Attached files
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| EX-2.1 - PIKSEL, INC. | v185844_ex2-1.htm |
| EX-99.1 - PIKSEL, INC. | v185844_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
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 14, 2010
KIT
DIGITAL, INC.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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001-34437
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11-3447894
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
incorporation)
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Identification
No.)
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205
Hudson Street, Suite 802
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New York, New York
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10013
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: +1 (212) 661-4111
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR
240.13e-4(c))
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CURRENT
REPORT ON FORM 8-K
KIT
digital, Inc.
(the
“Company”)
May
14, 2010
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Item
2.01.
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Completion
of Acquisition or Disposition of
Assets.
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Item
3.02.
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Unregistered
Sales of Equity Securities.
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On May
14, 2010, the Company, through a wholly-owned subsidiary, purchased all of
the outstanding capital stock of Benchmark Broadcast Systems (S) Pte
Ltd (“Benchmark”), a wholly-owned subsidiary of Benchmark Video
Technologies Pte Ltd (“BVT”), pursuant to a Stock Purchase Agreement, dated as
of May 14, 2010, among the parties (the “SPA”). Benchmark,
headquartered in Singapore, serves as one of the leading video asset
management providers and broadcast systems integrators in South and
Southeast Asia, with a strong sales presence in Greater China as well. The
aggregate consideration payable by the Company will be an amount
in the aggregate of not less than $10,630,000 (including payments to
employees of Benchmark over time), plus the positive balance of Benchmark’s
working capital (which will be payable in cash to BVT). The consideration
may be in excess of $10,630,000 pursuant to the earn-out terms summarized below
and contained in the SPA included as an exhibit hereto.
An amount
of $9,680,000 was paid to BVT and to Benchmark employees at the closing
(the “Purchase Price”), subject to escrow and holdback requirements summarized
below and described in the SPA. The Purchase Price consisted of (i) cash in the
amount of $4,905,000 and (ii) a number of restricted shares of the Company’s
common stock with a value of $4,775,000. The shares of the
Company’s common stock issued at the closing were valued using a
30-day volume-weighted average price prior to the signing of the SPA, which
was $13.50 per share. In addition to the Purchase Price, the Company
will pay to BVT (or its designees) an amount in cash equal to the positive
balance of the estimated working capital of Benchmark.
Following
the 12-month anniversary of the closing and subject to Benchmark generating
a minimum of $15,000,000 in revenue and associated minimum profit-before-taxes
("PBT") margin requirements, the Company will pay BVT (or
its designees) in the form of shares of the Company’s common stock $0.60
for every $1.00 of recognized revenue generated by Benchmark during the 12-month
period following the closing, minus the Purchase Price. In addition, at
such time, the Company will issue to certain employees of Benchmark (i) a number
of shares of the Company’s common stock equal to 5% of the number then being
issued to BVT (or its designees) and (ii) a number of shares of the Company’s
common stock with a value of $450,000 using the 30-day volume-weighted
average price prior to the signing of the SPA, or 33,334
shares.
Following
the 24-month anniversary of the closing and subject to Benchmark generating
a minimum of $15,000,000 in revenue and associated minimum PBT margin
requirements during the 12-month period between the 12 and 24-month
anniversaries of closing, the Company will pay BVT (or its designees) in
the form of shares of the Company’s common stock $0.40 for every $1.00
of recognized revenue generated by Benchmark during the same period, but only
after subtracting any remaining unearned portion of the Purchase Price based on
the first-year earn-out. In addition, at such time, the Company will issue to
certain employees of Benchmark a number of shares of the Company’s common stock
equal to 5% of the number then being issued to BVT (or its
designees).
Further,
to the extent that BVT (or its designees) otherwise receives less than $500,000
from the earn-outs described above following the first and second anniversaries
of the closing, then BVT (or its designees) will receive any shortfall from such
amount paid 50% in cash and 50% in shares of the Company’s common
stock.
Except as
otherwise provided with respect to the $450,000 in shares of the Company’s
common stock issued to Benchmark employees following the first anniversary of
the closing, the price per share of the Company’s common stock issuable as
part of either the first- or second-year earn-out will be the weighted average
price of the Company’s common stock for the 30 trading days immediately
preceding the first anniversary or second anniversary, as applicable, provided
that if such price would be (i) below $10.00, it will be $10.00 per share
and (ii) above $16.00, it will be $16.00 per share. The PBT margin
requirements for each year will be at least 5% (with penalties applied to
Benchmark's deemed revenues if the PBT margin does not reach at least 7.5%) for
the first 12 months and at least 7.5% for each 12-month period. If the
PBT margin exceeds 15% in either 12-month period, the deemed revenues for
such period will be subject to positive adjustment as provided in the
SPA.
Additionally,
BVT (or its designees) has the right to receive, at its option, 30% of the value
of the stock consideration payable pursuant to the first and second-year
earn-outs in the form of cash (less a specified discount of 15%), and the
Company has the right at any time, at its option, to make all such stock-based
earn-out payments in the form of cash. These cash payments will be subject
to any applicable tax withholding requirements.
Fifteen
percent of the Purchase Price payable at the closing and additional amounts
following the first anniversary of the closing will be subject to a
one-year escrow (all of which will be in the form of the Company’s
common stock), except
that no amount will be escrowed with respect to the portion of the shares
issuable solely to employees of Benchmark following the first anniversary of the
closing based upon Benchmark’s achievement of applicable minimum revenue
and PBT margin requirements. The Company also placed $2,000,000 into
escrow at the closing to support certain of its obligations under the
SPA.
In order
to comply with the market rules of the Nasdaq Stock Market, the SPA includes a
“share cap” to limit the number of shares that can be issued under the SPA,
after giving consideration to the earn-out provisions, to 19.9% of the
Company's outstanding shares (determined immediately prior to the closing
of the acquisition).
All
shares of the Company’s common stock issued to BVT in connection with the
acquisition will be issued in reliance upon the exemption from registration
afforded by Regulation S under the Securities Act of 1933, as amended (the
“Act”). All shares of the Company’s common stock issued to Benchmark
employees in connection with the acquisition will be issued either in reliance
upon the exemption from registration afforded by Regulation S under the Act or
in a registered offering under the Act. In addition to the
requirement that any subsequent sale or transfer of such stock comply with
Regulation S and Rule 144, all of the Company’s common stock issued at
the closing will be subject to a one-year contractual lock-up
agreement. Subject to applicable law, the holders of the Company’s
common stock will have tag-along rights with respect to sales of the common
stock owned or controlled by Kaleil Isaza Tuzman, the Company’s Chairman and
Chief Executive Officer, including, without limitation, in connection with a
transaction that results in a change of control of the Company.
The
purchase price was determined as a result of arm’s-length negotiations among the
parties. The foregoing description of the SPA does not purport to be
complete and is qualified in its entirety by reference to the full text of the
SPA, a copy of which is attached hereto as Exhibit 2.1 and is incorporated
herein by reference in its entirety. The securities offered in the
acquisition have not been registered under the Act, and may not be offered or
sold in the United States absent registration or an applicable exemption from
registration requirements.
The
Company had no previous relationship or association with Benchmark or
BVT. There are presently no significant changes anticipated in the
business or product lines of either the Company or Benchmark.
The
Company announced the closing of the acquisition in a press release issued
on May 17, 2010, a copy of which is attached hereto as Exhibit 99.1 and is
incorporated herein by reference in its entirety.
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Item
9.01.
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Financial
Statements and Exhibits.
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(a) Financial Statements of
Businesses Acquired. In accordance with Item 9.01(a), the
financial statements of Benchmark are not “significant” and therefore not
required to be filed pursuant to Item 3.05(b) of Regulation S-X.
(b) Pro Forma Financial
Information. In accordance with Item 9.01(b), the pro forma
financial information is not “significant” and therefore not required to be
filed pursuant to Article 11 of Regulation S-X.
(d) Exhibits. The
exhibits listed in the following Exhibit Index are filed as part of this current
report.
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Exhibit No.
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Description
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2.1
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Stock
Purchase Agreement, dated as of May 14, 2010, by and among KIT digital,
Inc., KIT digital, FZ-LLC, Benchmark Video Technologies Pte Ltd, and
Benchmark Broadcast Systems (S) Pte Ltd.
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99.1
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Press
release issued by KIT digital, Inc. on May 17,
2010.
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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.
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KIT
DIGITAL, INC.
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Date:
May 20, 2010
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By:
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/s/ Kaleil Isaza Tuzman
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Kaleil
Isaza Tuzman
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Chairman
and Chief Executive
Officer
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