Attached files
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| EX-99.1 - PRESS RELEASE - Dolphin Entertainment, Inc. | bdco_ex991.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) March 30,
2017
Dolphin Digital
Media, Inc.
(Exact Name of
Registrant as Specified in its Charter)
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Florida
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000-50621
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86-0787790
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(State or Other
Jurisdiction of Incorporation)
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(Commission File
Number)
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(IRS
EmployerIdentification No.)
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2151 Le Jeune
Road, Suite 150-Mezzanine
Coral Gables,
FL
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33134
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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:
(305) 774-0407
Registrant’s
facsimile number, including area code: (954)
774-0405
(Former name or
former address, if changed since last report)
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 (see
General Instruction A.2. below):
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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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Item
1.01 Entry into a
Material Definitive Agreement.
On
March 30, 2017, Dolphin Digital Media, Inc. (the
“Company”) entered into a Membership Interest Purchase
Agreement (the “Purchase Agreement”), by and among the
Company and Leslee Dart, Amanda Lundberg, Allan Mayer and the
Beatrice B. Trust (the “Sellers”). Pursuant to the
Purchase Agreement, on March 30, 2017, the Company acquired from
the Sellers 100% of the membership interests of 42West, LLC, a
Delaware limited liability company (“42West”) and
42West became a wholly-owned subsidiary of the Company (the
“42West Acquisition”). 42West is an entertainment
public relations agency offering talent publicity, strategic
communications and entertainment content marketing...
The
consideration paid by the Company in connection with the 42West
Acquisition was approximately $18.7 million in shares of common
stock of the Company, par value $0.015 (the “Common
Stock”), based on the Company’s 30-trading-day average
stock price prior to the closing date of $4.61 per share (less
certain working capital and closing adjustments, transaction
expenses and payments of indebtedness), plus the potential to earn
up to an additional $9.3 million in shares of Common Stock. As a
result, the Company (i) issued 1,230,280 shares of Common Stock on
the closing date (the “Initial Consideration”), (ii)
will issue (a) 344,550 shares of Common Stock to certain employees
within 30 days of the closing date, (b) 118,655 shares of Common
Stock as bonuses during 2017 and (c) approximately 1,961,821 shares
of Common Stock on January 2, 2018 (the "Post-Closing
Consideration") and (iii) may issue approximately 1,963,126 shares
of Common Stock based on the achievement of specified financial
performance targets over a three-year period as set forth in the
Purchase Agreement (the "Earn-Out Consideration", and together with
the Initial Consideration and the Post-Closing Consideration, the
"Consideration").
Each of
Leslee Dart, Amanda Lundberg and Allan Mayer (the “Principal
Sellers”) has entered into employment agreements with the
Company and will continue as employees of the Company for a
three-year term after the closing of the 42West Acquisition. Each
of the employment agreements of the Principal Sellers contains
lock-up provisions pursuant to which each Principal Seller has
agreed not to transfer any shares of Common Stock in the first
year, no more than 1/3 of the Initial Consideration and
Post-Closing Consideration received by such Seller in the second
year and no more than an additional 1/3 of the Initial
Consideration and Post-Closing Consideration received by such
Seller in the third year, following the closing date. The
non-executive employees of 42West are expected to be retained as
well. The Purchase Agreement contains customary representations,
warranties and covenants.
In
connection with the 42West Acquisition, on March 30, 2017, the
Company entered into put agreements (the “Put
Agreements”) with each of the Sellers. Pursuant to the terms
and subject to the conditions set forth in the Put Agreements, the
Company has granted the Sellers the right, but not obligation, to
cause the Company to purchase up to an aggregate of 2,374,187 of
their shares of Common Stock received as Consideration for a
purchase price equal to $4.61 per share during certain specified
exercise periods set forth in the Put Agreements up until December
2020.
In
addition, in connection with the 42West Acquisition, on March 30,
2017, the Company entered into a registration rights agreement with
the Sellers (the “Registration Rights Agreement”)
pursuant to which the Sellers are entitled to rights with respect
to the registration under the Securities Act of 1933, as amended
(the “Securities Act”). All fees, costs and expenses of
underwritten registrations under the Registration Rights Agreement
will be borne by the Company. At any time after the one-year
anniversary of the Registration Rights Agreement, the Company will
be required, upon the request of such Sellers holding at least a
majority of the Consideration received by the Sellers, to
file a registration statement on Form S-1 and use its
reasonable efforts to effect a registration covering up to 25% of
the Consideration received by the Sellers. In addition, if the
Company is eligible to file a registration statement on
Form S-3, upon the request of such Sellers holding at least a
majority of the Consideration received by the Sellers, the Company
will be required to use its reasonable efforts to effect a
registration of such shares on Form S-3 covering up to an
additional 25% of the Consideration received by the Sellers. The
Company is required to effect only one registration on Form S-1 and
one registration statement on Form S-3, if eligible. The right to
have the Consideration received by the Sellers registered on
Form S-1 or Form S-3 is subject to other specified conditions
and limitations.
The
foregoing descriptions of the Purchase Agreement, the Form of Put
Agreement and the Registration Rights Agreement do not purport to
be complete and are qualified in their entirety by reference to the
Purchase Agreement, Form of Put Agreement and Registration Rights
Agreement that will be filed.
2
Item
2.01 Completion of
Acquisition or Disposition of Assets.
The information set forth in Item
1.01 above is incorporated herein by
reference.
Item
3.02 Unregistered
Sales of Equity Securities.
The information set forth in Item
1.01 above is incorporated herein by reference. The Company issued,
or will issue, 5,499,777 shares of the Consideration in reliance
upon the exemption from registration provided by Section 4(a)(2) of
the Securities Act and/or Rule 506 of Regulation D promulgated
thereunder. The Sellers and 42 West employees represented to the
Company that each such Seller and employee was an “accredited
investor” as defined in Rule 501(a) under the Securities
Act. The shares of Common Stock have not been registered under
the Securities Act and are “restricted securities” as
that term is defined by Rule 144 promulgated under the Securities
Act.
Item
7.01 Regulation FD
Disclosure.
On March 30, 2017, the Company
issued the press release attached to this current report on Form
8-K as Exhibit 99.1 announcing the closing of the 42West
Acquisition, on the terms and subject to the conditions set forth
in the Purchase Agreement. The press release attached to this
current report on Form 8-K as Exhibit 99.1 is incorporated herein
by reference.
Item
9.01 Financial
Statements and Exhibits.
(a) Financial
Statements of Businesses Acquired.
The financial statements required by
Item 9.01(a) of Form 8-K will be filed no later than 71 calendar
days after the date on which this report on Form 8-K was required
be filed.
(b) Pro Forma
Financial Information.
The pro forma financial information
required by Item 9.01(b) of Form 8-K will be filed no later than 71
calendar days after the date on which this report on Form 8-K was
required to be filed.
(d)
Exhibits.
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Exhibit No.
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Description
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Press Release, dated March 30,
2017.
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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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DOLPHIN DIGITAL
MEDIA, INC.
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Date: April 5,
2017
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By:
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/s/
Mirta A. Negrini
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Mirta A. Negrini
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Chief Financial and Operating
Officer
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