SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MAY 18, 1999
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BIG ENTERTAINMENT, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
FLORIDA 0-22908 65-0385686
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
2255 GLADES ROAD, SUITE 237 WEST, BOCA RATON, FLORIDA 33431
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 998-8000
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#456040 v8.rtf
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF CINEMASOURCE ASSETS.
1. ACQUISITION OF SUBSTANTIALLY ALL OF THE ASSETS OF CINEMASOURCE, INC.
On May 18, 1999, Big Entertainment, Inc., a Florida corporation (the
"Company"), acquired substantially all of the assets (the "CinemaSource
Assets") of CinemaSource, Inc., a Connecticut corporation
("CinemaSource"), pursuant to the terms of the Asset Purchase Agreement
dated as of March 29, 1999 (the "Asset Purchase Agreement") by and among
the Company, CinemaSource, Brett West (the sole shareholder of
CinemaSource) and Pamela West. At the closing of the acquisition, the
Company directed CinemaSource to transfer the CinemaSource Assets, on
the Company's behalf, to its indirect wholly owned subsidiary,
Showtimes.com, Inc. CinemaSource was engaged in the business of
compiling, reproducing and distributing movie showtimes and related
movie information through electronic means and over the Internet. The
CinemaSource Assets constitute substantially all of the assets used by
CinemaSource in conducting such business and include tangible and
intangible property such as contracts, certain fixed assets, customer
lists and certain intellectual property. The Company presently intends
to integrate the CinemaSource Assets and the business of Hollywood.com,
Inc. acquired by merger on May 20, 1999 (which is described hereinbelow)
into its existing operations, thereby creating a comprehensive movie
Internet web site which (i) contains movie information, movie reviews,
trailers and celebrity interviews, (ii) sells movie-related merchandise
and (iii) delivers movie showtimes listings.
The purchase price for the CinemaSource Assets consisted of (i)
$6,500,000 in cash, plus (ii) 436,191 shares of common stock, $0.01 par
value, of the Company (the "Common Stock").
Funding for the cash portion of the purchase price came from the
proceeds of a private placement of approximately 570,000 shares of the
Common Stock at a price per share of $21.25 and warrants exercisable for
approximately 190,000 shares of the Common Stock at an exercise price
per share of $21.25. The total proceeds of the private placement was
approximately $12,000,000, before closing costs. The securities sold in
the private placement were sold without registration under the
Securities Act of 1933, as amended (the "1933 Act"), in reliance on an
exemption from registration under Section 4(2) of the 1933 Act and Rule
506 of Regulation D thereunder.
The purchase price for the CinemaSource Assets was determined by
arms-length negotiations between CinemaSource and the Company.
Prior to entering into the Asset Purchase Agreement, there were no
material relationships between the Company or any of its affiliates,
directors or officers, or any associates of such directors and officers
on one hand, and CinemaSource, on the other hand.
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2. ACQUISITION OF THE CAPITAL STOCK OF HOLLYWOOD.COM, INC.
On May 20, 1999, the Company acquired all of the capital stock of
Hollywood.com, Inc., a California corporation ("Hollywood.com"), from
The Times Mirror Company ("Times Mirror") pursuant to the merger (the
"Merger") of Hollywood.com into Big Acquisition Corp., a wholly owned
subsidiary of the Company prior to the Merger ("Merger Sub"). The Merger
occurred in accordance with the Agreement and Plan of Merger dated as of
January 10, 1999 (the "Merger Agreement") by and among the Company,
Times Mirror, Hollywood.com (formerly Hollywood Online, Inc.) and Merger
Sub. Hollywood.com owns and operates the HOLLYWOOD.COM web site,
offering viewers movie information, movie trailers, movie soundtracks,
photos and exclusive interactive games, current movie, laserdisc and
movie soundtrack information, local movie theaters' showtimes, daily
Hollywood news, celebrity interviews, listings of movies on TV, a
searchable database with over 130,000 movies and 850,000 cast and crew
credits, movie reviews, box office charts, interactive forums, a weekly
e-mail dispatch and coverage of premieres, film festivals and
movie-related events. The Company presently intends to integrate this
business and the CinemaSource Assets into its existing operations,
thereby creating a comprehensive movie Internet website which (i)
contains movie information, movie reviews, trailers and celebrity
interviews, (ii) sells movie-related merchandise and (iii) delivers
movie showtimes listings.
The aggregate consideration paid to Times Mirror by the Company in the
Merger consisted of (i) 2,300,075 shares of the Common Stock, plus (ii)
$1,928,137.64 by delivery of a promissory note of the Company payable to
Times Mirror. The promissory note has a maturity date of May 20, 2000
(at which time the aggregate principal balance thereof must be repaid in
full) and bears interest at the prime rate in effect from time to time
of Citibank, N.A. plus 1%. Accrued but unpaid interest on the then
unpaid principal balance of the note is payable on June 30, 1999,
September 30, 1999, December 31, 1999, March 31, 2000 and on the
maturity date. The promissory note may be prepaid in whole or in part at
any time without payment of any premiums or penalty.
The consideration paid to Times Mirror in the Merger was determined by
arms-length negotiations between Times Mirror and the Company.
Other than an agreement between the Company and Hollywood.com pursuant
to which the Hollywood.com website was linked to the bige.com website,
prior to entering into the Merger Agreement, there were no material
relationships between the Company or its affiliates, directors or
officers, or any associates of such directors or officers, on one hand,
and Hollywood.com and/or Times Mirror, on the other hand.
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3. PRESS RELEASE REGARDING THE ACQUISITIONS
On May 20, 1999, the Company issued a press release regarding the
foregoing acquisitions, a copy of which is attached as Exhibit 99
hereto and is hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The financial statements required by this item 7(a) are not included in
this report on Form 8-K. Pursuant to paragraph (4) of this Item 7(a),
the Company will file the financial statements required by this Item
7(a) not later than 60 days after the date hereof.
(b) Pro Forma Financial Information.
The Pro Forma Financial Information required by this item 7(b) are not
included in this report on Form 8-K. Pursuant to paragraph (2) of this
Item 7 the Company will file the Pro Forma Financial Information
required by Item 7(b) not later than 60 days after the date hereof.
(c) Exhibits.
1. Asset Purchase Agreement dated as of March 29, 1999 by and
among Big Entertainment, Inc., CinemaSource, Inc., Brett West
and Pamela West.
2. Agreement and Plan of Merger dated as of January 10, 1999 by
and among The Times Mirror Company, Hollywood.com, Inc.
(formerly Hollywood Online, Inc.), Big Entertainment, Inc. and
Big Acquisition Corp., as amended by the Waiver and Consent;
and Other Modifications dated as of May 14, 1999.
3. Press Release dated as of May 20, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BIG ENTERTAINMENT, INC.
By /s/ Mitchell Rubenstein
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Mitchell Rubenstein
Chairman of the Board and
Chief Executive Officer
Date: June 1, 1999
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EXHIBIT INDEX
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Exhibit Number Description
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2.1 Asset Purchase Agreement dated as of March 29, 1999
by and among Big Entertainment, Inc., CinemaSource,
Inc., Brett West and Pamela West (previously filed on
March 17, 1999 with the Company's Annual Report on
Form 10-KSB as Exhibit 10.33 thereto).
2.2 Agreement and Plan of Merger dated as of January 10,
1999, as amended May 14, 1999, by and among The Times
Mirror Company, Hollywood.com, Inc. (formerly
Hollywood Online, Inc.), Big Entertainment, Inc. and
Big Acquisition Corp. (previously filed on January
19, 1999 with the Company's Current Report on Form
8-K dated such date as Exhibit 2.1 thereto), as
amended by the Waiver and Consent: and Other
Modifications dated as of May 14, 1999 (filed
herewith).
99 Press Release dated as of May 20, 1999.
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Exhibit 2.2
May 14, 1999
To: Mitchell Rubenstein
Big Entertainment, Inc.
2255 Glades Road
Boca Raton, Florida 33431
Re: Waiver and Consent; and Other Modifications
Dear Mitch:
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,
hollywood.com, 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
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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 HOL'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 "Bruce R. Cameron, Anthony T. Farwell, Stuart J. Halperin and
Steven B. Katinsky 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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Parent'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/ Thomas Unterman
Thomas Unterman
THE TIMES MIRROR COMPANY
/s/ Michael Rollens
Michael Rollens
HOLLYWOOD.COM, INC.
Acknowledged, agreed to and accepted
this 14th day of May, 1999.
BIG ENTERTAINMENT, INC.
/s/ Michell Rubenstein
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Name: Michell Rubenstein
Title: Chief Executive Officer
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Exhibit 99
For Immediate Release
BIG ENTERTAINMENT CLOSES ON ACQUISITION OF HOLLYWOOD.COM
BIG ENTERTAINMENT ALSO COMPLETES ACQUISITION OF CINEMASOURCE
Boca Raton, FL, (May 20, 1999) -- Big Entertainment, Inc. (NASDAQ: BIGE) today
announced that it completed its acquisition of hollywood.com, Inc., formerly
Hollywood Online Inc., from The Times Mirror Company. Hollywood.com is a premier
movie website that features movie reviews, movie trailers, celebrity chats, and
bios on actors and directors, with over one million Web pages of movie content.
Page impressions on Hollywood.com during March and April 1999 totaled over 46
million, with an average of more than 2.2 million unique monthly users.
BigE today also announced that it completed the acquisition of the assets of
CinemaSource, Inc., the nation's largest provider of movie showtimes listings to
the Internet industry. CinemaSource provides movie showtimes to Yahoo!, Excite,
MSN, Go Network, CitySearch, Zip2, and numerous other websites.
BigE plans to combine its bige.com website, which is one of the Internet's
largest e-commerce movie studio stores, and Hollywood.com, to form a movie
content and movie merchandise Internet supersite, all under the Hollywood.com
brand.
"The combination of the Hollywood.com brand, bige.com's studio store and
CinemaSource's movie listings will offer users a one-stop Internet supersite for
movie content, showtimes, and movie merchandise," said Mitchell Rubenstein,
Chairman and Chief Executive Officer of BigE.
"Our acquisitions of Hollywood.com and CinemaSource are a major step in our plan
to create the dominant Internet movie-related website," added Mr. Rubenstein.
"In addition, our recently announced pending transaction with CBS will provide
the national branding for our online movie supersite that should ensure our
visibility to a wide range of viewers as the top destination for everything
about movies."
Thomas Unterman, Executive Vice President and Chief Financial Officer of Times
Mirror, said, "We are enthusiastic about the prospects for the combined
business, which will be the leader in its category on the web. We are very
pleased with our new investment in BigE." Mr. Unterman will be joining the Board
of Directors of BigE.
BigE acquired hollywood.com, Inc. from Times Mirror for approximately 2.3
million common shares and a one-year note for approximately $1.9 million. The
Times Mirror stake represents approximately 16.5% of BigE's outstanding common
shares after giving effect to the acquisitions.
BigE purchased CinemaSource's assets for $6.5 million in cash and approximately
435,000 of its common shares. Funding for the cash portion of the purchase price
in the CinemaSource acquisition came from the proceeds of a private placement of
approximately 570,000 BigE common shares at a price per share of $21.25, which
raised approximately $12 million, before closing costs. Investors in the private
placement also received warrants exerciseable for approximately 190,000 common
shares at an exercise price of $21.25 per share. The remaining proceeds from the
private placement will be used to pay transaction costs of the acquisitions and
for working capital purposes. Wasserstein Perella Securities, Inc. acted as sole
placement agent for the private placement.
About Hollywood.com
Hollywood.com (www.hollywood.com) is a premier website for movies. The
award-winning website features one of the Web's largest collections of
movie-related multimedia, including movie trailers, movie soundtracks, photos
and exclusive interactive games. Hollywood.com also offers visitors current
movie, laserdisc, and movie soundtrack information, as well as local movie
theaters' showtimes, daily Hollywood news, celebrity interviews, listings of
movies on TV, a searchable database with over 130,000 movies and 850,000 cast
and crew credits, movie reviews, box office charts, and interactive forums.
Hollywood.com also offers a weekly e-mail dispatch and coverage of premieres,
film festivals and events.
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BIG ENTERTAINMENT CLOSES ON ACQUISITION OF HOLLYWOOD.COM
BIG ENTERTAINMENT ALSO COMPLETES ACQUISITION OF CINEMASOURCE
May 20, 1999
Page 2 of 2
About bige.com
bige.com is an online movie studio store offering thousands of entertainment
products from Hollywood studios and popular culture. bige.com sells merchandise
based on movies and popular culture including items such as apparel, action
figures, games, plush, collectibles and posters. bige.com is available on the
Web at www.bige.com as well as on many popular websites, including
www.usatoday.com, www.broadcast.com, Excite, IMDb, www.Film.com, and the
AdvanceNet websites (www.nj.com, www.mlive.com, www.cleveland.com,
www.oregonlive.com, www.rainorshine.com, www.mardigras.com, and www.yucky.com).
About CinemaSource
CinemaSource is the nation's largest distributor of movie showtimes to the
Internet industry. The largest media companies (and many of the small ones too)
rely on CinemaSource for their movie related informational needs. Its customers
include Yahoo!, Excite, MSN, CitySearch, Zip2, The New York Times, Knight
Ridder, AdvanceNet, and others.
About Big Entertainment
Big Entertainment, Inc. (NASDAQ:BIGE) was founded by Mitchell Rubenstein and
Laurie S. Silvers, who earlier founded the Sci-Fi Channel(TM). Big Entertainment
owns Hollywood.com, bige.com, and CinemaSource, a combination of movie-related
Internet businesses that are being combined under the "Hollywood.com" brand. Big
Entertainment also owns entertainment properties created for it by best-selling
authors and media celebrities, including Leonard Nimoy and Mickey Spillane.
CBS Corporation and BigE recently announced that they have signed an agreement
in principle for CBS to receive an initial 35% ownership interest (with warrants
to purchase an additional 5% ownership position) in Hollywood.com, bige.com and
CinemaSource in exchange for $100 million of promotion and content support over
a period of seven years. Big Entertainment will own 65% of the joint venture.
Completion of the CBS joint venture is subject to finalizing transaction
documents and customary closing conditions.
Note: Page impressions and unique user information sources are I/Pro and Accrue,
respectively.
(The matters discussed herein that are forward-looking statements are based on
current management expectations that involve risks and uncertainties that may
result in such expectations not being realized. Potential risks and
uncertainties include, but are not limited to, the risks described in Big
Entertainment's filings with the Securities and Exchange Commission.)
Contacts
For Big Entertainment:
Mitchell Rubenstein Mark Cohen
Phone: 561-998-8000 The Pinnacle Group (Investor Relations)
Email: [email protected] Phone: 516-773-2477
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