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EXHIBIT B
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
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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/ Xxxxxxxx Xxxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxxx
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Title: Chief Executive Officer
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