Asset Purchase Agreement - Merchant Internet Group Inc. and Showtimes.com Inc.
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of June
15, 2004, by and between MERCHANT INTERNET GROUP, INC., a Delaware corporation
("Seller"), and SHOWTIMES.COM, INC., a Florida corporation ("Purchaser").
BACKGROUND
As only a portion of the operations of Seller, Seller is engaged,
through its Front Row Marketing division, in the business of providing a weekly
or more frequently delivered movie show times (and related content) email
newsletter to patrons of movie theatres (the "Business"). Purchaser desires to
acquire, and Seller desires to sell to Purchaser, certain of Seller's customer
contracts related to the operation of the Business.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions set forth herein, the parties hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 Agreement to Sell and Purchase. At the Closing, Seller shall sell,
assign, convey, transfer and deliver to Purchaser, and Purchaser shall purchase
from Seller, all of Seller's right, title and interest on the Closing Date in,
to and under the following assets (the "Purchased Assets"):
1.1.1 Business Contracts. All right, title and interest of Seller
in, to and under the contracts, agreements, commitments, arrangements or
undertakings of the Business set forth on Exhibit 1.1.1 (collectively, the
"Business Contracts") but excluding the accounts receivable of the Business due
under the Business Contracts as of the Closing Date;
1.1.2 Records. All information, databases, ledgers, files, records,
lists, data, materials, telephone numbers, facsimile numbers, addresses and
internet addresses, whether in tangible, electronic or other form, which pertain
to the Business, including without limitation, the customers party to the
Business Contracts;
1.1.3 Business Name. To the extent of Seller's interest therein,
the name "Front Row Marketing";
1.1.4 URLs. Seller's URLs for those of its websites used only in
connection with the Business, as set forth on Exhibit 1.1.4;
1.1.5 Toll free Telephone Number. The number 888-866-3765 used in
connection with the Business; and
1.1.6 Other Intellectual Property Rights. All other non-patent
intellectual property rights, including trademarks and service marks, and the
<PAGE>
goodwill associated with the Business, and all rights thereunder, remedies
against infringement thereof, and rights to protection of such interests therein
under the laws of all jurisdictions.
1.2 Assumption of Liabilities. At the Closing, Purchaser shall assume
and agree to pay, discharge or perform, as appropriate, all liabilities and
obligations arising on and after the Closing Date under the Business Contracts
(the "Assumed Liabilities"). Except for the Assumed Liabilities, Purchaser shall
not assume or have any responsibility for any debt, liability, obligation or
commitment of any nature, whether now or hereafter existing, absolute,
contingent or otherwise, known or unknown, relating to Seller, the Purchased
Assets or the Business; provided, however, that Purchaser acknowledges and
agrees that it shall be solely responsible for the liabilities and obligations
incurred or undertaken by Purchaser in connection with the Business Contracts
and otherwise with respect to its operation of the Business after the Closing
Date.
1.3 Purchase Price. The purchase price (the "Purchase Price") paid by
Purchaser to Seller for the Purchased Assets shall be the assumption of the
Assumed Liabilities plus $300,000 payable in the form of in that number of the
shares of the common stock, par value $0.01 per share (the "Common Stock"), of
Hollywood Media Corp., a Florida corporation and the parent company of Purchaser
("Hollywood Media"), determined by dividing $300,000 by the Per Share Price (as
defined in Article XI) for the Common Stock as of the close of business on date
that is four business days prior to the Closing Date. Purchaser shall cause
Hollywood Media to issue the Common Stock as follows:
1.3.1 Hollywood Media shall issue to Seller that number of shares
of Common Stock with an aggregate value (based on the Per Share Price) of
$50,000 (rounded down to the nearest whole multiple of the Per Share Price) and
delivered such shares to Broad and Cassel, as escrow agent (the "Escrow Agent")
under the Escrow Agreement to be entered into among the parties in the form of
Exhibit 1.3 (the "Escrow Agreement") (such shares are referred to herein as the
"Escrowed Shares"). Within fifteen (15) days after expiration of the ninety (90)
day period commencing on the Closing Date (the "Relevant Period"), Purchaser
shall deliver to Seller and the Escrow Agent a written notice setting forth the
gross revenues generated by the Business during the Relevant Period, which
notice shall be certified as accurate and complete by a duly authorized officer
of Purchaser (the "Revenue Notice"). In the event that the Revenue Notice
reflects gross revenues greater than or equal to seventy-five percent (75%) or
greater of the revenues generated by the Business during the ninety (90) period
preceding the Closing Date (being $29,941.65) (the "Revenue Threshold"),
Purchaser shall cause the Escrow Agent to deliver the Escrowed Shares to Seller
within five (5) days after delivery of the Revenue Notice. In the event that the
gross revenues set forth in the Revenue Notice are less than the Revenue
Threshold, Purchaser shall instead cause the Escrow Agent to release to Seller
-2-
<PAGE>
that number of the Escrowed Shares determined by reducing the total number
thereof by the same percentage reduction in gross revenues set forth in the
Revenue Notice as compared to the Revenue Threshold and to release the remainder
to Hollywood Media for cancellation. Any fractional shares resulting from such
reduction shall be rounded up to the nearest whole share for purposes of the
amount released to Seller. In addition, but only if the Escrowed Shares are not
subject to any lien or pledge in favor of any third party, any claims for
indemnity by Purchaser pursuant to Section 8.3 shall be first satisfied from the
Escrowed Shares. Seller and Purchaser acknowledge that the Escrow Agent is
acting as legal counsel to Purchaser for purposes of the transactions
contemplated hereby. Seller and Purchaser consent to such counsel acting as
Escrow Agent and do hereby waive any conflict of interest resulting therefrom
and agree to indemnify Escrow Agent in the exercise of its obligations to the
extent provided in the Escrow Agreement.
1.3.2 Hollywood Media shall issue the remaining shares of Common
Stock in the name of Seller and deliver the same to Seller at Closing.
Seller acknowledges and agrees that the certificates representing the shares of
Common Stock hereunder shall bear the following legend:
The shares of stock represented by this Certificate have been acquired
directly or indirectly from the Issuer or an affiliate of the Issuer
without being registered under the Securities Act of 1933, as amended
(the "Act"), or the securities laws of any state or other jurisdiction,
including the Florida Securities Act, and are restricted securities as
that term is defined in Rule 144 promulgated under the Act. These
shares may not be sold or transferred unless registered under such Act
and the securities laws of applicable states and other jurisdictions or
unless any request for any such sale or transfer is accompanied by a
favorable opinion of counsel reasonably satisfactory to the Issuer,
stating that such sale or transfer will not result in a violation of
such laws.
Purchaser acknowledges that Seller intends to pledge the Common Stock as
collateral for a loan to be received from a financial institution or other
lender and, in connection with such pledge, the financial institution or other
lender will acknowledge that the shares of Common Stock are restricted
securities under Rule 144 promulgated under the Securities Act. Accordingly,
Seller will advise and cause such financial institution or other lender to agree
that in exercising its rights under such pledge it must either comply with the
applicable provisions of the Securities Act or must provide an opinion of
counsel satisfactory to Hollywood Media that any such exercise will not violate
the Securities Act.
ARTICLE II - CLOSING
2.1 Closing. The purchase and sale provided for in this Agreement (the
"Closing") shall take place at the offices of Seller's counsel at Miller,
-3-
<PAGE>
Canfield, Paddock and Stone, P.L.C., 101 North Main Street, 7th Floor, Ann
Arbor, Michigan, at 10:00 a.m. (local time) on June 18, 2004, unless Purchaser
and Seller otherwise agree. Subject to the provisions of Article X, failure to
consummate the purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 2.1 shall not result
in the termination of this Agreement and shall not relieve any party of any
obligation under this Agreement. In such a situation, the Closing shall occur as
soon as practicable, subject to Article X.
2.2 Items to be Delivered at the Closing. At the Closing and subject to
the terms and conditions of this Agreement:
2.2.1 Deliveries by Seller. Seller shall deliver to Purchaser:
(a) The Bill of Sale and Assignment of Contract Rights
executed by Seller in substantially the form attached as Exhibit 2.2.1(a) (the
"Bill of Sale");
(b) The Assignment and Assumption Agreement executed by
Seller in substantially the form attached as Exhibit 2.2.1(b) (the "Assignment
and Assumption Agreement");
(c) The Non-Competition Agreement executed by Seller in
substantially the form attached as Exhibit 2.2.1(c) (the "Non-Competition
Agreement");
(d) The Service Agreement executed by Seller in substantially
the form attached as Exhibit 2.2.2(d) (the "Service Agreement");
(e) The Escrow Agreement executed by Seller;
(f) All third-party consents necessary to transfer to
Purchaser Seller's right, title and interest in and to the Business Contracts as
of the Closing Date to the extent obtained by Seller prior to the Closing Date;
(g) A certificate executed by Seller certifying as to the
matters set forth in Sections 6.1 and 6.2; and
(h) Such other documents, certificates, affidavits and
instruments as are required by this Agreement or reasonably requested by
Purchaser.
2.2.2 Deliveries by Purchaser. Purchaser shall deliver to Seller:
(a) duly issued stock certificates representing that number
of shares of Common Stock determined pursuant to Section 1.3 (subject to the
delivery of the Escrowed Shares into escrow pursuant to Section 1.3(a));
-4-
<PAGE>
(b) The Assignment and Assumption Agreement executed by
Purchaser;
(c) The Non-Competition Agreement executed by Purchaser;
(d) The Service Agreement executed by Purchaser;
(e) The Escrow Agreement executed by Purchaser;
(f) A certificate executed by Purchaser certifying as to the
matters set forth in Sections 7.1 and 7.2; and
(g) Such other documents, certificates, affidavits and
instruments as are required by this Agreement or reasonably requested by Seller.
2.3 Third-Party Consents. To the extent Seller's rights under any of
the Business Contracts to be assigned to Purchaser hereunder may not be assigned
without the consent of another Person which has not been obtained on or before
the Closing, this Agreement shall not constitute an agreement to assign the same
if an attempted assignment would constitute a breach thereof or be unlawful, and
Seller, at its expense (which shall be limited to reasonable expenses incidental
to obtaining third-party consents), shall use its Best Efforts after the Closing
to obtain any such required consent(s) as promptly as possible. If any such
consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Purchaser's rights under the Purchased Assets in
question so that Purchaser would not in effect acquire the benefit of such
rights in all material respects, Seller, to the maximum extent permitted by Law,
shall act after the Closing as Purchaser's agent in order to obtain for it the
benefits thereunder and shall cooperate, to the maximum extent permitted by Law,
with Purchaser in any subcontracting or other reasonable arrangement designed to
provide such benefits to Purchaser.
2.4 Allocation of Purchase Price. The parties agree to allocate the
Purchase Price (and all other capitalizable costs) among the Purchased Assets
for all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule attached as Exhibit 2.4.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
3.1 Corporate Existence. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2 Corporate Power; Authorization; Enforceable Obligations. Seller has
the corporate power, authority and legal right to execute, deliver and perform
-5-
<PAGE>
this Agreement. The execution, delivery and performance of this Agreement by
Seller has been duly authorized by all necessary corporate and shareholder
action. This Agreement has been, and the other agreements, documents,
instruments, exhibits, schedules or certificates required to be delivered under
this Agreement shall be, duly executed and delivered on behalf of Seller by duly
authorized officers of Seller, and this Agreement constitutes, and the other
agreements, documents, instruments, exhibits, schedules or certificates required
to be delivered under this Agreement when executed and delivered shall
constitute, the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, except to the extent
that such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, or by general principles of equity.
3.3 Conflict with Existing Laws, Agreements, etc. The execution,
delivery and performance of this Agreement by Seller does not and shall not
result in the creation of any Encumbrance upon or any option or right to
purchase any of the Purchased Assets and shall not materially violate, conflict
with or result in the breach of any material term, condition or provision of, or
require the consent of any other Person: (a) to the Knowledge of Seller, under
any existing Law; (b) under any judgment, order, writ, injunction, decree or
award of any arbitrator or Governmental Body; (c) under the articles of
incorporation or bylaws of Seller or any securities issued by Seller; or (d)
under any mortgage or indenture, agreement, contract, commitment, lease, plan,
authorization or permit issued by any Governmental Body, or other instrument or
document to which Seller is a party, by which Seller may have rights or by which
any of the Purchased Assets may be bound or affected.
3.4 Accounts Receivable. Exhibit 3.4 (a) contains a complete and
accurate list and the aging of the accounts receivable of the Business due under
the Business Contracts as of June 9, 2004, and (b) will contain a complete and
accurate list and aging of the accounts receivable of the Business due under the
Business Contracts as of the Closing Date. Such accounts receivable represent
valid obligations arising from sales actually made, services actually performed
and other business transactions in the Ordinary Course of Business and Seller
has not attempted to delay collection of such accounts receivable other than in
the Ordinary Course of Business.
3.5 No Material Adverse Effect. Since December 31, 2003, no event has
occurred or condition has arisen that has had a Material Adverse Effect.
3.6 Title to Certain Purchased Assets. At the Closing, Seller shall
convey good title to all of the Purchased Assets free and clear of all
Encumbrances.
3.7 Compliance with Laws. To the Knowledge of Seller, Seller is in
compliance with applicable Laws relating to the ownership of the Purchased
Assets and the conduct of the Business as presently conducted.
-6-
<PAGE>
3.8 Litigation. There is no suit, action, arbitration or other legal or
administrative proceeding to which Seller is a party or, to Seller's Knowledge,
threatened or under investigation or considered relating to the Purchased Assets
or which questions or challenges the validity of this Agreement or the
transactions contemplated hereby. Seller is not a party to any judgment, order,
writ, injunction, decree or award of any court, arbitrator or Governmental Body
which relates to the Purchased Assets or the transactions contemplated by this
Agreement.
3.9 Business Contracts. Exhibit 1.1.1 (a) sets forth a true, complete
and correct list of all Business Contracts as of the date of this Agreement,
which list reflects all of the customers of the Business as of the date hereof,
and (b) will set forth a true, complete and correct list of all Business
Contracts as of the Closing Date and will reflect all of the customers of the
Business as of the Closing Date. The Business Contracts are valid and
enforceable in accordance with their terms and are assignable by Seller to
Purchaser, except as such enforceability may be limited by laws relating to
creditors' rights and general equitable principles. Seller is not and, to the
Knowledge of Seller, no other party to the Business Contracts is, in material
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein; and to the Knowledge of
Seller, no event has occurred which with or without the giving of notice or
lapse of time, or both, would constitute a default thereunder. There are no
outstanding and, to the Knowledge of Seller, no threatened disputes or
disagreements with respect to any Business Contract. To the Knowledge of Seller,
there are no plans by any other party to a Business Contract to terminate such
Business Contract. Seller has made available to Purchaser true and complete
copies of the written Business Contracts as currently in effect as well as true
and complete copies of the accounts receivable invoices since January 1, 2002,
with respect to such Business Contracts. Purchaser acknowledges that Seller
makes no representation or warranty as to the number of customers of the
Business that will continue with the Business after the Closing.
3.10 Intellectual Property. Seller in the operation of the Business
does not utilize any registered patent, registered trademark, registered service
mark, registered copyright or software. To the Knowledge of Seller, Seller in
the operation of the Business does not infringe upon or unlawfully or wrongfully
use any registered patent, registered trademark, registered service mark,
registered copyright or trade secret owned or claimed by another.
3.11 Financial Condition of Seller. Seller is able to pay and perform
its obligations relating to the Business prior to the Closing as they mature.
3.12 No Misrepresentation or Omission. No representation or warrant by
Seller in this Agreement, or in any exhibit, schedule, document, certificate,
instrument or other agreement delivered or to be delivered by it pursuant
hereto, contains or will contain any untrue statement of a material fact or
omits or will omit to state a fact necessary in order to make the statements
contained herein or therein not misleading.
-7-
<PAGE>
3.13 Brokers. Seller has not paid or become obligated to pay any fee or
commission to any broker, finder, investment banker or other intermediary in
connection with the transactions contemplated by this Agreement.
3.14 Investment Intent. Seller is acquiring the Common Stock for
investment for its own account and not with a view to the distribution of any
part thereof. Seller acknowledges that the Common Stock to be delivered to
Seller pursuant to Section 1.3 has not been registered under U.S. federal or any
applicable state securities Laws or the Laws of any other jurisdiction and
cannot be resold without registration under such Laws or an exemption therefrom.
Seller further acknowledges that it has knowledge and experience in financial
and business matters, that it is capable of evaluating the merits and risks of
an investment in the Common Stock, and that it can bear the economic risk of an
investment in the Common Stock. Seller represents that it is aware that
Hollywood Media is a reporting company under the Exchange Act and that it has
had the opportunity to review reports and other filings with the SEC made by
Hollywood Media and to ask questions of, and receive answers from,
representatives of Hollywood Media and Purchaser regarding Seller's acquisition
of the Common Stock.
3.15 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF THE BUSINESS, THE PURCHASED ASSETS, THE ASSUMED
LIABILITIES OR ANY OTHER ASPECT OF SELLER'S ASSETS, LIABILITIES OR OPERATIONS,
AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED. PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE BILL OF SALE OR THE ASSIGNMENT AND
ASSUMPTION AGREEMENT TO BE DELIVERED BY SELLER, PURCHASER IS PURCHASING THE
PURCHASED ASSETS ON AN "AS-IS, WHERE-IS" BASIS. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING ANY
ASSETS OTHER THAN THE PURCHASED ASSETS, AND NONE SHALL BE IMPLIED AT LAW OR IN
EQUITY.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PURCHASER AND HOLLYWOOD MEDIA
4.1 Representations of Purchaser. Purchaser represents and warrants to
Seller as follows:
4.1.1 Corporate Existence. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
-8-
<PAGE>
4.1.2 Corporate Power; Authorization; Enforceable Obligations.
Purchaser has the corporate power, authority and legal right to execute, deliver
and perform this Agreement. The execution, delivery and performance of this
Agreement by Purchaser has been duly authorized by all necessary corporate
action. This Agreement has been, and the other agreements, documents,
instruments, exhibits, schedules or certificates required to be delivered by
Purchaser under this Agreement shall be, duly executed and delivered on behalf
of Purchaser by duly authorized officers of Purchaser, and this Agreement
constitutes, and the other agreements, documents, instruments, exhibits,
schedules or certificates required to be delivered under this Agreement when
executed and delivered shall constitute, the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
respective terms, except to the extent that such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, or by general principles of equity.
4.1.3 Conflict with Existing Laws, Agreements, etc. The execution,
delivery and performance of this Agreement by Purchaser does not and shall not
materially violate, conflict with or result in the breach of any material term,
condition or provision of, or require the consent of any other Person: (a) to
its Knowledge, under any existing Law; (b) under any judgment, order, writ,
injunction, decree or award of any arbitrator or Governmental Body; (c) the
articles of incorporation or bylaws of Purchaser or any securities issued by
Purchaser; or (d) under any mortgage, indenture, agreement, contract,
commitment, lease, plan or authorization or permit issued by any Governmental
Body or other instrument or document to which Purchaser is a party or by which
Purchaser may have rights.
4.1.4 Brokers. Purchaser has not paid or become obligated to pay
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement.
4.2 Representations of Hollywood Media. Hollywood Media represents to
Seller as follows:
4.2.1 Corporate Existence. Hollywood Media is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
4.2.2 Corporate Power; Authorization; Enforceable Obligations.
Hollywood Media has the corporate power, authority and legal right to execute,
deliver and perform this Agreement to the extent of its obligations hereunder.
The execution and delivery of this Agreement by Hollywood Media and performance
of its obligations hereunder have been duly authorized by all necessary
corporate action. This Agreement has been, and the other certificates required
to be delivered under this Agreement shall be, duly executed and delivered on
behalf of Hollywood Media by duly authorized officers of Hollywood Media, and
-9-
<PAGE>
this Agreement constitutes, and the other certificates required to be delivered
by Hollywood Media under this Agreement when executed and delivered shall
constitute, the legal, valid and binding obligations of Hollywood Media,
enforceable against Hollywood Media in accordance with their respective terms,
except to the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, or by general principles of equity.
4.2.3 Issuance of the Common Stock. Subject to receipt of the
consideration therefor, the Common Stock issued to Seller at the Closing shall
be duly and validly issued, fully paid and non-assessable and issued free of all
preemptive rights and Encumbrances.
ARTICLE V - COVENANTS PENDING CLOSING
5.1 Operation of the Business. Seller covenants and agrees that,
pending the Closing, and except as otherwise agreed to in writing by Purchaser
and except in connection with the matters contemplated by this Agreement, the
Business shall be conducted in the Ordinary Course of Business. In particular,
Seller agrees that it shall not modify the pricing for services provided to
customers in the Business in any manner without the prior written consent of
Purchaser, which consent will not be unreasonably withheld or delayed.
5.2 Notice of Developments. Seller shall promptly notify Purchaser of
any development that, to Seller's Knowledge, causes a breach of its
representations and warranties contained in Article III. Unless Purchaser has
the right to terminate this Agreement pursuant to Section 10.1 by reason of the
development and exercises that right within the period of ten Business Days
referred to in Section 10.1.2(b), the written notice pursuant to this Section
5.2 shall be deemed to have qualified the representations and warranties
contained in Article III, and to have cured any misrepresentation or breach of
warranty that otherwise might have existed hereunder by reason of the
development.
5.3 Satisfaction of Conditions. Seller and Purchaser shall cooperate
with one another and use their Best Efforts to cause all of the conditions to
the obligations of each other under this Agreement to be satisfied on or prior
to the Closing Date.
5.4 Access. Upon forty-eight (48) hours prior written notice from
Purchaser to Seller, Seller shall give to Purchaser and its Representatives
access to and the right to inspect, during normal business hours, all of the
Purchased Assets, provided that such inspection shall not unreasonably interfere
with Seller's operation of the Business. Seller shall take all reasonable steps
necessary to cooperate with Purchaser in conducting this inspection. In no event
shall Purchaser communicate with any employee, customer or supplier of the
Business without the prior written consent of Seller.
-10-
<PAGE>
5.5 Public Announcements. Any public announcements or similar publicity
with respect to this Agreement or the transactions contemplated herein shall
only be made at such time and in such manner as the parties hereto shall
reasonably agree in writing.
5.6 Third-Party Consents. Seller, at its expense (which shall be
limited to reasonable expenses incidental to obtaining third-party consents),
shall use Best Efforts to acquire all third-party consents necessary to transfer
to Purchaser all of Seller's right, title and interest in the contracts and
agreements to be assumed by Purchaser as of the Closing Date.
ARTICLE VI - CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions contemplated
hereby is subject to the satisfaction prior to or at the Closing of each of the
following conditions, any of which may be waived by Purchaser, in whole or in
part:
6.1 Representations and Warranties. The representations and warranties
of Seller contained in Article III of this Agreement shall be true and correct
in all material respects at and as of the Closing Date as if made on the Closing
Date.
6.2 Performance. Seller shall have in all material respects performed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
6.3 Officer's Certificate. Seller shall have delivered to Purchaser a
certificate signed by an officer of Seller, dated the Closing Date, as to the
matters set forth in Sections 6.1 and 6.2.
6.4 No Proceedings. No action, suit or proceeding shall be pending or
threatened before any Governmental Body that would prevent, delay, make illegal
or otherwise interfere with any of the transactions contemplated by this
Agreement.
6.5 Employment of Jack Gordon. Jack Gordon shall have entered into an
employment agreement in form and substance satisfactory to Purchaser in its sole
discretion. . 6.6 Closing Deliveries. Seller shall have completed its closing
deliveries as set forth in Section 2.2.1 hereof.
ARTICLE VII - CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated
hereby is subject to the satisfaction prior to or at the Closing of each of the
following conditions, any of which may be waived by Seller, in whole or in part:
-11-
<PAGE>
7.1 Representations and Warranties. The representations and warranties
of Purchaser contained in Article IV of this Agreement shall be true and correct
in all material respects at and as of the Closing Date as if made on the Closing
Date.
7.2 Performance. Purchaser shall have in all material respects
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by Purchaser prior to or on the
Closing Date.
7.3 Officer's Certificate. Purchaser shall have delivered to Seller a
certificate signed by an officer of Purchaser, dated the Closing Date, as to the
matters set forth in Sections 7.1 and 7.2.
7.4 Transactions Involving Jack Gordon. Seller shall have reached an
agreement with Jacob J. Gordon with respect to the termination of Gordon's
relationship with Seller to the satisfaction of Seller.
7.5 No Proceedings. No action, suit or proceeding shall be pending or
threatened before any Governmental Body that would prevent, delay, make illegal
or otherwise interfere with any of the transactions contemplated by this
Agreement.
7.6 Closing Deliveries. Purchaser shall have completed its closing
deliveries as set forth in Section 2.2.2 hereof.
ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification Given By Seller. Seller and its successors and
permitted assigns, subject to the limitations set forth in this Article VIII,
shall indemnify Purchaser and its successors and permitted assigns from and
against any and all losses, claims, liabilities, actions, suits, proceedings,
fines, expenses, penalties and damages including reasonable legal fees and
costs, whether or not involving a third-party claim (collectively, "Losses")
arising from or in connection with:
8.1.1 Any breach of any representation or warranty made by Seller
in Article III of this Agreement;
8.1.2 Any breach of any covenant or obligation of Seller in this
Agreement; and
8.1.3 The performance or non-performance by Seller under any of
the Business Contracts or the provision by Seller of any service or sale of any
product relating to the Business, in either case at any time prior to the
Closing Date.
8.2 Indemnification Given by Purchaser. Purchaser and its successors
and permitted assigns, subject to the limitations set forth in this Article
-12-
<PAGE>
VIII, shall indemnify Seller and its successors and permitted assigns from and
against any and all Losses arising from or in connection with:
8.2.1 Any breach of any representation or warranty made by
Purchaser or Hollywood Media in Article IV this Agreement;
8.2.2 Any breach of any covenant or obligation of Purchaser or
Hollywood Media in this Agreement;
8.2.3 The performance or non-performance by Purchaser under any of
the Business Contracts or the provision by Purchaser of any service or sale of
any product relating to the Business, in either case at any time on or after the
Closing Date;
8.2.4 Any assessment, claim or other liability (including interest
and penalties) for Taxes assessed against the Purchased Assets or relating to
the operation of the Business in any jurisdiction, in either case for any period
commencing on or after the Closing Date; and
8.2.5 Any failure of Purchaser to pay or perform any of the Assumed
Liabilities from and after the Closing Date.
8.3 Satisfaction of Indemnification Claims Against Seller. All claims
for indemnification against Seller and its successors and permitted assigns
shall be satisfied solely by the return of shares of the Common Stock delivered
to Seller pursuant to Section 1.3 and not by cash payment; provided, however,
that to the extent that any such claim cannot be satisfied by release of
Escrowed Shares as provided in the Escrow Agreement and then all or any portion
of such Common Stock still held by Seller and not subject to any lien, pledge or
encumbrance in favor of any third party, then Purchaser shall be entitled to
payment in cash from Seller in respect of such claim. The value of the Common
Stock to be returned in connection with the satisfaction of any such claim for
indemnification shall be determined based on the Per Share Price as of the date
on which the indemnification claim is satisfied. Notwithstanding any cash
payment required pursuant to this Section, the maximum aggregate liability of
Seller and its successors and permitted assigns for indemnification pursuant to
this Article VIII shall be limited to the aggregate value of the Common Stock as
of the date on which the indemnification claim is satisfied. Seller shall have
no liability (for indemnification or otherwise) with respect to Section 8.1
until the total monetary value of all Losses with respect to such matters
exceeds $30,000 and thereafter Seller shall be liable for the full amount of
such Losses back to the first dollar, subject to the limit on the maximum
aggregate amount of Seller's liability as provided in this Section 8.3.
8.4 Satisfaction of Indemnification Claims Against Purchaser. All
claims for indemnification against Purchaser and its successors and permitted
assigns shall be satisfied by cash payment or by the delivery of additional
-13-
<PAGE>
shares of Common Stock, determined as provided in Section 8.3 above, at
Purchaser's sole discretion. The maximum aggregate liability of Purchaser and
its successors and permitted assigns for indemnification pursuant to this
Article VIII shall be limited to the aggregate value of the Common Stock as of
the date on which the indemnification claim is satisfied, determined based on
the Per Share Price as of the date on which the indemnification claim is
satisfied. Purchaser shall have no liability (for indemnification or otherwise)
with respect to Section 8.2 until the total monetary value of all Losses with
respect to such matters exceeds $30,000 and thereafter Purchaser shall be liable
for the full amount of such Losses back to the first dollar, subject to the
limit on the maximum aggregate amount of Purchaser's liability as provided in
this Section 8.4.
8.5 Survival. All representations, warranties and covenants made in
this Agreement shall survive, and shall not be extinguished by, the Closing;
provided, however, no party shall be entitled to indemnification or payment from
the other party pursuant to this Article VIII, unless the Indemnified Party (as
defined below) shall have provided the Indemnifying Party (as defined below)
with notice of its claim to indemnification pursuant to Section 8.7 or 8.8 (as
applicable) within one (1) year after the Closing Date.
8.6 Limitations on Losses. Anything in this Agreement or otherwise to
the contrary notwithstanding:
8.6.1 No party shall be entitled to indemnification for the amount
of any Losses in excess of the amount of such Losses which would have been
incurred, but for the failure of such party to take reasonable action to
mitigate such Losses upon becoming aware of any claim.
8.6.2 No party shall be entitled to indemnification for the amount
of any Losses in excess of the amount of such Losses which would have been
incurred, but for: (a) the unlawful conduct of such party; or (b) the breach or
default by such party of any representation, warranty, covenant, obligation or
agreement under this Agreement.
8.6.3 In determining the amount of any claim for which an
Indemnified Party is entitled to indemnification pursuant to this Article VIII,
the parties shall make appropriate adjustments for tax benefits.
8.6.4 No party shall be entitled to indemnification under this
Agreement for any incidental, indirect, special, collateral, consequential,
exemplary or punitive damages.
8.6.5 All indemnification payments under this Article VIII shall be
deemed adjustments to the Purchase Price.
-14-
<PAGE>
8.7 Procedure for Indemnification - Defense of Third-Party Claims. If
any third party shall notify a party hereto (the "Indemnified Party") with
respect to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the other party hereto (the "Indemnifying Party") under
this Article VIII, then the Indemnified Party shall promptly (an in any event
within five Business Days) after receiving notice of the Third Party Claim
notify the Indemnifying Party thereof in writing describing in reasonable detail
the facts constituting the basis for the Third Party Claim; provided, however,
that the failure of the Indemnified Party to so notify the Indemnifying Party of
such Third Party Claim shall not affect the Indemnified Party's right to
indemnification hereunder, except to the extent that (a) the resolution of such
claim is materially prejudiced by the Indemnified Party's failure to give such
notice in such a timely fashion or (b) the Indemnifying Party is required to pay
a materially greater amount or accrue material additional expenses with respect
to such claim. The Indemnifying Party shall have the right at any time to
participate in the defense of any Third Party Claim and, to the extent it
wishes, to assume and thereafter conduct the defense of any Third Party Claim
using legal counsel reasonably satisfactory to the Indemnified Party; provided,
however, that the Indemnifying Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be
unreasonably withheld). Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in this Section 8.7, the
Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate. In no event shall the Indemnified Party consent
to the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying Party
(not to be unreasonably withheld). If the Indemnifying Party assumes the defense
of the Third Party Claim the Indemnified Party agrees, if requested by the
Indemnifying Party, to cooperate with the Indemnifying Party and its counsel in
contesting the Third Party Claim, or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim against the Person asserting
the Third Party Claim or any cross-complaint against any Person. After
assumption of the defense by the Indemnifying Party, the Indemnified Party shall
have the right to employ its own counsel in such matter, but the fees and
expenses of the Indemnified Party's counsel shall be at the Indemnified Party's
expense. Purchaser and Seller consent to the non-exclusive jurisdiction of any
court in which a proceeding is brought against the other party by a third party
for purposes of any claim that Purchaser or Seller may have under this Agreement
with respect to such proceeding or the matters alleged therein. Purchaser and
Seller agree that process may be served on them with respect to such a claim
anywhere in the world.
8.8 Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a Third Party Claim shall be
asserted by the Indemnified Party by notice to the Indemnifying Party in
writing, promptly and in any case within twenty Business Days, after discovery
-15-
<PAGE>
of the facts supporting the claim; provided, however, that the failure of the
Indemnified Party to promptly notify the other or to give notice of a claim
within such twenty-Business-Day period shall not affect the Indemnified Party's
right to indemnification hereunder, except to the extent that (a) the resolution
of such claim is materially prejudiced by the Indemnified Party's failure to
give such notice in such a timely fashion or (b) the Indemnifying Party is
required to pay a materially greater amount or accrue material additional
expenses with respect to such claim. Such notice shall describe the facts
constituting the basis for the claim of indemnification in reasonable detail.
8.9 Escrow; Right of Setoff. Upon notice to Seller specifying in
reasonable detail the basis for such setoff, Purchaser may give notice of a
claim in such amount under the Escrow Agreement. Neither giving nor failing to
give a notice of a claim under the Escrow Agreement will constitute an election
of remedies or limit Purchaser in any manner in the enforcement of any other
remedies that may be available to Purchaser.
8.10 Exclusive Remedy. PURCHASER AND SELLER ACKNOWLEDGE AND AGREE THAT
THE FOREGOING INDEMNIFICATION PROVISIONS IN THIS ARTICLE VIII SHALL BE THE SOLE
AND EXCLUSIVE REMEDY OF PURCHASER AND SELLER FOR ANY BREACH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR OBLIGATION CONTAINED IN THIS AGREEMENT;
PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS SECTION SHALL BE INTERPRETED
TO IN ANY WAY LIMIT THE SEPARATE REMEDIES SET FORTH IN THE SERVICE AGREEMENT OR
THE NON-COMPETITION AGREEMENT. TO THE FULLEST EXTENT PERMITTED BY LAW, ALL OTHER
RIGHTS AND REMEDIES OF THE PARTIES ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT ARE HEREBY WAIVED AND RELEASED.
ARTICLE IX - POST-CLOSING MATTERS
9.1 Discharge of Business Obligations. From and after the Closing Date,
Seller shall pay and discharge, in accordance with past practice but not less
than on a timely basis, all obligations and liabilities it has incurred prior to
the Closing Date in respect of the Business to the extent not assumed by
Purchaser hereunder as part of the Assumed Liabilities.
9.2 Value of the Common Stock. If on the one-year anniversary of the
Closing Date (the "Trigger Date"), the aggregate value of the Common Stock
delivered to Seller pursuant to Section 1.3 shall be less than $300,000
(determined using the Per Share Price as of the Trigger Date) then Purchaser
shall, within five Business Days of the Trigger Date, pay to Seller the
difference between the aggregate value of the Common Stock as of the Trigger
Date and $300,000 by cashier's check or wire transfer in immediately available
funds to the account specified by Seller. Notwithstanding the foregoing, if at
any time prior to the Trigger Date the Common Stock is of a class which is not
-16-
<PAGE>
then listed or admitted to trading on any national securities exchange or traded
in the over-the-counter market as reported by NASDAQ Stock Market, Inc., or a
successor of NASDAQ Stock Market, Inc., then Purchaser shall immediately pay the
sum of $300,000 to Seller by cashier's check or wire transfer in immediately
available funds to the account specified by Seller and upon receipt thereof
Seller shall return the certificates representing the Common Stock.
9.3 Compliance with Rule 144. With a view to making available to Seller
the benefits of certain rules and regulations of the SEC which may permit the
sale of Common Stock to the public without registration, Hollywood Media agrees
to use its Best Efforts from and after the date of this Agreement to:
9.3.1 Make and keep public information available, as those terms
are understood and defined in Rule 144 promulgated under the Securities Act, as
such rule may be amended from time to time ("Rule 144");
9.3.2 File with the SEC, in a timely manner, all reports and other
documents required of Purchaser under the Exchange Act;
9.3.3 So long as Seller owns any of the Common Stock delivered to
Seller pursuant to this Agreement, furnish to Seller forthwith upon request a
written statement by Purchaser as to its compliance with the reporting
requirements of the Exchange Act; and 9.3.4 Cooperate with Seller's reasonable
requests in its attempts to dispose of the Common Stock upon satisfaction of the
applicable holding periods under Rule 144.
9.4 Payments Received. Seller and Purchaser each agree that after the
Closing they shall hold and shall promptly transfer and deliver to the other,
from time to time as and when received by them, any cash, checks with
appropriate endorsements (using their Best Efforts not to convert such checks
into cash), or other property that they may receive which properly belongs to
the other party.
ARTICLE X - TERMINATION
10.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time prior to the Closing only as follows:
10.1.1 by mutual written consent of Seller and Purchaser;
10.1.2 by Purchaser: (a) if Seller has breached any material
representation, warranty or covenant contained in this Agreement in any material
respect and has not cured the same within 30 days after Purchaser notifies
Seller of the breach; (b) if Seller has, within the previous ten Business Days,
-17-
<PAGE>
given Purchaser any notice pursuant to Section 5.2 and the development that is
the subject of such notice has had a Material Adverse Effect; or (c) if any of
the conditions precedent set forth in Article VI hereof have become incapable of
being met through no fault of Purchaser;
10.1.3 by Seller: (a) if Purchaser has breached any material
representation, warranty or covenant contained in this Agreement in any material
respect and has not cured the same within 30 days after Seller notifies
Purchaser of the breach; or (b) if any of the conditions precedent set forth in
Article VII hereof have become incapable of being met through no fault of
Seller; or
10.1.4 by any party not in material breach of this Agreement if the
Closing has not occurred by June 30, 2004.
In the event of the termination of this Agreement pursuant to the provisions of
this Section 10.1, this Agreement shall become void and shall be of no further
force and effect, without any liability on the part of any of the parties in
respect of this Agreement. Provided, however, if such termination was the result
of the representations and warranties of a party being materially incorrect when
made or the material breach by such party of a covenant hereunder, the party
whose representations and warranties were incorrect or who breached such
covenant shall be liable to the other party for all out-of-pocket costs and
expenses of the other party in connection with the preparation, negotiation,
execution and performance of this Agreement (including reasonable legal fees),
in addition to all rights and remedies to which such non-defaulting party may
otherwise be entitled.
ARTICLE XI - CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms (whether plural or
singular) have the meanings specified in this Article XII:
"Affiliate" - with respect to a Person, any other Person controlled by,
under common control with or controlling such Person.
"Best Efforts" - the efforts that a reasonable Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible without incurring unreasonable
expenses.
"Business Day" - any day other than a Saturday, Sunday or other day on
which commercial banks in the States of Florida or Michigan are authorized or
required by Law to close.
"Encumbrance" - any lien, option, pledge, security interest, right of
first refusal or other ownership interest of any kind.
-18-
<PAGE>
"Exchange Act" - the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"GAAP" - generally accepted accounting principles for financial
reporting in the United States, as in effect as of the date of this Agreement.
"Governmental Body" - any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is either (a) actually aware
of such fact or other matter on the date of this Agreement or becomes actually
aware of such fact or matter after the date of this Agreement and prior to the
Closing, or (b) could be reasonably expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a commercially
reasonable investigation regarding the existence of such fact or other matter.
With respect to Seller, Seller will be deemed to have "Knowledge" of a
particular fact or other matter only if any one or more of Mark J. Bennett,
Andrew Frazier or Brian McCarter has Knowledge of such fact or other matter.
"Laws" - any law, statute, treaty, ordinance or governmental or
regulatory rule or regulation, whether federal, state, local, municipal, foreign
or multinational.
"Material Adverse Effect" - shall mean an individual or cumulative
material adverse change in, or material adverse effect upon, the Purchased
Assets or the financial condition of the Business as presently conducted which
would materially impair the value of the Purchased Assets; provided, however,
that any change, effect or impact on the condition of the Business or the
Purchased Assets as a result of (i) any change in the general economy of any
jurisdiction or in any of the industries that the Business serves, (ii) any
change in any Law or adoption of any new Law (including any change in any
interpretation thereof), or (iii) the pendency of the transactions contemplated
herein or the announcement thereof, shall in no event constitute a Material
Adverse Effect.
-19-
<PAGE>
"Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Per Share Price" - the average of the last transaction prices for the
15 trading days immediately prior to the date of determination for a share of
Common Stock on a national securities exchange or the NASDAQ National Market
System on which the Common Stock is then principally trading, or, in case a sale
does not take place on a trading day during such 15-trading-day period, the
average of the last reported representative bid and asked prices quoted by such
national securities exchange or the NASDAQ National Market System on which the
Common Stock is then principally trading.
"Representatives" - a party's directors, officers, employees,
shareholders, advisors and agents.
"SEC" - the Securities and Exchange Commission.
"Securities Act" - the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Taxes" - any taxes (including income taxes, capital gains taxes,
value-added taxes, sales taxes, property taxes or transfer taxes), levy,
assessment, tariff, duty, deficiency or other fee and any related charge or
amount (including any fine, penalty or interest) imposed, assessed or collected
by or under the authority of any Governmental Body.
-20-
<PAGE>
ARTICLE XII - GENERAL PROVISIONS
12.1 Construction. The headings of Articles and Sections of this
Agreement are inserted for convenience only and shall not affect the
construction or interpretation of this Agreement. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Agreement.
Whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless Business Days are specified. Whenever in this Agreement
"or" is used, it is used in the inclusive sense of "and/or." As used in this
Agreement, the word "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term. This Agreement and the Exhibits and other documents delivered pursuant to
this Agreement are being entered into by and among competent and sophisticated
parties who are experienced in business matters and represented by counsel and
other advisors, and have been reviewed by the parties and their counsel and
other advisors. Therefore, any ambiguous language in this Agreement or any
agreements, documents, instruments, schedules, exhibits and certificates
delivered pursuant hereto will not be construed against any particular party as
the drafter of the language. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
12.2 Expenses. Except to the extent otherwise provided in this
Agreement, Seller and Purchaser shall each pay all costs and expenses incurred
by it in connection with this Agreement and the transactions contemplated hereby
including fees and expenses of its own financial consultants, accountants and
counsel.
12.3 Notices. All notices, consents, waivers and other communication
under this Agreement must be in writing and shall be deemed given to a party
when: (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid), (b) sent by confirmed
facsimile if sent during normal business hours of the recipient, if not, then on
the next Business Day, or (c) received or rejected by the addressee if sent
certified mail, return receipt requested, in each case to the following address
or facsimile number and marked to the attention of the individual (by name or
title) designated below (or to such other address, facsimile number or
individual as a party may designate by notice to the other parties):
If to Seller: Merchant Internet Group, Inc.
301 West Fourth Street, Suite 140
Royal Oak, MI 48067
Attention: Mark J. Bennett, President
Facsimile: 248-581-0700
-21-
<PAGE>
with a copy to: Miller, Canfield, Paddock and Stone, P.L.C.
101 N. Main Street, 7th Floor
Ann Arbor, MI 48104
Attention: David N. Parsigian
Facsimile: 734-747-7147
If to Purchaser: Showtimes.com, Inc.
63 Copps Hill Road
Ridgefield, CT 06877
Attention: Brett West, President
Facsimile: 203-894-8838
with copies to: Showtimes.com, Inc.
2255 Glades Road, Suite 221A
Boca Raton, FL 33431
Attention: Scott A. Gomez,
V.P. of Finance and Accounting
Facsimile: 561-998-2974
Broad and Cassel
7777 Glades Road, Suite 300
Boca Raton, FL 33434
Attention: Nina S. Gordon, P.A.
Facsimile: 561-218-8978
12.4 Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors,
permitted assigns, heirs and legal representatives. Neither Seller nor Purchaser
shall assign or attempt to assign this Agreement without the prior written
consent of the other party. Neither this Agreement nor any provisions hereof is
intended to, or shall, create any rights in or confer any benefits to any Person
other than the parties hereto.
12.5 Entire Agreement. Except for the Confidentiality Agreement between
Seller and Purchaser dated April 9, 2004, this Agreement supersedes all prior
agreements and communication between the parties with respect to its subject
matter (including the term sheet from Hollywood Media to Seller dated April 22,
2004) and constitutes (along with the Exhibits and other documents delivered
pursuant to this Agreement) a complete and exclusive statement of the terms of
the agreement between the parties with respect to its subject matter. This
Agreement may not be amended, supplemented or otherwise modified except by a
written agreement executed by the party to be charged with the amendment
-22-
<PAGE>
12.6 Further Assurances. Subject to the terms and conditions of this
Agreement and at no material cost to Seller, at any time and from time to time
after the Closing, at Purchaser's reasonable request, Seller shall execute and
deliver to Purchaser such other instruments of sale, transfer, conveyance,
assignment and confirmation, as Purchaser may reasonably deem necessary or
desirable in order to more effectively transfer, convey and assign to Purchaser
the Purchased Assets. Subject to the terms and conditions of this Agreement and
at no material cost to Purchaser, at any time and from time to time after the
Closing, at Seller's reasonable request, Purchaser shall execute and deliver to
Seller such other instruments of assumption as Seller may reasonably deem
necessary or desirable in order to more effectively give effect to Purchaser's
assumption of the Assumed Liabilities.
12.7 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement shall operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege shall preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable Law: (a) no waiver that may be given by a
party shall be applicable except in the specific instance for which it is given;
and (b) no notice to or demand on one party shall be deemed to be a waiver of
any obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
12.8 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree shall remain in
full force and effect to the extent not held invalid or unenforceable.
12.9 Governing Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of New York without regard to
conflict of laws principles that would require the application of any other law.
12.10 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which shall be deemed to be an original
copy of this Agreement and all of which, when taken together, shall be deemed to
constitute one and the same agreement.
[Signature page follows.]
-23-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
PURCHASER: SELLER:
SHOWTIMES.COM, INC. MERCHANT INTERNET GROUP, INC.
By: /s/ Brett West By: /s/ Mark J. Bennett
------------------------------------ -------------------------
Brett West Mark J. Bennett
Its President Its President
AS TO SECTIONS 1.3, 4.2 AND 9.3 ONLY:
HOLLYWOOD MEDIA:
HOLLYWOOD MEDIA CORP.
By: /s/ Mitchell Rubenstein
---------------------------------------
Name: Mitchell Rubenstein
Title: Chief Executive Officer
-24-