SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
January 17, 2004
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Date of report (Date of earliest event reported)
JAG Media Holdings, Inc.
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(Exact Name of Registrant as Specified in Charter)
Nevada 000-28761 88-0380546
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
6865 SW 18th Street, Suite B13, Boca Raton, Florida 33433
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(Address of Principal Executive Offices) (Zip Code)
(561) 393-0605
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(Registrant's telephone number, including area code)
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(Former Name or Address, if Changed Since Last Report)
Item 1(b). Changes in Control of Registrant.
On January 17, 2004, JAG Media Holdings, Inc. (the "Company") issued a press
release announcing that the Company has entered into a Letter of Intent, dated
January 17, 2004 (the "Letter of Intent"), to acquire Great Eastern Securities,
Inc., a privately held New York corporation and broker/dealer based in Syosset,
New York ("Great Eastern"). Great Eastern offers a cost-efficient trading
platform for brokers and traders, including direct access trading, with
individually tailored commission rates.
Structure of Transaction
The Letter of Intent contemplates that the Company will purchase all of the
issued and outstanding capital stock of Great Eastern pursuant to a Stock
Purchase Agreement to be entered into by the parties in form and substance
satisfactory to each of the parties and to their respective counsel and
financial advisors (the "Stock Purchase Agreement"). The Stock Purchase
Agreement would be entered into prior to the date on which the closing of the
transactions contemplated by the Letter of Intent occurs, which date shall be
mutually agreed upon by the parties but shall in no event be later than March
31, 2004 (the "Closing Date"). In consideration of JAG Media's acquisition of
all of the issued and outstanding capital stock of Great Eastern, the
stockholders of Great Eastern as of the Closing Date (the "Great Eastern
Stockholders") shall be issued shares of Common Stock (the "Consideration
Shares"), which shares will, upon issuance, represent 57% of the Company's
outstanding capital stock on a fully diluted basis (including, without
limitation, shares issuable to Messrs. Gary Valinoti, Stephen J. Schopefer and
Thomas J. Mazzarisi (collectively, the "Management Stockholders") as the result
of the change in control, but excluding any finder's fee payable in connection
with the transaction). As used herein "Common Stock" shall mean the Class A
Common Stock, par value $0.00001 per share, of the Company or any security into
which such Class A Common Stock is hereafter reclassified, and the Series 1
Class B Common Stock, par value $0.00001 per share, of the Company or any
security into which such Series 1 Class B Common Stock is hereafter
reclassified, it being understood that at the upcoming 2004 annual meeting of
the Company scheduled to take place on February 11, 2004 the stockholders of the
Company are scheduled to vote upon a recapitalization pursuant to which each
outstanding share of Class A Common Stock and Series 1 Class B Common Stock of
the Company would be reclassified into one share of new Common Stock, par value
$0.00001 per share, of the Company.
Any shares of the Company to be offered and sold as contemplated by the Letter
of Intent will not be registered under the Securities Act of 1933, as amended,
and may not be offered or sold in the United States absent such registration or
an applicable exemption from such registration requirements.
This disclosure shall not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of the shares of the Company in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under applicable securities laws, or absent the
availability of an exemption from such registration or qualification
requirements.
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Pre-Closing Covenants
Great Eastern has agreed not to effect any private placements or transfers of
Great Eastern capital stock prior to the closing without the prior consent of
JAG Media, other than possible transfers or new issuances to its consultant,
Flow Capital Advisors, Inc., or any of its principals. In addition, the Great
Eastern Stockholders have agreed to cause all of the outstanding subordinated
notes of Great Eastern and any other indebtedness for borrowed money to be
contributed to the capital of Great Eastern at or prior to the closing such that
Great Eastern shall be free of debt for borrowed money at the closing of the
transaction.
JAG Media Content/License Agreement
In conjunction with the transaction, the Company will reposition its JAG Notes
consolidated research product as an institutional product, with professional
traders and brokers as the target market. Once this change is implemented, the
Company currently intends to cease offering JAG Notes at its current retail
subscription rates. As a condition to the closing of the transaction, JAG Media
LLC and Great Eastern shall enter into a license agreement pursuant to which JAG
Media LLC shall license to Great Eastern its JAG Notes product and other JAG
Media financial content for distribution to its traders and retail brokers.
Corporate Governance and Employment Matters
Effective at the Closing, each of the three (3) existing directors of JAG Media
shall resign, the number of members that constitute the Board of Directors of
JAG Media shall be increased from three (3) to five (5) and Great Eastern
nominees shall be appointed to fill the vacancies on the Board of Directors.
In addition the Management Stockholders would resign from their positions as
executive officers and directors of the Company but would remain involved in the
business of the Company various capacities. Messrs. Schoepfer and Mazzarisi
would continue to serve as employees of the JAG Media LLC operating subsidiary
and Mr. Valinoti would continue as a consultant to the Company.
The transaction with Great Eastern would trigger the change-in-control
provisions in the existing employment agreements of the Management Stockholders,
resulting in the issuance of options to acquire 1,000,000 shares of the
Company's Common Stock to each of the Management Stockholders as well as
severance payments to such individuals.
Following the closing, the Great Eastern Stockholders would vote their shares of
the Company, representing a majority of all outstanding shares of the Company,
in favor of an amendment to the Company's Articles of Incorporation to effect a
name change to better reflect the overall business in which the Company expects
to engage following the acquisition of Great Eastern.
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Lock-Up Provisions
As part of the transaction, the Great Eastern Stockholders have agreed not to
sell 95% of the Consideration Shares for a period of twelve (12) months
following the Closing Date, nor shall 95% of the Consideration Shares be
registered in any registration statement prior to the expiration of such twelve
(12) month period. Notwithstanding and in addition to the foregoing lock-up
provisions described in this Section, the Great Eastern Stockholders hereby
agree that any sales of Common Stock shall be made in compliance with all
applicable securities laws. Stock certificates representing shares that are not
registered on an existing registration statement shall be endorsed with such
legends as may be required by applicable securities laws.
The execution of a Stock Purchase Agreement is subject to each party completing
a due diligence review, the results of which are satisfactory in all respects to
each party. There is no assurance that the definitive documentation called for
in the Letter of Intent will ever be executed, or if executed, that the proposed
transaction between the Company and Great Eastern will be consummated.
A copy of the press release of the Company dated January 17, 2004 and the Letter
of Intent are attached hereto as Exhibits 99.1 and 99.2, respectively, and
incorporated by reference herein.
Finder's Agreement with Flow Capital Advisors, Inc.
In consideration of the introduction by Flow Capital Advisors, Inc., a Delaware
corporation (the "Finder"), of Great Eastern to the Company, the Company has
agreed to pay the Finder, if a transaction with Great Eastern is
consummated on or before December 31, 2005, a fee, payable in shares of the
Company upon the unconditional closing of the acquisition, equal to five percent
(5.0%) of the aggregate consideration paid by the Company for Great Eastern.
Expiration of Asset Purchase Agreement with XeQute
The Company's Asset Purchase Agreement with Vertex Interactive, Inc., XeQute
Solutions PLC and XeQute Solutions, Inc. (collectively, the "XeQute Parties")
expired in accordance with its terms on October 31, 2003. The Board of Directors
of the Company has decided not to pursue any further negotiations with the
XeQute Parties.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
10.1 Finder's Fee Agreement, dated as of January 5, 2004, between the
Company and Flow Capital Advisors, Inc.
99.1 Press Release of the Company, dated January 17, 2004.
99.2 Letter of Intent, dated January 17, 2004, by and among the Company,
Great Eastern and the stockholders of Great Eastern.
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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.
JAG Media Holdings, Inc.
Date: January 17, 2004 By: /s/ Gary Valinoti
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Name: Gary Valinoti
Title: Chief Executive Officer
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INDEX TO EXHIBITS
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Exhibit No. Description
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10.1 Finder's Fee Agreement, dated as of January 5, 2004, between
the Company and Flow Capital Advisors, Inc.
99.1 Press Release of the Company, dated January 17, 2004.
99.2 Letter of Intent, dated January 17, 2004 by and among the
Company, Great Eastern and certain stockholders of Great
Eastern.
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