<PAGE> 1
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): January 30, 1999
TEAM COMMUNICATIONS GROUP, INC.
(Exact name of registrant as specified in charter)
California 333-26307 95-4053296
(State or Other Jurisdiction of Commission (I.R.S. Employer
Incorporation) File Number Identification No.)
12300 Wilshire Boulevard, Suite 400, Los Angeles, California 90025
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 442-3500
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
1. On March 19, 1999, the Team Communications Group, Inc. (the
"Company") entered into a Securities Purchase Agreement, dated as of February
23, 1999 (the "Securities Purchase Agreement") with VMR Luxembourg, S. A.,
Chateau Woltz, 34 Rue Neuve, Remich, L5560 Luxembourg, pursuant to which the
Company agreed to sell up to and issue to the Purchasers, and the Purchasers
agreed to purchase from the Company, an aggregate principal amount of up to
$1,000,000 of 8% Convertible Debentures (the "Debentures") and Warrants (the
"Warrants") to purchase up to 100,000 shares of Common Stock. The sale (referred
to herein as the "VMR Sale") is to take place in up to two separate sales, the
first of which (the "Initial Closing") occurred on March 16, 1999. On that date
the Company sold, for an aggregate purchase price of $500,000, $500,000
principal amount of Debentures and 50,000 Warrants. An additional second sale of
$500,000 is at the discretion of the Purchaser.
The terms of the Debentures and Warrants are substantially similar to
the Debentures and Warrants issued on January 29, 1999. The holders of those
Debentures (the "Original Purchasers") have consented to this sale, and have
agreed to increase the overall size of that offering to $3,000,000. The Original
Purchasers have agreed that the registration of the underlying securities must
now be completed by May 31, 1999 , and that a special meeting of shareholders
must be held by April 30, 1999.
The Debentures are convertible into shares of Common Stock at the option
of the Purchasers at any time after the Initial Closing. The conversion price
for each Debenture in effect on any conversion date will be the lesser of (A) an
amount equal to 90% of the average per share market value for five consecutive
trading days immediately prior to the Initial Closing date or (B) an amount
equal to 85% of the per share market value for the trading day having the lowest
per share market value during the five trading days prior to the conversion
date. Purchasers effect conversions by surrendering the Debentures to be
converted to the Company, together with the form of conversion notice attached
thereto. If not otherwise converted, the Debentures mature on January 27, 2002.
The Warrants are exercisable at an exercise price equal to 110% of the Per Share
Market Value as of the last Trading Day prior to the date of the issuance of the
Warrants. This price, which is subject to adjustment in the event of certain
dilutive events, was $1.96 as of the Initial Closing. The Warrants expire three
years after their date of issuance.
Pursuant to the terms of the Securities Purchase Agreement, and a
related registration rights agreement, the Company is obligated to file a
registration statement with respect to the shares issuable upon conversion of
the debentures and the shares issuable upon exercise of the Warrants, which
Registration Statement must be declared effective, as indicated above, no later
than May 31, 1999.
Beginning on the date on which the initial registration statement (the
"Registration Statement") is filed with the Securities and Exchange Commission
(the "Commission"), the Company has the right to deliver a written notice to the
Original Purchasers requiring the Purchasers to purchase an additional $350,000
aggregate principal amount of Debentures and Warrants to purchase an additional
35,000 shares of Common Stock for an aggregate purchase price of $350,000.
Subject to the terms and conditions set forth in Section 4.2 of the Securities
Purchase Agreement, and elsewhere in the Securities Purchase Agreement and
beginning on the date that the Registration Statement is declared effective by
the Commission, the Company has the right to request that the Original
Purchasers purchase an additional $400,000 aggregate principal amount of
Debentures and Warrants to purchase an additional 40,000 shares of Common Stock
for an aggregate purchase price of $400,000.
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Finally, earlier than 75 days after the date on which the Registration
Statement has been declared effective by the Commission, the Company has the
right to deliver a written notice to the Purchasers requiring the Purchasers to
purchase up to an additional $400,000 aggregate principal amount of Debentures
and Warrants to purchase an additional 40,000 shares of Common Stock for an
aggregate purchase price of $400,000.
As with the initial sale, without shareholder approval, the Company is
not permitted to issue securities representing more than 20% of its outstanding
shares of Common Stock at a price below market value or book value pursuant to
applicable NASDAQ rules. The Company intends to immediately seek shareholder
approval ("Shareholder Approval") at a special meeting of the shareholders of
the Company held in accordance with the Company's articles of incorporation and
by-laws, for the issuance by the Company of shares of all of the shares of
Common Stock potentially called for as a consequence of the conversion of the
Debentures into shares of Common Stock at a price less than the greater of the
book or market value on the Original Issue Date as and to the extent required
pursuant to Rule 4460(i) of The Nasdaq Stock Market, Inc.'s Marketplace Rules
(or any successor or replacement provision thereof). If on the Conversion Date
applicable to any conversion, (A) the Common Stock is then listed for trading on
the Nasdaq National Market, the New York Stock Exchange, the American Stock
Exchange or The Nasdaq Small Cap Market, (B) the Conversion Price then in effect
is such that the aggregate number of shares of Common Stock that would then be
issuable upon conversion of all the outstanding Debentures, together with any
shares of Common Stock previously issued upon conversion of Debentures, would
equal or exceed 20% of the number of shares of Common Stock outstanding on the
Original Issue Date, and (C) the Company has not previously obtained Shareholder
Approval the Company may be subject to financial penalties, as well as being
required to issue additional shares of Common Stock. Similar penalties apply in
the event that the Company cannot effectuate the filing of the Registration
Statement in a timely fashion.
The Company has retained the right to redeem the Debentures at a price
equal to 115% of the principal amount thereof, if the price of the Company's
Common Stock trades at a price of $1.50 or less per share for a specified period
of trading. The Purchasers have agreed, subject to certain limitations, that
they will not engage in any "short sales" of the Company's common stock.
If the Conversion Price was $1.75, and the Company received the entire
$3,000,000 of Debentures now authorized, the Company would issue approximately
1,714,285 shares of Common Stock, exclusive of accrued interest, in respect of
this transaction. The issuance of these securities will have a material impact
on the Company's earnings per share figure for the fiscal year ended December
31, 1999.
2. In connection with the VMR Sale, the Company entered into a letter
of intent to effectuate an offering of up to $8,000,000 of its Common Stock on
the Neuer Market in Germany. The underwriter of the securities will be VMR. The
Company anticipates that it will complete the initial filing by the beginning of
May 1999, and complete the offering by the end of June 1999. Completion of the
offering is subject to a number of conditions, including satisfaction of listing
requirements on the Neuer Market, and the completion of due diligence by the
underwriter. The Company has been advised that 40% of the proceeds of such
offering must be utilized in activities relating to the European Economic
Community.
<PAGE> 4
3. The Company has entered into a letter of intent to acquire Goldstar
Entertainment Media, Inc. The terms of the acquisition have not been agreed to,
and are subject to the completion of due diligence by the Company. Goldstar is
a publicly held company whose stock currently trades on the Bulletin Board
operated by NASDAQ. Goldstar has assembled a library of classic rock videos. The
Company intends to pursue a strategy of creating a classic rock network, and
related internet strategy with respect thereto. Goldstar has had discussion with
a number of internet companies with a view of creating such a network.
Item 6.
At a board meeting on March 8, 1999, Seth Williamson indicated he would
not stand for re-election to the Board due to other commitments, and
accordingly, the Company accepted his resignation as of March 26, 1999. Russell
Barry, the former President and Chairman of Turner Program Services, was
appointed by the Board to fill the vacancy. Mr Williamson did not resign over
any disagreement with the Company or its policies or business activities.
(c) EXHIBITS.
Exhibit Description
- ------- -----------
10.15 Letter of Intent to acquire Goldstar Entertainment
10.16 Letter of Intent to list securities on the Neuer Market.
10.17 Letter of Resignation of Seth Williamson received March 26, 1999
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 thereunto duly authorized.
SIGNATURES
TEAM COMMUNICATIONS GROUP, INC.
Date: March 29, 1999 By: /s/ DREW S. LEVIN
--------------------------------------
Drew S. Levin
Its: Chairman of the Board and CEO
<PAGE> 1
EXHIBIT 10.15
[DREW S. LEVIN LETTERHEAD]
March 2, 1999
Mr. Michael Pinera
Goldstar Entertainment Media
12400 Wilshire Boulevard, Suite 570
Los Angeles, CA 90025
RE: MERGER/ACQUISITION
Dear Mr. Pinera:
This Letter Agreement ("Letter of Intent") sets forth our intentions with
respect to the acquisition by Team Communications Group, Inc. ("Team") of the
majority interest of the Common Stock of Goldstar Entertainment Media
("Goldstar"). The Parties hereto agree as follows:
1. Goldstar has made available to Team, for its review, its most recent
unaudited financial statements. A material requirement of this
acquisition will be the auditing of these financial statements.
2. Team has propounded to Goldstar a due diligence check list of material
to be gathered and to be provided to Team to enable Team to commence
and, thereafter, conclude its due diligence investigation of Goldstar.
3. Team and Goldstar have entered into a mutual non-disclosure agreement
requiring that all parties maintain the possibility and proceedings of
this merger strictly confidential.
4. Upon conclusion of it's due diligence, Team and Goldstar will enter into
good faith negotiation to arrive at a mutually acceptable valuation of
Goldstar to determine the
<PAGE> 2
Mr. Michael Pinera
Goldstar Entertainment Media
March 2, 1999
Page 2
acquisition price to be paid by Team to acquire Goldstar.
5. Goldstar represents, warrants and covenants to Team that its management
has disclosed to Team, and will continue to disclose to Team, any and
all material facts which might impact the valuation of the company and
of any facts which may adversely affect Goldstar's earnings, prospects
or business which have not previously been fully disclosed to Team.
6. Goldstar will further prepared and deliver to Team its most recent
financial statements and projections constituting its best estimate of
revenues, earnings and cash flow and shall update such estimates on a
monthly basis during the due diligence period.
7. It is understood and agreed that Team's undertaking to effectuate this
acquisition will be on a reasonable "best efforts" basis, and is subject
to the ability of the parties to arrive at a mutually acceptable
purchase price, the approval of Team's Board of Directors and Team's
satisfactory conclusion of its due diligence inquiry and the results of
such due diligence inquiry, including review of audited financial
statements, being reasonably satisfactory to Team and its outside
attorneys and accountants.
8. Notwithstanding anything to the contrary herein above set forth, the
performance of Team's obligations as provided in this letter of intent,
are specifically subject to the following conditions:
a. The successful completion of the in-depth investigative
procedures to be conducted by Team in respect to Goldstar,
its operations and general performance as well as its
offices and directors (commonly referred to as "due
diligence" procedures); and
b. Results of the due diligence procedures employed by Team
being satisfactory to Team in its sole determination.
If the foregoing correctly sets forth the understanding reached between Team and
Goldstar regarding the proposed acquisition, please sign and return the enclosed
copy of this Letter of Intent within the next five (5) business days. Your
acceptance hereto also constitutes an agreement to keep this letter confidential
and not to make it or its existence known to any other
<PAGE> 3
Mr. Michael Pinera
Goldstar Entertainment Media
March 2, 1999
Page 3
potential purchasers.
Thank you.
Sincerely,
Drew S. Levin
Chairman/CEO
ESE:ma
Enclosure
cc: Mr. Todd Ficeto
Mr. Florian Homm
ACCEPTED AND AGREED TO THIS ____ DAY OF MARCH, 1999:
GOLDSTAR ENTERTAINMENT MEDIA
By: _________________________________ _____________________________
Signature Print Name
Its: _________________________________
<PAGE> 1
EXHIBIT 10.16
March 11, 1999
LETTER OF INTENT
Team Communications Group, Inc.
12300 Wilshire Boulevard
Los Angeles, California 90024
Attention: Drew Levin
Re: PUBLIC OFFERING
Dear Mr. Levin:
This letter agreement (this "Letter of Intent") sets forth our
intentions with respect to a public offering (the "Public Offering"), on a "best
efforts" basis, of shares of Common Stock of Team Communications Group, Inc.
(the "Company") through an underwriting group, for which Value Management and
Research, A.G. (the "Representative") will serve as coordinator of an
underwriting to be underwritten through its affiliate VEM, A.G., or a third
party of parties to be engaged by the Representatives with TEAM consulted on and
our agreements with respect to certain matters thereto. The Representative will
also act as the Company's exclusive agent for listing the Company's shares on
the Neuer Markt of the Deutsche Borse ("Neuer Markt"). The parties hereto hereby
agree as follows:
1. AMOUNT OF PUBLIC OFFERING: A minimum of Euros 5.5 million to 10.0
million to be offered on a "best-efforts" basis on the Neuer Markt..
2. PRE-OFFERING CAPITALIZATION: Our proposal is based on no more than 6.5
million shares of capital stock of the Company (including shares to be
issued upon the exercise of outstanding options, warrants and
convertible securities and debt) being outstanding immediately prior to
the effective date of the offering.
3. THE OFFERING: The number of shares of Common Stock (the "Shares") to be
sold in the Public Offering will be a function of the public offering
price (the "Public Offering Price"), the exact amount of which is
subject to market and other conditions at the time of the Public
Offering and will be determined by the Company and the Representative at
the time of the Public Offering. Such Public Offering Price may not be
reflective of the trading price of the Company's common stock as
reported on the Nasdaq Small Cap Market.
4. COMPENSATION:
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Team Communications Group, Inc.
March 11, 1999
Page 2
(a) The Representative shall receive seven percent (7%) of the aggregate
Public Offering Price of the Shares sold in the Public Offering. In
addition, the Company shall pay Century City Securities ("CCS") a
finders fee of two percent (2%) of the aggregate Public Offering Price
of the Shares. Also, the Company shall pay the Representative a
non-accountable expense allowance equal to two percent (2%) of the
aggregate Public Offering Price of the Shares sold in the Public
Offering.
(b) Upon execution of this Letter of Intent, the Company will pay the
Representative the sum of $25,000 on account for expenses. Such sums
shall be credited toward the non-accountable expense allowance referred
to above, but shall not be refundable by the Representative to the
Company under any circumstances.
5. REPRESENTATIVE'S WARRANTS: The Company shall sell the Representative at
the closing of the Public Offering (the "Closing"), at a price of $0.001
per warrant, warrants (the "Representative's Warrants") to purchase up
to ten percent (10%) of the Shares sold by the Company. The
Representative's Warrants shall be exercisable for a period of three (3)
years on the date of the consummation of the Public Offering and shall
be exercisable at 110% of the Public Offering Price of the Shares.
As soon as practicable following the Public Offering, the Company shall
take all actions to cause the Representative's Warrants and the
underlying Common Stock to be freely tradeable on the Neuer Markt.
6. CONSULTING AGREEMENT: The Company agrees to retain the Representative
for a period of six (6) months after the offering at $5,000 per month,
to continue the development of interest and sponsorship in the common
shares of the Company; such amount shall be paid in advance at the
consummation of the Public Offering.
7. EXPENSES: In addition to the Spread and the non-accountable expense
allowance, and except as set forth below, the Company shall pay all
costs and expenses incident to the purchase, sale and delivery of the
Shares, including without limitation, all fees and expenses, including
fees of the Representative's counsel in connection with the listing of
the shares on the Neuer Markt in Germany; fees and disbursements of
counsel and accountants for the Company; printing costs, including costs
of printing the Prospectus, any amendments thereto, all underwriting
documents, and a reasonable quantity of prospectuses as determined by
the Representative; all road show costs and expenses; the cost of
preparing bound volumes of the Public Offering documents for the
Representative and its counsel. The Company shall also pay for the cost
of any tombstone advertisements, and such other expenses for advertising
undertaken at the Company's request, including
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Team Communications Group, Inc.
March 11, 1999
Page 3
graphic slide costs. The Representative shall pay the fees and
disbursements of its counsel.
8. CONDITIONS, REPRESENTATIONS AND COVENANTS: The Company represents,
warrants and covenants that:
Current Company management, as disclosed to us, will continue in
place after the Public Offering for a reasonable period of time.
The Company does not know of any facts which may adversely
affect its earnings, prospects or business which have not been
fully disclosed to the Representative.
The Company shall cause at least 40% of the proceeds from the
Public Offering to be expended on business activities in Europe
as described in the Prospectus.
A financial printing services acceptable to the Representative
shall be used to print the Prospectus and underwriting and/or
placement documents.
There will be included in the Prospectus, audited financial
statements of the Company for the three fiscal years preceding
the effective date of the Prospectus (reported on by a national
accounting firm reasonably acceptable to the Representative)
and, current unaudited comparative interim financial statements.
The financial statements will present fairly the financial
condition of the Company and the results of its operations at
the time and for the periods covered by such financial
statements, and such statements will be substantially as
heretofore represented to the Representative.
The Company has prepared and delivered to the Representative its
most recent financial statements and projections constituting
its best estimate of revenues, earnings and cash flow and shall
update such estimates on a monthly basis during the registration
period.
The Company shall have in place a reasonable amount of Director
and Officer Liability Insurance (provided that such insurance
can be obtained at a reasonable cost as determined by the
Company and the Representative) from a responsible insurer, all
satisfactory to the Representative, prior to the consummation of
the Public Offering.
The Representative shall have the right for such eighteen (18)
month period to
<PAGE> 4
Team Communications Group, Inc.
March 11, 1999
Page 4
designate an observer to the Board of Directors of the Company,
which observer shall have the right to attend all Board and
Board committee meetings.
The Company will use its best efforts to have the Shares listed
on the Neuer Markt concurrently with the consummation of the
Public Offering.
For a period of two (2) years after the closing of the Public
Offering or until an offering occurs which the Representative
declined, the Company shall notify the Representative in writing
at least ten (10) days before the execution of an Agreement for
a proposed public offering of any debt or equity securities
(other than bank debt or similar financing) by the Company or by
any of its majority owned or controlled subsidiaries
(collectively referred to herein as the Company) or any of its
stockholders owning at least five percent of the Company's
Common Stock ("Principal Shareholders") so that the
Representative or, at its option, a group of associated
investment bankers, shall have the right of first refusal to
effect the offering on terms as favorable as theretofore offered
in writing by a reputable investment banker. If the Company
receives an offer from a major bracket investment banker, the
foregoing condition shall be considered satisfied if the
Representative is included in the offering as a syndicate member
and receives a reasonable retention. We agree to notify the
Company if we intend to exercise the right of first refusal
within ten (10) days of receipt by us of such notice from the
Company. If the Representative fails to exercise the right of
first refusal within the ten day period and the terms of the
proposed subsequent financings thereafter are altered in any
material respect, the Company shall again offer to the
Representative the right of first refusal to effect subsequent
financings upon such altered terms and the Representative shall
have ten (10) days from the date of receipt to notify the
Company of its acceptance.
The Company represents to the Representative that except for
CCS, no one is entitled, directly or indirectly, to compensation
from the Company, for services as a finder in connection with
the proposed Offering or any other transaction contemplated by
this letter.
9. STATEMENT OF INTENT: It is understood that our undertaking to effectuate
the proposed Public Offering on a "best-efforts" basis is subject to the
Prospectus and the documentation related thereto, being reasonably
satisfactory to the Representative and its counsel.
The Representative intends to effect the Public Offering as soon
as practicable after the Company has complied with all
applicable statutes, laws, rules and
<PAGE> 5
Team Communications Group, Inc.
March 11, 1999
Page 5
regulations and the terms of this Letter of Intent; provided,
however, that the Representative reserves the right not to
proceed with the Public Offering if, in its sole judgment,
market conditions are unsuitable for such offering, or
information comes to its attention relating to the Company, its
management or its position in the industry, which could, in the
Representative's sole judgment, preclude a successful offering
of the Shares to the public.
This Letter of Intent is only a statement of intent. If
executed, it does not, either expressly or by implication,
constitute a binding agreement by the Representative to
undertake the financing outlined herein or an agreement to enter
into an underwriting and/or placement agreement. Except with
respect to the obligations of the Company to proceed with the
underwriting outlined herein and the obligations set forth in
Paragraphs 4(b), 6 and 11 hereof (which obligations of the
Company are intended to be legally binding), any legal
obligation between the Company and the Representative or the
underwriters shall be only as set forth in a duly negotiated and
executed underwriting and/or placement agreement which shall be
in form and content satisfactory to the Representative.
10. CONDITIONS OF PERFORMANCE BY THE REPRESENTATIVE: Notwithstanding
anything to the contrary hereinabove set forth, the performance of the
obligations of the Representative as provided in this Letter of Intent
is specifically subject to and conditioned upon the following:
Successful completion of in depth investigative procedures to be
conducted by the Representative in respect to the Company, its
operations and general performance as well as its officers and
directors (commonly referred to as "due diligence" procedures);
and
Results of the due diligence procedures employed by the
Representative satisfactory to the Representative in its sole
determination.
11. LEGALLY BINDING: In addition to the provisions of Paragraph 5, the
Company and the Representative agree that the following provisions shall
be legally binding on the Company:
If,the Public Offering is not commenced for any reason
whatsoever, then the Company shall (1) reimburse the
Representative in full for its direct, out-of-pocket expenses,
including without limitation, its legal fees and disbursements,
but not to exceed an aggregate of $100,000, of which $25,000
will have been
<PAGE> 6
Team Communications Group, Inc.
March 11, 1999
Page 6
paid to the Representative, (2) pay all listing fees and
expenses, including Neuer Markt listing legal fees not to exceed
an aggregate of $30,000.
<PAGE> 7
Team Communications Group, Inc.
March 11, 1999
Page 7
If the foregoing correctly sets forth the understanding we have
heretofore reached regarding the proposed Public Offering, please sign and
return the enclosed copy of this Letter of Intent by March __, 1999. Your
acceptance hereto also constitutes an agreement to keep this letter confidential
and not to "shop" it with any other underwriters.
Very truly yours,
VALUE MANAGEMENT AND RESEARCH, A.G.
By: ______________________
______________________
Managing Director
ACCEPTED AND AGREED TO
this 18th day of March, 1999
Team Communications Group, Inc.
By: ______________________
Drew Levin
Chairman & C.E.O.
<PAGE> 1
EXHIBIT 10.17
March 16, 1999
Mr. Drew S. Levia
Chairman, Board of Directors
Team Communications Group, Inc.
12300 Wilshire Boulevard, #400
Los Angeles, CA 90025
Re: Resignation from Board of Directors
Dear Mr. Levin:
Effective immediately, for personal reasons, I am resigning from the Board of
Directors of Team Communications Group, Inc.
Be advised that may resignation is not due to any disagreement relating to the
company's operations, policies or practices.
Thank you,
Sincerely,
/s/ Seth Williamson
- -------------------
Seth Williamson
SW:af
