f). “Final Working Capital” means Closing Working Capital (i) as shown in the Closing Statement delivered pursuant to Section 3.3(a) if no Notice of Disagreement is duly delivered pursuant to Section 3.3(b); or (ii) if a Notice of Disagreement is delivered, (A) as completely agreed to by the Selling Stockholder and Purchaser pursuant to Section 3.3(c) or (B) in the absence of such complete agreement, as shown in the Independent Accountant’s calculation delivered pursuant to Section 3.3(c) together with any disputes resolved by the parties prior to submission to the Independent Accountant.

(f) Any payment pursuant to Section 3.3(e) shall be made at a mutually convenient time and place within five (5) Business Days after Final Working Capital has been determined by wire transfer by Purchaser or the Selling Stockholder, as the case may be, of immediately available funds to the account of such other party as may be designated in writing by such other party. The amount of any payment to be made pursuant to this Section 3.3 shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the rate of interest published from time to time by The Wall Street Journal, Eastern Edition, as the “prime rate” during the period from the Closing Date to the date of payment calculated daily on the basis of a year of 365 days and the actual number of days elapsed.

3.4 Delivery of Shares. At the Closing, the Selling Stockholder shall transfer or cause to be transferred to Purchaser, against payment of the Purchase Price therefor as provided in Section 3.2, good and valid title to the Shares, free and clear of any Liens (other than transfer restrictions on subsequent transfers that may apply under applicable law or organizational documents) by causing to be delivered to Purchaser one or more stock certificates representing the Shares, duly endorsed in blank or accompanied by a stock transfer powers.

3.5 Other Closing Deliveries by the Selling Stockholder. At the Closing, the Selling Stockholder shall deliver or cause to be delivered to Purchaser:

(a) a certificate of a duly authorized officer of the Selling Stockholder certifying as to the matters set forth in Section 8.2(a) and (b);

(b) all other books and records relating solely to the Companies, including minute books, stock books, ledgers and registers, corporate seals, if any, and tax records, if not already located on the premises of the Companies;

(c) all documents required by the lenders under the Credit Agreement to be executed by the Selling Stockholder in connection with the Transactions, in each case consistent with the terms set forth in Exhibit A and in form and substance reasonably acceptable to Selling Stockholder;

(d) signed resignations of all directors of the Companies, effective immediately as of the Closing;

(e) an executed release in substantially the form attached hereto as Exhibit C;

(f) an executed Transition Services Agreement in substantially the form attached hereto as Exhibit D;

(g) the list of employees pursuant to Section 7.13(f); and

(h) Non-Competition Agreements executed and delivered by each of Mitchell Rubenstein and Laurie S. Silvers in substantially the form attached hereto as Exhibit E.

3.6 Closing Deliveries by Purchaser. At the Closing, Purchaser shall deliver to the Selling Stockholder:

(a) the Closing Cash Consideration in the manner set forth in Section 3.2(b);

(b) the Note, and all other documents required by the lenders under the Credit Agreement to be executed by Purchaser and/or Theatre Direct in connection with the Transactions and as set forth under Exhibit A, in each case consistent with the terms set forth in Exhibit A and in form and substance reasonably acceptable to Purchaser and Selling Stockholder, duly executed by Purchaser and/or Theatre Direct;

(d) a certificate of a duly authorized officer of the Purchaser certifying as to the matters set forth in Section 8.3(a) and (b); and

(e) an executed Transition Services Agreement in substantially the form attached hereto as Exhibit D.

3.7 Earnout.

(a) Determination of Net Revenue. Following each Earnout Year, as promptly as practicable, but no later than five (5) Business Days after the earlier to occur of (A) the completion of the annual audit of Purchaser and its subsidiaries for the applicable Earnout Year and (B) ninety (90) days after the end of such Earnout Year, Purchaser shall prepare and deliver, or cause to be prepared and delivered, to the Selling Stockholder, a copy of the financial statements of the Companies on a consolidated basis (derived from the audited financial statements of Purchaser prepared by a nationally recognized accounting firm, or if such audited financial statements have not been completed, the unaudited financial statement of the Purchaser and its subsidiaries) for the applicable Earnout Year (the “Post-Closing Financial Statements”) along with a statement setting forth Purchaser’s calculation of Revenues (the “Earnout Statement”), along with reasonable supporting or underlying documentation used in the preparation of such statements. Additionally, as soon as reasonably practicable, but in no event later than sixty (60) days after the end of each fiscal quarter during the Earnout Years, the Purchaser shall prepare and deliver, or cause to be prepared and delivered, to the Selling Stockholder, unaudited quarterly financial statements of the Companies (such statements to be in a form reasonably detailed in order for the Selling Stockholder to review and analyze the financial data related to the calculation of Revenues). Purchaser shall deliver and furnish the Selling Stockholder any other supporting or underlying documentation pertinent to the Post-Closing Financial Statements and the Earnout Statement as may be reasonably requested by the Selling Stockholder. With respect to Revenues, the Post-Closing Financial Statements and Earnout Statement shall be prepared in accordance with the Accounting Principles and this Agreement.

(b) Dispute Procedures. If Selling Stockholder disagrees with the Purchaser’s calculation of Revenues as set forth on an Earnout Statement, Selling Stockholder may, within 30 days after delivery of the Earnout Statement, deliver a notice to the Purchaser stating that Selling Stockholder disagrees with such calculation and specifying in reasonable detail those items or amounts as to which Selling Stockholder disagrees and the basis therefor (the “Earnout Notice of Disagreement”) and reasonable documentation and evidence of such basis. Selling Stockholder shall be deemed to have agreed with all other items and amounts contained in the Earnout Statement. If an Earnout Notice of Disagreement shall be duly delivered pursuant to this Section 3.7(b), the Selling Stockholder and Purchaser shall, during the fifteen (15) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the Earnout Amount. If during such period, the Selling Stockholder and Purchaser are unable to reach such agreement, they shall promptly thereafter submit the unresolved issues to the Independent Accountant for a binding determination. Each of Purchaser and the Selling Stockholder agree that it shall not engage, or agree to engage the Independent Accountant to perform any services other than as the Independent Accountant pursuant hereto until the Earnout Statement has been finally determined pursuant to this Section 3.7. Each party agrees to execute, if requested by the Independent Accountant, a reasonable engagement letter. Purchaser and the Selling Stockholder shall cooperate with the Independent Accountant and promptly provide all documents and information requested by the Independent Accountant. In making its determination, the Independent Accountant shall consider only those items or amounts set forth in the Earnout Notice of Disagreement (and not resolved by the parties) and matters affected thereby, and its determination of the Revenues shall not be less than the Revenues set forth in the Earnout Statement or more than the Revenues set forth in the Earnout Notice of Disagreement. The Independent Accountant shall deliver to the Selling Stockholder and Purchaser, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Independent Accountant), a report setting forth its calculation of the Earnout Amount, including the basis for and explanation of any difference from the Earnout Statement and/or the Earnout Notice of Disagreement. Such report shall be final and binding upon the Selling Stockholder and Purchaser, shall be deemed a final arbitration award that is binding on Purchaser and the Selling Stockholder, and neither Purchaser nor the Selling Stockholder shall seek further recourse to courts or other tribunals, other than to enforce such report. Judgment may be entered to enforce such report in any court of competent jurisdiction. The Independent Accountant will determine the allocation of the cost of its review and report based on the inverse of the percentage its determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the Independent Accountant. For example, should the items in dispute total in amount to $1,000 and the Independent Accountant awards $600 in favor of the Selling Stockholder’s position, 60% of the costs of its review would be borne by Purchaser and 40% of the costs would be borne by the Selling Stockholder.

(c) Earn-out Payments. If the Companies achieve Revenues greater than or equal to $125,000,000 in any Earnout Year, then Purchaser shall pay to the Selling Stockholder an amount equal to the Level 1 Earnout Amount. In addition, if the Companies achieve Revenues greater than or equal to $150,000,000 during any Earnout Year (including any Earnout Year where the Level 1 Earnout Amount may be earned), then Purchaser shall pay to the Selling Stockholder an additional amount equal to the Level 2 Earnout Amount. Each payment amount referenced in this Section 3.7 shall be referred to herein as a “Earnout Payment Amount” and collectively the “Earnout Payment Amounts”. Any Earnout Payment Amounts shall be made within five (5) Business Days after the final determination of Revenues for the applicable Earnout Year(s) and shall be made in cash by wire transfer by Purchaser of immediately available funds to an account designated by the Selling Stockholder.

(d) Post-Closing Covenants. During the Earnout Period, neither Purchaser or any of its Affiliates shall (i) liquidate, dissolve or wind up the Companies, (ii) compete with the Companies with respect to the sale of tickets to live musical, live theatrical or live entertainment performances in New York City, New York or divert any business or opportunities away from the Companies with respect to the sale of tickets to live musical, live theatrical or live entertainment performances in New York City, New York (except as contemplated in the definition of Revenues), or (iii) take any other actions, not in the Ordinary Course of Business, with the actual knowledge and intent that such actions are for the primary purpose of reducing or deferring any Revenues in order to avoid or delay payment of an Earnout Amount. In addition, during the Earnout Period, the Companies shall not enter into any transaction, agreement or arrangements under which the Companies engage or otherwise use a third party to conduct more than an incidental portion of the sale of tickets business conducted by the Companies prior to that time in exchange for a royalty, charge, fee or any other payment, which royalty, charge, fee or other payment is less than the price which would be paid to the Companies if the Companies sold the tickets in question, in lieu of the Companies conducting such sale of tickets business itself.

(e) Access. For purposes of complying with the terms set forth in Sections 3.7, Purchaser shall cooperate with and make available to the Selling Stockholder and the Independent Accountant and their respective representatives all information, records, data and working papers as may be reasonably required in connection with the preparation and analysis of the Post-Closing Financial Statements and the Earnout Statement, as the case may be, and the resolution of any disputes thereunder.

(f) Sale, Transfer or Assignment. If Purchaser or any of its Affiliates sell, transfer or dispose (through merger, consolidation, reorganization, sale of assets, sale of stock or otherwise) of the Companies or any material part of the Companies' businesses or assets, the calculation of Revenues shall continue to apply as to the Companies (or the successor in a merger, consolidation, reorganization or purchaser in a sale of a material part of the Companies' business or assets) and Purchaser shall require such successor, assignee, purchaser or other acquiror of the Companies or such business or assets to assume the applicable obligations of the Purchaser under this Section 3.7 and the payment of the remaining Earnout Amount, if any, in accordance with its payment terms, as a condition precedent to any such transaction; provided that no such sale, transfer or disposal shall relieve Purchaser of its obligations under this Agreement unless agreed to in writing by the Selling Stockholder.

Survival and Indemnification	73

Termination	75

Miscellaneous	77

Ancillary Agreements	78

Hollywood Media Release	78

Transition Services Agreement	78

Non-Competition Agreements of Mr. Rubenstein and Ms. Silvers	79

Deferral of Change of Control Payments Pursuant to Amendments to Employment Agreements of Mr. Rubenstein and Ms. Silvers	79

Accounting Treatment	81

Material U.S. Federal Income Tax Consequences	81

PROPOSAL #2: PROPOSAL TO ADJOURN THE SPECIAL MEETING	87

Vote Required to Approve the Proposal to Adjourn the Special Meeting	87

No Appraisal or Dissenters’ Rights	87

Recommendation of Our Board of Directors	87

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	88

SHAREHOLDERS’ PROPOSALS	90

DELIVERY OF MATERIALS	92

WHERE YOU CAN FIND MORE INFORMATION	92

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES	93

FINANCIAL STATEMENTS OF THEATRE DIRECT NY, INC. (OUR BROADWAY TICKETING DIVISION)	101

SELECTED FINANCIAL DATA OF HOLLYWOOD MEDIA CORP.	107

Consideration (in millions)	May 22, 2009 Term Sheet		July 16, 2009 Proposal		Variance

Closing Cash	$	24.0	$	20.0	$	(4.0	)

Key Brand’s assumption of $1.6 million of liabilities associated with employment agreements with certain employees of Theatre Direct (which essentially is a cash equivalent for Hollywood Media)	$	0.0	$	1.6	$	1.6

Promissory Note (1)	$	10.0	$	5.0	$	(5.0	)

Earnout	$	10.0	$	15.0	$	5.0

Warrant (2)	$	0.0	$	4.0	$	4.0

Total	$	44.0	$	45.6	$	1.6

Consideration (in millions)	July 7, 2009 Proposal		July 16, 2009 Proposal		Variance

Closing Cash	$	15.2	$	20.0	$	4.8

Key Brand’s assumption of $1.6 million of liabilities associated with employment agreements with certain employees of Theatre Direct (which essentially is a cash equivalent for Hollywood Media)	$	0.0	$	1.6	$	1.6

Promissory Note (1)	$	6.5	$	5.0	$	(1.5	)

Earnout	$	10.0	$	15.0	$	5.0

Warrant (2)	$	0.0	$	4.0	$	4.0

Total	$	31.7	$	45.6	$	13.9

Name and Address of Beneficial Owner(1)	Number of Shares Beneficially Owned(2)			Percent of Class(2)
Intana Management, LLC		3,193,547	(3)		10.29	%
Shannon River Fund Management Co. LLC		3,123,860	(4)		10.07	%
CCM Master Qualified Fund, Ltd.		2,868,992	(5)		9.24	%
Morgan Stanley		2,408,233	(6)		7.76	%
Gruber and McBaine Capital Management, LLC		2,227,984	(7)		7.18	%
Mitchell Rubenstein and Laurie S. Silvers		1,816,330	(8)		5.85	%
Potomac Capital Management LLC		1,756,553	(9)		5.66	%
Dimensional Fund Advisors, LP		1,656,229	(10)		5.34	%
Wellington Management Company, LLP and Vanguard Explorer Fund		1,643,923	(11)		5.30	%
Stephen Gans		1,620,425	(12)		5.22	%
Harry T. Hoffman		83,254	(13)		*
Robert E. McAllan		81,843	(14)		*
Scott Gomez		54,986	(15)		*
Robert D. Epstein		16,000	(16)		*
Spencer Waxman		3,123,860	(17)		10.07	%
All directors, director nominees and executive officers of Hollywood Media as a group (8 persons)		6,796,698	(18)		21.90	%

	Historical			Sale of			Pro Forma
	Hollywood Media Corp.(5)			Broadway Ticketing			Hollywood Media Corp.

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	9,761,580		$	19,364,434	(1),(2)	$	29,126,014
Receivables, net		1,189,689			(500,749	) (2)		688,940
Inventories held for sale		4,071,233			(4,071,233	) (2)		-
Deferred ticket costs		9,839,951			(9,839,951	) (2)		-
Prepaid expenses		1,698,894			(204,090	) (2)		1,494,804
Other receivables		1,254,595			(795,259	) (2)		459,336
Other current assets		203,240			(203,240	) (2)		-
Related party receivable		101,349			-			101,349
Restricted cash		1,221,000			(1,221,000	) (2)		-
Total current assets		29,341,531			2,528,912			31,870,443

PROPERTY AND EQUIPMENT, net		4,644,434			(3,735,445	) (2)		908,989
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED INVESTEES		136,504			-			136,504
INTANGIBLE ASSETS, net		457,303			(278,810	) (2)		178,493
PUT/CALL OPTION		-			400,000	(2),(4)		400,000
NOTE RECEIVABLE		-			7,100,000	(2),(4)		7,100,000
EARNOUT RECEIVABLE		-			2,900,000	(2),(4)		2,900,000
GOODWILL		20,183,142			(5,587,359	) (2)		14,595,783
OTHER ASSETS		31,148			-			31,148
TOTAL ASSETS	$	54,794,062		$	3,327,298		$	58,121,360

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	647,441			(235,302	) (2)	$	412,139
Accrued expenses and other		3,043,127			4,119,118	(2),(3)		7,162,245
Deferred revenue		12,888,759			(11,809,647	) (2)		1,079,112
Gift certificate liability		2,881,359			(2,881,359	) (2)		-
Customer deposits		852,943			(852,943	) (2)		-
Current portion of capital lease obligations		142,544			(25,188	) (2)		117,356
Current portion of notes payable		45,308			-			45,308
Total current liabilities		20,501,481			(11,685,321	)		8,816,160

DEFERRED REVENUE		314,103			-			314,103
CAPITAL LEASE OBLIGATIONS, less current portion		94,609			(3,056	) (2)		91,553
OTHER DEFERRED LIABILITY		1,120,892			(867,608	) (2)		253,284
NOTES PAYABLE, less current portion		6,424			-			6,424

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 1,000,000 shares authorized; none outstanding		-			-			-
Common stock, $.01 par value, 100,000,000 shares authorized; 31,037,656 and 30,883,913 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		310,376			-			310,376
Additional paid-in capital		309,321,245			-			309,321,245
Accumulated deficit		(276,930,993	)		15,883,283	(4)		(261,047,710	)
Total Hollywood Media Corp shareholders' equity		32,700,628			15,883,283			48,583,911
Non-controlling interest		55,925			-			55,925
		32,756,553			15,883,283			48,639,836
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	54,794,062		$	3,327,298		$	58,121,360

		The filing fee was determined based on $45,400,000 total consideration proposed to be paid to Hollywood Media Corp. in the transaction. The total consideration was based on Hollywood Media Corp. receiving the following consideration in the transaction (i) $20 million in cash, (ii) a five-year second lien secured promissory note in the initial principal amount of $8.5 million at an interest rate of 12% per annum (valued at $8.5 million for purposes of calculating the filing fee), (iii) a warrant to purchase 5% of the outstanding shares of common stock of Theatre Direct NY, Inc. as of the closing date on a fully diluted basis at an exercise price of $.01 per share (valued at $1 million for purposes of calculating the filing fee), (iv) earnout payments of up to $14 million, and (v) an estimated working capital adjustment of $1.9 million. The filing fee was determined by multiplying 0.00007130 by the total consideration proposed to be paid to Hollywood Media Corp. in the transaction.

SUMMARY TERM SHEET	1

Parties to the Stock Purchase Agreement	1

The Stock Purchase Agreement and The Sale of Theatre Direct	1

Purchase Price	2

Purchase Price Adjustments	2

Promissory Note and Related Agreements	2

Warrant	3

Earnout	4

Restrictions on Key Brand During the Earnout Period	4

The Escrow Agreement and Deposit and Expense Reimbursement	4

Use of Proceeds from the Sale of Theatre Direct	5

When the Sale of Theatre Direct is Expected to be Completed	5

Reasons for the Sale of Theatre Direct	5

Recommendation of Our Board of Directors	6

Interests of Certain Persons in the Sale of Theatre Direct	6

Opinion of Hollywood Media’s Financial Advisor	7

Governmental and Regulatory Approvals	7

Accounting Treatment	8

Material U.S. Federal Income Tax Consequences	8

Other Offers	9

Financing Condition to Closing	9

Other Conditions to Closing	10

Indemnification	10

Non-Competition Agreement	11

Termination of the Stock Purchase Agreement	11

Termination Fee	11

Effects on Hollywood Media if the Sale of Theatre Direct is Completed and Nature of Hollywood Media’s Business Following the Sale of Theatre Direct	11

Effects on Hollywood Media if the Sale of Theatre Direct is Not Completed	12

Risk Factors	12

Ancillary Agreements	12

The Special Meeting	12

The Proposal to Adjourn the Special Meeting	13

Shareholders Entitled to Vote at the Special Meeting	13

Quorum at the Special Meeting	13

Vote Required for Approval of the Proposal to Sell Theatre Direct and Approval of the Proposal to Adjourn the Special Meeting	13

No Appraisal or Dissenters’ Rights	13

QUESTIONS AND ANSWERS ABOUT THE SALE OF THEATRE DIRECT AND THE SPECIAL MEETING	14

Questions and Answers About the Sale of Theatre Direct	14

Questions and Answers About the Special Meeting	16

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	21

THE SPECIAL MEETING	23

Time, Place and Purpose of the Special Meeting	23

Recommendation of Our Board of Directors	23

Record Date and Quorum	23

Vote Required for Approval	24

Shares Held in “Street Name” by a Broker, Bank or Other Nominee	24

Proxies and Revocation	25

Adjournments and Postponements	25

No Appraisal or Dissenters’ Rights	26

Solicitation of Proxies	26

Internet Availability of Proxy Materials	26

Questions and Additional Information	26

RISK FACTORS	27

PROPOSAL #1: PROPOSAL TO SELL THEATRE DIRECT	32

Parties to the Stock Purchase Agreement	32

Background of the Sale of Theatre Direct	33

Background on the Amendments to Amended and Restated Employment Agreements of Mr. Rubenstein and Ms. Silvers	42

Past Contacts, Transactions or Negotiations	44

Reasons for the Sale of Theatre Direct	44

Opinion of Hollywood Media’s Financial Advisor	46

Governmental and Regulatory Approvals	52

Effects on Hollywood Media if the Sale of Theatre Direct is Completed and Nature of Hollywood Media’s Business Following the Sale of Theatre Direct	52

Effects on Hollywood Media if the Sale of Theatre Direct is Not Completed	53

Use of Proceeds from the Sale of Theatre Direct	53

No Appraisal or Dissenters’ Rights	54

Interests of Certain Persons in the Sale of Theatre Direct	54

Terms of the Stock Purchase Agreement	55

The Sale of Theatre Direct	56

Purchase Price	56

The Escrow Agreement and Deposit and Expenses Reimbursement	61

Representations and Warranties	63

Covenants	65

Conditions to Closing	71

Closing Date	73

Annex A	–	Stock Purchase Agreement
Annex B	–	Terms of the Promissory Note
Annex C	–	Form of Warrant
Annex D	–	Escrow Agreement
Annex E	–	Opinion of Peter J. Solomon Company
Annex F	–	Audited Financial Statements of Hollywood Media Corp. included in its Form 10−K for the period ended December 31, 2008
Annex G	–	Unaudited Financial Statements of Hollywood Media Corp. included in its Form 10−Q for the period ended September 30, 2009


	•	Key Brand’s access to the properties, business, operations, books and records of Theatre Direct and its subsidiaries between the date of the Stock Purchase Agreement and the closing;

	•	any fees, commissions, or like payments by any person having acted or claiming to have acted, directly or indirectly, as a broker for Hollywood Media, Theatre Direct, or its subsidiaries in connection with the transactions contemplated by the Stock Purchase Agreement.

Proceeds received	$	20,000,000
Working capital		4,467,875
Note receivable		7,100,000
Earnout receivable		2,900,000
Put/call option		400,000
Net assets sold		(13,673,637	)
Accrued transaction expense		(5,310,955	)

Net gain	$	15,883,283

	Nine Months Ended September 30,
	2009			2008
NET REVENUES
Ticketing	$	69,979,418		$	83,044,397

OPERATING COSTS AND EXPENSES
Cost of revenues - ticketing		57,768,570			69,416,062
Selling, general and administrative		4,294,318			5,620,822
Payroll and benefits		4,112,432			5,011,655
Depreciation and amortization		617,505			657,295

Total operating costs and expenses		66,792,825			80,705,834

Income from operations		3,186,593			2,338,563

OTHER INCOME (EXPENSE)
Interest, net		10,092			66,280
Other, net		(194,536	)		(8,298	)

Net income	$	3,002,149		$	2,396,545

	Year Ended December 31,
	2008		2007			2006
NET REVENUES
Ticketing	$	110,918,969	$	111,792,068		$	98,661,705

OPERATING COSTS AND EXPENSES
Cost of revenues - ticketing		92,882,066		94,017,924			82,496,590
Selling, general and administrative		7,996,054		8,063,461			6,883,797
Payroll and benefits		6,631,118		6,707,021			5,754,695
Depreciation and amortization		876,049		351,310			339,254

Total operating costs and expenses		108,385,287		109,139,716			95,474,336

Income from operations		2,533,682		2,652,352			3,187,369

OTHER INCOME (EXPENSE)
Interest, net		65,451		74,468			40,460
Other, net		1,260		(35,559	)		(37,492	)

Net income	$	2,600,393	$	2,691,261		$	3,190,337

		$3,237.02

	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No.:

	(3)	Filing Party:

	YEARS ENDED DECEMBER 31,
	2008			2007			2006			2005			2004
STATEMENT OF OPERATIONS DATA:

NET REVENUES
Ticketing	$	110,918,969		$	111,792,068		$	98,661,705		$	79,189,987		$	59,874,527
Other		6,138,962			6,369,156			5,862,715			2,025,776			2,483,302
		117,057,931			118,161,224			104,524,420			81,215,763			62,357,829

OPERATING COSTS AND EXPENSES
Cost of revenues - ticketing		92,882,066			94,017,924			82,496,590			68,179,732			51,781,133
Editorial, production, development and technology		3,323,546			3,590,192			3,165,383			1,022,850			1,256,755
Selling, general and administrative		13,932,852			14,269,974			13,354,795			9,472,084			8,315,674
Payroll & benefits		13,284,857			13,368,817			12,100,816			11,425,999			8,310,107
Amortization of CBS advertising		-			-			-			-			38,807
Impairment loss		3,524,697			-			-			-			-
Depreciation and amortization		2,224,831			1,378,492			1,293,797			891,540			1,049,958

Total operating costs and expenses		129,172,849			126,625,399			112,411,381			90,992,205			70,752,434

Loss from operations		(12,114,918	)		(8,464,175	)		(7,886,961	)		(9,776,442	)		(8,394,605	)

EQUITY IN EARNINGS OF UNCONSOLIDATED INVESTEES		1,160,623			4,747			12,227			533,228			576,317

OTHER INCOME (EXPENSE)
Interest, net		425,251			199,437			(1,787,735	)		(542,935	)		(2,576,769	)
Change in derivative liability		-			-			640,536			87,037			-
Other, net		44,958			(50,935	)		9,430			40,803			7,239

Loss from continuing operations		(10,484,086	)		(8,310,926	)		(9,012,503	)		(9,658,309	)		(10,387,818	)

Gain (loss) on sale of discontinued operations, net of income taxes		(4,655,122	)		10,254,287			16,328,241			-			-
Income (loss) from discontinued operations		(1,635,750	)		(211,993	)		2,201,865			913,234			(821,598	)

Income (loss) from discontinued operations		(6,290,872	)		10,042,294			18,530,106			913,234			(821,598	)

Net income (loss)		(16,774,958	)		1,731,368			9,517,603			(8,745,075	)		(11,209,416	)

NET (INCOME) LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTEREST		(81,365	)		3,241			4,910			(168,107	)		(388,383	)

Net income (loss) attributable to Hollywood Media Corp.	$	(16,856,323	)	$	1,734,609		$	9,522,513		$	(8,913,182	)	$	(11,597,799	)

Basic and diluted income (loss) per common share
Continuing operations	$	(0.33	)	$	(0.25	)	$	(0.28	)	$	(0.31	)	$	(0.39	)
Discontinued operations		(0.20	)		0.30			0.57			0.03			0.03
Total basic and diluted net income (loss) per share	$	(0.53	)	$	0.05		$	0.29		$	(0.23	)	$	(0.42	)

Weighted average common and common equivalent shares outstanding – basic and diluted		31,793,853			33,303,886			32,761,848			31,470,307			27,784,850

	AS OF DECEMBER 31,
	2008		2007		2006		2005			2004
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents	$	12,685,946	$	26,758,550	$	27,448,649	$	6,926,313		$	6,075,508
Working capital (deficit)		8,831,416		20,161,486		16,318,322		(3,484,178	)		(1,973,557	)
Total assets		66,938,861		93,978,836		100,009,604		83,302,950			69,811,599
Capital lease obligations, including current portion		407,480		397,780		77,588		106,993			156,313
Convertible debentures - net		-		-		-		940,927			799,152
Senior Unsecured Notes		-		-		6,375,399		5,402,255			-
Total shareholders’ equity	$	37,714,168	$	55,600,403	$	55,699,417	$	42,399,092		$	47,149,270

	Nine Months Ended
	September 30,
	2009			2008
STATEMENT OF OPERATIONS DATA:

NET REVENUES
Ticketing	$	69,979,418		$	83,044,397
Other		3,441,400			4,995,369
		73,420,818			88,039,766

OPERATING COSTS AND EXPENSES
Cost of revenues - ticketing		57,768,570			69,416,062
Editorial, production, development and technology		1,944,210			2,685,058
Selling, general and administrative		7,572,482			10,098,009
Payroll & benefits		7,402,148			10,249,690
Depreciation and amortization		1,184,187			1,451,359

Total operating costs and expenses		75,871,597			93,900,178

Loss from operations		(2,450,779	)		(5,860,412	)

EARNINGS (LOSSES) OF UNCONSOLIDATED INVESTEES
Equity in earnings of unconsolidated investees		1,912,906			1,312,622
Impairment loss		(5,000,000	)		-

Total equity in earnings (losses) of unconsolidated investees		(3,087,094	)		1,312,622

OTHER INCOME (EXPENSE)
Interest, net		18,714			392,104
Other, net		(156,069	)		(40,273	)

Loss from continuing operations		(5,675,228	)		(4,195,959	)

Loss on sale of discontinued operations, net of income taxes		-			(4,303,717	)
Income (loss) from discontinued operations		472,487			(1,635,750	)

Income (loss) from discontinued operations		472,487			(5,939,467	)

Net loss		(5,202,741	)		(10,135,426	)

NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(32,821	)		(97,573	)

Net loss attributable to Hollywood Media Corp.	$	(5,235,562	)	$	(10,232,999	)

Basic and diluted income (loss) per common share
Continuing operations	$	(0.19	)	$	(0.13	)
Discontinued operations		0 .02			(0.19	)
Total basic and diluted net income (loss) per share	$	(0.17	)	$	(0.32	)

Weighted average common and common equivalent shares outstanding – basic and diluted		30,565,413			31,971,997

	As of September 30,
	2009		2008
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents	$	9,761,580	$	14,279,571
Working capital (deficit)		8,840,050		13,165,549
Total assets		54,794,062		77,236,512
Capital lease obligations, including current portion		237,153		319,527
Total shareholders’ equity	$	32,756,553	$	46,414,797

HOLLYWOOD MEDIA CORP.

By:	/s/ Mitchell Rubenstein
	Name: Mitchell Rubenstein
	Title: Chairman and CEO

KEY BRAND ENTERTAINMENT INC.

By:	/s/ John Gore
	Name: John Gore
	Title: Chief Executive Officer

HOLLYWOOD MEDIA CORP.

By:	/s/ Mitchell Rubenstein
		Name:	Mitchell Rubenstein
		Title:	Chairman and CEO

KEY BRAND ENTERTAINMENT INC.

By:	/s/ David B. Stern
		Name:	David B. Stern
		Title:	Secretary

Borrower:	Key Brand Entertainment Inc. (the “Borrower”).

Lender:	Hollywood Media Corp. (the “Lender”).

Agent:	JPMorgan Chase Bank, N.A. (the “Agent”).

Credit Agreement:	That certain Credit, Security, Pledge and Guaranty Agreement, dated as of January 23, 2008, by and among, inter alios, the Borrower, Toronto Theater Ltd., the guarantors and lenders named therein, and the Agent, as amended by that Amendment No. 1 to Credit Agreement, dated as of August 22, 2008 (the “Credit Agreement”).

Second Lien Facilities:	A second lien facility to be entered into among the Borrower, Theatre Direct NY, Inc. (the “Company”), the Lender and the Agent in connection with the closing of the Transactions (the “Second Lien Facilities”).

Second Lien Note:	The promissory note to be delivered in connection with the closing of the Second Lien Facilities (the “Note”).

Principal Amount:	$8,500,000, subject to reduction as set forth in the following paragraph.

Adverse Ticketing Regulations:	The principal amount of the Second Lien Facilities and the Note shall be subject to reduction by up to $5,000,000 upon any adverse change in state or federal ticketing regulations that takes effect within two years of the Closing Date that restricts or limits the amount of services fees that may be charged on the resale of tickets (“Adverse Ticketing Regulations”), the actual amount of any such reduction to be determined by a valuation firm mutually acceptable to Lender and Borrower. Any reduction of the principal amount of the Second Lien Facilities and the Note shall be added to the Earnout Amount as follows: (i) if no Earnout Amount has been earned, 50% of such reduction shall be added to the Level 1 Earnout Amount (as the Level 1 Regulatory Earnout Amount) and 50% of such reduction shall be added to the Level 2 Earnout Amount (as the Level 2 Regulatory Earnout Amount); and (ii) if the Level 1 Earnout Amount has been earned and the Level 2 Earnout Amount has not been earned, then 100% of such reduction shall be added to the Level 2 Earnout Amount (as the Level 2 Regulatory Earnout Amount); provided, however, if the entire Earnout Amount has been earned, there will be no such reduction in the Note for such Adverse Ticketing Regulation.

Interest Rate:	12% per annum, payable in quarterly in cash.

Maturity:	The Note will be payable in full upon on the fifth anniversary of the Closing Date.

Mandatory Prepayment:	The Second Lien Facilities and the Note will accelerate and become immediately due and payable upon any event of default (to be defined in a manner consistent with the definition of Events of Default in the Credit Agreement, but excluding as an Event of Default any Change in Management (as defined in the Credit Agreement)) or a change in control (to be defined in a manner consistent with the definition of Change in Control in the Credit Agreement and which shall also include any sale, transfer, disposition or change in control of the Company).

Voluntary Prepayment:	Subject to the terms of the Credit Agreement and the Intercreditor Agreement (as defined below), the obligations under the Second Lien Facility and the Note may be voluntarily prepaid in whole or in part in minimum amounts of no less than $25,000.

Ranking:	The obligations under the Second Lien Facilities and the Note will be subordinated to up to $15,000,000 in the aggregate of senior indebtedness (plus all interest accrued thereon from and after the Closing Date), including amounts outstanding under the Credit Agreement or any renewal or replacement thereof.

Security:	The obligations under the Second Lien Facilities and the Note will be secured on a second priority basis by (i) a perfected pledge of the capital stock of the Company and each direct or indirect subsidiary of the Company (subject, in the case of any foreign direct subsidiary, to a pledge of 65% of the capital stock of such foreign subsidiary) and (ii) perfected security interests in substantially all tangible and intangible assets of the Company and each direct or indirect US domestic subsidiary of the Company (including equipment, investment property, intellectual property, other general intangibles, real property and proceeds of the foregoing), which shall include a mortgage on any owned real estate but not leased real estate.

Facilities Documentation and Intercreditor Agreement:	The Second Lien Facilities shall be documented pursuant to a loan agreement, security documents and other ancillary documents containing terms and conditions (including representations, warranties, affirmative covenants, negative covenants and events of default) which are substantially the same as those set forth for the Credit Agreement except (i) as otherwise set forth herein, (ii) the Second Lien Facilities shall not contain any financial ratio covenants, (iii) for differences necessary or customary to reflect the relative ranking of the Credit Agreement and the Second Lien Facilities, (iv) that no representations and warranties shall be given covering any period prior to the Closing Date with respect to the Company or any of its subsidiaries and (v) events of default shall not include any Change in Management. An intercreditor agreement (the “Intercreditor Agreement”) shall be executed between the Lender, the Borrower and the Agent, which shall contain market standard provisions as between first lien and second lien facilities and any other conditions required by Agent and agreed to by the Lender, including (i) permitted enforcement by the Lenders under the Second Lien Facility after a standstill period to be agreed in the event of non-payment of principal or interest, and a standstill period to be agreed in the case of a breach of any other provisions; (ii) a payment blockage period to be agreed, (iii) a provision which permits Lender to file Lender's claim in any bankruptcy of Borrower and vote Lender's claim, (iv) a provision which will require Agent not to disproportionately foreclose on the collateral for the Note as compared to the other assets which are collateral under Credit Agreement, and (v) a provision which permits Borrower to make mandatory payments of principal and interest on the Note (other than upon on acceleration due to an event of default) when there is no event of default under the Credit Agreement.

Refinancing or Replacement of the Credit Agreement:	The loans under the Credit Agreement may be refinanced or replaced by the Borrower so long as any intercreditor agreement to be agreed with the new senior lender does not contain provisions which are adverse to Lender (including with respect to ranking as set forth above) as compared to the provisions of the Intercreditor Agreement with Agent then in effect with respect to the Credit Agreement.

Assignments and Participations:	No assignments or transfers by the Borrower or the Company. The Lender may assign or transfer participations in the Second Lien Facilities without restriction, except prior to any assignment or transfer of participations Borrower shall have the right to purchase the participations for a price equal to 102.5% of the amount offered for such participations by the proposed purchaser thereof.

Governing Law and Forum:	New York.

THEATRE DIRECT NY, INC.

By:
	Name:
	Title:

HOLLYWOOD MEDIA CORP.

By:
	Name:
	Title:

	THE BANK OF NEW YORK MELLON, as Escrow Agent

	By:	/s/ Odell Romeo
	Name: Odell Romeo
	Title: Vice President

	December 31,			December 31,
	2008			2007
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	12,685,946		$	26,758,550
Receivables, net		1,433,797			2,033,702
Inventories held for sale		4,491,841			3,950,578
Deferred ticket costs		12,085,237			16,481,861
Prepaid expenses		1,418,563			2,167,109
Other receivables		1,431,216			3,877,167
Other current assets		99,945			629,298
Restricted cash		2,600,000			-
Current assets of discontinued operations		-			1,124,714
Total current assets		36,246,545			57,022,979

PROPERTY AND EQUIPMENT, net		4,649,202			4,486,620
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED INVESTEES		132,800			286,985
INTANGIBLE ASSETS, net		682,896			1,071,658
GOODWILL		25,154,292			29,049,259
OTHER ASSETS		73,126			54,993
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS		-			2,006,342
TOTAL ASSETS	$	66,938,861		$	93,978,836

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	1,374,661		$	3,380,403
Accrued expenses and other		3,708,652			4,403,088
Deferred revenue		15,196,455			21,433,825
Gift certificate liability		3,434,359			2,801,300
Customer deposits		831,838			1,928,357
Current portion of capital lease obligations		203,579			141,809
Current portion of notes payable		43,147			53,422
Related party payable		2,622,438			-
Current liabilities of discontinued operations		-			2,719,289
Total current liabilities		27,415,129			36,861,493

DEFERRED REVENUE		401,309			544,491
CAPITAL LEASE OBLIGATIONS, less current portion		203,901			255,971
OTHER DEFERRED LIABILITY		1,168,096			616,413
NOTES PAYABLE, less current portion		36,258			94,289
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS		-			5,776

COMMITMENTS AND CONTINGENCES

SHAREHOLDERS’ EQUITY
Preferred stock, $.01 par value, 1,000,000 shares authorized; none outstanding		-			-
Common stock, $.01 par value, 100,000,000 shares authorized; 30,883,913 and 31,897,983 shares issued and outstanding at December 31, 2008 and December 31, 2007, respectively		308,839			318,980
Additional paid-in capital		309,100,760			310,120,531
Accumulated deficit		(271,695,431	)		(254,839,108	)
Total shareholders’ equity		37,714,168			55,600,403
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	66,938,861		$	93,978,836

	Common Stock						Additional			Deferred			Accumulated
	Shares			Amount			Paid-in Capital			Compensation			Deficit			Total

Balance – December 31, 2005		32,703,457		$	327,035		$	309,228,214		$	(1,787,500	)	$	(265,368,657	)	$	42,399,092

Reclassification of deferred compensation		-			-			(1,787,500	)		1,787,500			-			-
Issuance of stock – stock option exercises		67,125			672			204,769			-			-			205,441
Issuance of stock to employees		126,914			1,269			542,802			-			-			544,071
Issuance of stock – interest on convertible debenture		9,133			91			38,374			-			-			38,465
Issuance of stock – warrant exercise, net of placement commissions		69,250			692			188,111			-			-			188,803
Issuance of stock – 401(k) employer match		44,028			440			189,320			-			-			189,760
Amortization of deferred compensation		-			-			650,000			-			-			650,000
Issuance of stock for business acquisitions		23,844			238			99,762			-			-			100,000
Issuance of stock for acquisitions of intangible assets		120,279			1,203			515,297			-			-			516,500
Issuance of stock – conversion of convertible debentures		312,500			3,125			996,875			-			-			1,000,000
Compensation expense on employee stock options		-			-			344,772			-			-			344,772
Net income		-			-			-			-			9,522,513			9,522,513

Balance – December 31, 2006		33,476,530			334,765			311,210,796			-			(255,846,144	)		55,699,417

Effect of adoption of FSP EITF 00-19-2		-			-			2,151,037			-			(727,573	)		1,423,464
Repurchase of company stock		(2,003,660	)		(20,037	)		(5,084,167	)		-			-			(5,104,204	)
Issuance of stock – stock option exercises		69,375			694			203,130			-			-			203,824
Issuance of stock to employees		145,308			1,453			570,806			-			-			572,259
Issuance of stock – warrant exercise		149,181			1,492			(1,492	)		-			-			-
Issuance of stock – 401(k) employer match		59,257			593			248,283			-			-			248,876
Amortization of deferred compensation		-			-			650,000			-			-			650,000
Issuance of stock for acquisitions of intangible assets		1,992			20			7,980			-			-			8,000
Compensation expense on employee stock options		-			-			164,158			-			-			164,158
Net income		-			-			-						1,734,609			1,734,609

Balance – December 31, 2007		31,897,983			318,980			310,120,531			-			(254,839,108	)		55,600,403

Repurchase of company stock		(1,711,639	)		(17,117	)		(2,107,882	)		-			-			(2,124,999	)
Issuance of stock – stock option exercises		101,000			1,010			121,890			-			-			122,900
Issuance of stock to officers		100,000			1,000			101,000			-			-			102,000
Issuance of warrants for services rendered		-			-			4,429			-			-			4,429
Issuance of stock – 401(k) employer match		96,569			966			279,084			-			-			280,050
Amortization of deferred compensation		-			-			487,500			-			-			487,500
Issuance of restricted stock - officers		400,000			4,000			(3,069	)		-			-			931
Compensation expense on employee stock options		-			-			97,277			-			-			97,277
Net loss		-			-			-			-			(16,856,323	)		(16,856,323	)

Balance – December 31, 2008		30,883,913		$	308,839		$	309,100,760		$	-		$	(271,695,431	)	$	37,714,168

	Additions (Deductions)
	Balance at		Charges to		Charged						Balance at
	Beginning		costs and		to other						end of
	of period		expenses		accounts			Write-offs			period

Allowance for doubtful accounts:

2008	$	1,146,536	$	319,273	$	5,000	(A)	$	(825,632	) (B)	$	645,177

2007	$	1,144,700	$	627,197	$	48,360	(A)	$	(673,721	) (B)	$	1,146,536

2006	$	1,735,531	$	810,614	$	-		$	(1,401,445	) (B)	$	1,144,700

Furniture and fixtures	5 years
Equipment and software	3 to 5 years
Website development	Up to 3 years
Equipment under capital leases	Shorter of term of lease or 3 to 5 years
Leasehold improvements	Term of lease
Internally developed software	3 years upon implementation

	Stock Options					Warrants
				Weighted				Weighted
				Average				Average
				Exercise				Exercise
	Shares			Price		Shares		Price

Outstanding at December 31, 2007		753,943		$	4.54		1,982,485	$	4.36

Granted		-			-		7,500		2.34
Exercised		(101,000	)		1.22		-		-
Cancelled		(36,000	)		4.09		-		-
Expired		(25,000	)		2.23		-		-

Outstanding at December 31, 2008		591,943		$	5.24		1,989,985	$	4.35

	Number of			Exercise Price
	Shares			Per Share

Outstanding at December 31, 2007		753,943		$0.88 - $16.50

Granted		-		-
Exercised		(101,000	)	$0.88 - $ 1.30
Cancelled		(36,000	)	$3.60 - $ 4.28
Expired		(25,000	)	$2.23

Outstanding at December 31, 2008		591,943		$2.03 - $16.50

				Weighted -
				Average Grant
	Number of			Date Fair Value
	Shares			Per Share

Non-vested at December 31, 2007		35,000		$	1.31
Granted		-			-
Vested		(27,500	)		1.01
Forfeited		-			-
Non-vested at December 31, 2008		7,500		$	2.42

	Options and Warrants Outstanding						Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
			Remaining		Exercise				Exercise
Range of	Number of		Contractual		Price		Number of		Price
Exercise Prices	Shares		Life		Per Share		Shares		Per Share

$ 2.03 - $ 2.84		1,189,985		0.54	$	2.78		1,189,985	$	2.78
$ 3.00 - $ 5.99		1,210,943		2.47		4.31		1,203,443		4.31
$ 8.00 - $14.06		36,000		1.41		9.75		36,000		9.75
$14.87 - $17.50		45,000		0.95		16.50		45,000		16.50
$21.42		100,000		0.57		21.42		100,000		21.42
		2,581,928		1.44	$	4.56		2,574,428	$	4.56

	December 31, 2007

Current assets	$	1,124,714
Property and equipment, net		403,500
Other assets		8,800
Intangibles		406,164
Goodwill		1,187,878

Total assets of discontinued operations	$	3,131,056

Current liabilities	$	2,719,289
Long-term liabilities		5,776

Total liabilities of discontinued operations	$	2,725,065