Exhibit 2.2
May 14, 1999
To: Xxxxxxxx Xxxxxxxxxx
Big Entertainment, Inc.
0000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Re: Waiver and Consent; and Other Modifications
Dear Xxxxx:
We have discussed making certain changes and/or clarifications to the Agreement
and Plan of Merger (the "Merger Agreement") dated as of January 10, 1999, by and
among The Times Mirror Company ("Times Mirror"), a Delaware corporation,
xxxxxxxxx.xxx, Inc., formerly Hollywood Online Inc. ("HOL"), a California
corporation, Big Entertainment, Inc. ("Big"), a Florida corporation and Big
Acquisition Corp., a Delaware corporation and to the related Shareholder
Agreement (the "Shareholder Agreement") dated as of January 10, 1999 by and
between Big and Times Mirror. In this regard, we acknowledge and agree to the
following:
1. Section 1.8(a)(i)(4) of the Merger Agreement is hereby amended by
adding the following to the end of such section:
"Alternatively, if the aggregate Parent Common Stock Price of
the excess shares of the Common Stock Merger Consideration
calculated as provided pursuant to this Section 1.8(a)(i)(4)
would be more than $1,000,000.00 but equal to or less than
$4,000,000.00, then, at the option of Parent, the Shares
shall, by virtue of the Merger and without any action on the
part of Sub, HOL or the holder thereof, be converted into and
shall become the sum of a number of fully paid and
nonassessable shares of Parent Common Stock equal to 19.9% of
the issued and outstanding common stock of Parent or the
voting power of Parent immediately prior to the Effective Time
plus an amount in cash equal to the product of (x) the number
of excess shares multiplied by (y) the Parent Common Stock
Price; provided, however, that Parent may exercise this option
only if the Closing occurs on or prior to June 30, 1999,
unless Times Mirror notifies Parent in writing on or prior to
such date that it wishes to extend such date for an additional
15-day period in connection with Times Mirror's satisfaction
of any obligations with respect to any of the performance
cycle bonuses as set forth in Section 10.3(b). In addition, in
lieu of such cash payment, Parent may issue to Times Mirror an
unsecured promissory note in the aggregate principal amount
thereof at the Closing. Such promissory note shall be
substantially in the form of Exhibit AA, attached to this
Amendment."
2. Pursuant to Sections 6.1(a) and (b) of the Merger Agreement, HOL was
obligated to, and Times Mirror was obligated to cause HOL to, deliver Audited
Financial Statements and Work Papers (each as defined in the Agreement) to Big
on or before January 31, 1999. HOL and Times Mirror seek to obtain a waiver of
HOL's failure to, and Times Mirror's failure to cause HOL to, deliver Audited
Financial Statements and Work Papers to Big on or before January 31, 1999 as
required by Sections 6.1(a) and (b) of the Merger Agreement. HOL shall, and
Times Mirror shall cause HOL to, deliver Audited Financial Statements and Work
Papers to Big on or before April 30, 1999, and Big acknowledges and consents
that the failure of HOL to, and the failure of Times Mirror to cause HOL to,
deliver Audited Financial Statements and Work Papers on or before January 31,
1999 shall not constitute a breach of or a default under the Merger Agreement by
Times Mirror or HOL.
3. Pursuant to Section 6.1(a) of the Merger Agreement, HOL was
obligated to cause HOL to deliver an officer's certificate by its chief
financial officer along with the Audited Financial Statements. Big and Times
Mirror agree that such officer certificate may be executed by either XXX's chief
executive officer or its chief financial officer.
4. Clause (ii) of Section 9.1(c) of the Merger Agreement shall be
deleted in its entirety and substituted with the following clause:
"(ii) the Merger has not been consummated by August 15, 1999,
provided, however, if the Merger has not been consummated by
such date by reason of a pending review by the SEC, then in
such event the August 15th date may be extended at Big's
option until October 15, 1999; and"
5. The reference in the first sentence of Section 10.3(b) of the Merger
Agreement to "Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx and
Xxxxxx X. Xxxxxxxx pursuant to the employment agreements set forth" shall be
amended to read, "those individuals having agreements as identified by numbers
2, 3, 4, 5, 6, 7, 10 and 11;" the reference in the second sentence of such
section to "If any of such person" in Section 10.3(b) of the Merger Agreement
shall be amended to read, "If any of the individuals having agreements
identified by numbers 2, 4, 6 and 7 on Schedule 3.12(a)"; and the phrase at the
end of the second sentence of such section "or like provision of each of the
employment agreements set forth on Schedule 3.12(a)" shall be amended to read,
"or like provision of each of the Employment Agreements". In addition, Schedule
3.12(a) is hereby amended to delete items 8 and 9 therefrom.
6. Each of the references to "the date of this Agreement" in Sections
3.1(i) and 6.1 of the Shareholder Agreement shall be amended to read "the
Closing Date of the Merger (as such terms are defined in the Merger Agreement)".
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7. Section 8.6 of the Merger Agreement is hereby amended by adding the
phrase "Subject to Section 5.13(c)," to the beginning of such section and by
changing the capital letter "E" in the word "each" at the beginning of such
section to a lower case "E."
8. Subsection 10.3(b) of the Merger Agreement is hereby amended by
adding the following language at the end of the penultimate sentence of such
subsection:
"; provided, however, before Times Mirror is obligated to
advance any such payment for the performance cycle bonuses,
Parent shall deliver to Times Mirror a notice of its intent to
pay such performance cycle bonuses, which notice shall set
forth in sufficient detail: (i) the Performance Cycle Amount
(as defined in Section 5.2(d)(i) of the Employment
Agreements), (ii) HOL's Gross Revenue, Adjusted Operating
Income and Adjusted Revenue (as each such term is defined in
Section 5.2(ii) of each of the Employment Agreements),
together with all appropriate supporting accounting
information, (iii) the Market Value (as determined in
accordance with Section 5.2(e) of each of the Employment
Agreements) of HOL along with all relevant supporting
information, and (iv) the amount of each individual
Performance Cycle Bonus (as defined in Section 5.2(a)(i) of
each of the Employment Agreements), together with all
supporting calculations; all of which information Times Mirror
shall be entitled to review and approve within 10 business
days of the date such notice is deemed to be effective. During
any such 10-day approval period, Times Mirror shall be
entitled to request and receive any additional supporting
documentation and accounting information as it may reasonably
require to verify such information and calculations. If at any
time during any such 10-day period Times Mirror disputes the
Performance Cycle Amount or any individual Performance Cycle
Bonus calculation, Times Mirror shall timely deliver to Parent
written notice of any such dispute, the specific reason or
reasons thereof, and neither Parent nor HOL shall distribute
any performance cycle bonus payments until all such disputes,
if any, are resolved in accordance with Section 10.3(c) below.
If during any such 10-day period Times Mirror does not deliver
to Parent a written notice of dispute, then the absence of any
such notice shall be deemed as Times Mirror's acceptance and
approval of the performance cycle bonuses for which notice was
given."
9. Section 10.3 of the Merger Agreement is hereby amended by adding the
following subsection (c) to the end of such section:
"(c) Settlement of Performance Cycle Bonus Disputes. All
disputes that may arise under this Section 10.3 with respect
to the calculation and payment of any performance cycle
bonuses shall be settled by mutual agreement of Times Mirror,
Parent and HOL signed by all such parties. If the parties
concerned cannot reach a mutual agreement within 20 days of
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Xxxxxx's receipt of a notice of dispute, then this matter
shall be resolved in accordance with Section 12.11 of the
Merger Agreement."
Except as provided in this letter, Big's consent and waiver hereunder
shall not be construed to be a waiver of any other rights of Big, nor a waiver
of any other breach or default of HOL or Times Mirror. Big hereby reserves all
rights not specifically waived in this letter.
Except as expressly modified by this letter, all other terms and
provisions of the Merger Agreement shall remain in full force and effect and
shall apply to this letter as if a part of the Merger Agreement.
Thank you for your cooperation.
Sincerely,
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
THE TIMES MIRROR COMPANY
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
XXXXXXXXX.XXX, INC.
Xxxxxxxxxxxx, agreed to and accepted
this 14th day of May, 1999.
BIG ENTERTAINMENT, INC.
/s/ Xxxxxxx Xxxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxxx
Title: Chief Executive Officer
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