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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):
June 3, 1996
DIGITAL DATA NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Washington 0-27704 91-1426372
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification Number)
3102 Maple Avenue, Suite 230
Dallas, Texas 75201
(Address of principal executive offices)
(214) 969-7200
(Registrant's telephone number, including area code)
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ITEM 2. Acquisition or Disposition of Assets.
Pursuant to an OFFER dated April 19, 1996, to all of the shareholders
of Pro.Net Communications, Inc. ("Pro.Net"), Digital Data Networks, Inc. (the
"Registrant") acquired all of the outstanding capital stock of Pro.Net, a
British Columbia, Canada corporation. The Registrant issued 100,000 shares of
its Common Stock, no par value, to the fourteen (14) shareholders of Pro.Net in
exchange for all of its outstanding capital stock.
The OFFER was an exempt take-over bid under section 80(d) of the
British Columbia Securities Act (the "Act"), and was exempt from the
registration and prospectus filing requirements of the Act, by virtue of
sections 31(2)(28) and 55(2)(26) of the Act.
The Registrant further issued an additional 10,000 shares of its
Common Stock each to Peter Ciccone and Stephen Willey as consideration for
entering into contracts for services, which have not yet been finalized, to
direct the activities of Pro.Net.
All shareholders who received shares of the Registrant's Common Stock
relating to this transaction did so for investment purposes and without a view
towards distribution. Further, all stock certificates issued in connection with
this transaction were stamped with a restrictive legend prohibiting transfer of
said shares for a period of twenty-four (24) months.
Pro.Net provides a complete range of Internet offerings to
commercial/business customers, including connectivity services to local
subscribers, Intranet services to corporations, and the development of on-line
marketing programs for commercial clients.
This transaction closed June 3, 1996.
ITEM 7. Financial Statements and Exhibits.
(a) & (b) It is impracticable to provide the required financial
statements and the pro forma financial information
relative to Pro.Net at this time. In accordance with Item
7 (a) (1) and 7 (b) (2), the Registrant will file the
required financial statements and proforma financial
information as an amendment to this Form 8-K as soon as
practicable, but not later than 60 days after this report
on Form 8-K must be filed.
(c) The following exhibit is furnished herewith in accordance
with the provisions of Item 601 of Regulation S-K:
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Exhibit No. Description Reg. S-K
Item No.
1 OFFER 2
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.
DIGITAL DATA NETWORKS, INC.
Date: June 18, 1996 By: /s/ Donald B. Scott, Jr.
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Donald B. Scott, Jr., President
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EXHIBIT 1
Digital Data Networks, Inc.
230 - 3102 Maple Avenue
Dallas, Texas 75201
April 19, 1996
To the Holders of Record of shares of Pro.Net Communications, Inc. as of the
mailing date of this offer. (the "Shareholders")
Dear Shareholder,
Offer for Pro.Net Communications, Inc. ("Pro.Net")
1. Introduction
Digital Data Networks, Inc. ("DDN") entered into an understanding pursuant to
which it agreed to make an offer (the "Offer") to all the holders of the
4,400,000 issued and outstanding ordinary shares without par value (the
"Ordinary Shares") in the capital of Pro.Net on the terms and conditions set out
herein.
The purpose of this letter is to make the Offer to you to acquire your Ordinary
Shares.
Certain Shareholders who together hold approximately fifty seven (57%) percent
of the Ordinary Shares have agreed to accept the Offer in respect of their
entire holdings of Ordinary Shares in exchange for common shares without par
value in the capital of DDN (the "DDN Shares").
2. The Offer
We hereby offer to acquire, on the terms and subject to the conditions set out
in this document and the Form of Acceptance, all the Ordinary Shares as of the
date of this letter.
(i) Terms
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In consideration for tendering your Ordinary Shares in the Offer, DDN will issue
to you, for every 44 Ordinary Shares tendered by you into the Offer, one (1) DDN
Share. Each such DDN Share issued will be subject to a two (2) year resale
restriction from the date of issue and thereafter may only be sold in compliance
with the United States Securities Act of 1933 and the securities laws of any
jurisdiction in which the sale may be effected.
For any excess Ordinary Shares tendered by you into the Offer in an amount less
than forty-four (44) (the "Residual Shares"), the Company will issue to you one
(1) DDN Share.
(ii) Condition
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This Offer is subject to the following condition ("the Condition"), namely, that
the Offer shall have been accepted by Shareholders representing more than ninety
(90%) percent of the Ordinary Shares by 3:00 p.m. (Vancouver time) on the 26th
day of April, 1996 (the "Expiry Date").
The above Condition is for the exclusive benefit of DDN and may be waived, in
whole or in part, by DDN.
All Ordinary Shares in respect of which the Offer is accepted or deemed to be
accepted shall be transferred free from all liens, charges and encumbrances and
with all rights attaching thereto as at the date of this document, including all
rights to any dividends or distributions declared made or paid in respect of
them after the date of this Offer.
Instructions on how to accept the Offer are set out in paragraph 6 below headed
"Action to be taken". Further terms of the Offer are set out in Appendices I
and II and in the Form of Acceptance.
3. Details of the DDN Shares
Digital Data Networks, Inc. is a United States corporation whose shares are
quoted on the NASDAQ "small cap" exchange. At the time of making this Offer,
there were 2,026,115 DDN Shares issued and outstanding.
4. Agreement to Tender
Pursuant to an understanding between DDN and certain Shareholders, certain
Shareholders owning approximately 57% of the Ordinary Shares have agreed to
irrevocably tender their respective Ordinary Shares into the Offer.
5. Risk Factors
(i) Non-Acceptance
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If the holders of ten (10%) percent or more of the Ordinary Shares do not accept
this Offer, the Condition of the Offer will not have been met. It is DDN's
intention to withdraw the Offer if the Condition is not met.
(ii) Compulsory Acquisition of Shares
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Under section 279 of the Company Act (B.C.) once the holders of more than ninety
(90%) percent of the Ordinary Shares have accepted the Offer, DDN will become
entitled and intends to acquire compulsorily the remaining Ordinary Shares
(subject to the right of any holder of Ordinary Shares to apply to the court
under the Company Act to set aside the compulsory acquisition or to amend its
terms). Although the terms of the compulsory acquisition will be the same as
those under the Offer, the issuance of DDN shares under the compulsory
acquisition
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provisions will occur at a later date than under the Offer.
6. Action to be taken
(a) Procedure for acceptance
To accept the Offer you must complete, sign and return the attached form of
acceptance ("Form of Acceptance") and forward the duly completed Form of
Acceptance together with any share certificate(s) for the Ordinary Shares, duly
endorsed for transfer, and/or other documents of title, by post, facsimile or by
hand delivery, to Davis & Company, 2800 Park Place, 666 Burrard Street,
Vancouver, B.C., V6C 2Z7, marked for the attention of Stuart Morrow.
Acceptance of the Offer should arrive as soon as possible and in any event not
later than 3:00 p.m. (Vancouver Time) on the 26th day of April, 1996.
(b) Share certificates and validity of acceptance
Even if your share certificate(s) and/or other document(s) of title is/are not
readily available or is/are lost, you should still complete and send the Form of
Acceptance so as to arrive not later than 3:00 p.m. (Vancouver time) on the 26th
day of April, 1996, and arrange for the relevant share certificate(s) and/or
other document(s) of title to be delivered to the offices of Davis & Company as
soon as possible thereafter.
If you have lost your share certificate(s) and/or other document(s) of title,
you should request that the Company Secretary of Pro.Net Communications, Inc. at
120 - 890 West Pender Street, Vancouver, B.C., send you a letter of indemnity
for completion in accordance with the instructions given. When completed, the
letter of indemnity must be sent to the relevant address, as detailed below, in
support of the Form of Acceptance.
DDN reserves the right to treat as invalid in whole or in part any acceptance of
the Offer which is not accompanied by the relevant share certificate(s) and/or
other document(s) of title.
7. Settlement
Provided that the Condition has been fulfilled (or waived by DDN), the DDN
shares payable to Shareholders will be dispatched by post to accepting
Shareholders not later than twenty-one (21) days after the closing of the
acquisition of the Ordinary Shares of Pro.Net by DDN under the Offer (the
"Closing").
All documents will be sent by post at the risk of the person(s) entitled
thereto. Unless other instructions are given in the Form of Acceptance, all
documents will be sent to the holder (or first-named of joint holders in the
Form of Acceptance) at the address indicated in Pro.Net's share register.
8. Further information
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Your attention is drawn to Appendix I and II, which form part of this document
and further terms of the Offer, and further information concerning DDN.
Yours faithfully,
On Behalf of the Board of Digital Data Networks, Inc.
Donald B. Scott
President
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APPENDIX I
FURTHER INFORMATION RELATING TO DDN
1. Directors/Officers
Name Position with the Company
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Ronald P. Erickson Chairman of the Board of Directors
Donald B. Scott President and Director
James F., Biagi, Jr. Secretary and Director
Richard F. Rutkowski Treasurer and Director
Richard J. Boeglin Vice President, CFO
Susan Hassel Vice President, Sales
2. Offices
- - Registered Office: 3102 Maple Ave. Suite 230 Dallas, TX USA 75201
3. Share Capital
DDN's authorized share capital consists of 10,000,000 common shares without
nominal or par value, of which 2,026,115 shares were issued and outstanding as
at the date of this Offer.
4. Prospectus
Pro.Net Shareholders are referred to DDN's prospectus (the "Prospectus"), dated
February 13, 1996, for further particulars on DDN. Copies of the Prospectus are
available for review at Pro.Net's offices, during ordinary business hours.
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APPENDIX II
Further terms of the Offer
1. Acceptance Period
The Offer is open for acceptance for the period from the 19th day of April,
1996, until the 26th day of April, 1996, inclusive.
2. Forms of Acceptance
Each Shareholder by whom, or on whose behalf, any Form of Acceptance is
executed, irrevocably undertakes, represents, warrants and agrees to and with
DDN (so as to bind him, his heirs, successors and assigns) to the following
effect:
(i) that the execution of the Form of Acceptance shall constitute:
(a) an acceptance of the Offer in respect of the number of Ordinary
Shares indicated on the Form of Acceptance, subject to the terms and
conditions set out or referred to in this Offer and the Form of
Acceptance, and that each such acceptance shall be irrevocable; and
(b) provided that the Condition has been fulfilled (or waived by DDN),
an irrevocable cancellation of all options to subscribe for Ordinary
Shares held by the accepting Shareholder and surrender of all his
rights to so subscribe;
(ii) that the execution of the Form of Acceptance, provided that the Condition
has been fulfilled (or waived by DDN), constitutes the irrevocable appointment
of any Director of DDN as such Shareholder's attorney (the "Attorney") (with
power of sub-delegation) and an irrevocable instruction to the Attorney, to
execute all or any form(s) of transfer and/or other documents at the Attorney's
discretion in relation to the Ordinary Shares referred to in sub-paragraph (i)
above in favor of DDN or such other person as DDN may direct and to deliver such
form(s) of transfer and/or other document(s) at the Attorney's discretion
together with the certificate(s) and/or other document(s) of title relating to
such Ordinary Shares for registration within six months of the date of the
Offer, provided that the Condition has been fulfilled (or waived by DDN), and to
do all such other acts and things as may in the opinion of such Attorney be
necessary or reasonable for the purpose of, or in connection with, the
acceptance of the Offer and to vest in DDN or its nominee, the Ordinary Shares
as aforesaid;
(iii) that, provided that the Condition has been fulfilled (or waived by DDN),
the execution of the Form of Acceptance constitutes an irrevocable authority and
request:
(a) to DDN or its agents to procure the registration of the transfer
of the Ordinary Shares pursuant to the Offer and the delivery of
the share certificate(s) and/or other document(s) of title in
respect thereof to DDN
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or as it may direct pursuant to the Offer and the delivery of the
share certificate(s) and/or other document(s) of title in respect
thereof to DDN or as it may direct;
(b) to DDN to deliver to the Shareholder, by post, at the risk of
each Shareholder, share certificates representing the DDN Shares,
at the address set out in the Form of Acceptance.
(iv) that, provided that the Condition has been fulfilled (or waived by DDN),
DDN shall be entitled to direct the exercise of any votes and any or all other
rights and privileges (including the right to requisition the convening of a
general meeting of shareholders) attaching to any Ordinary Shares in respect of
which the Offer has been accepted or is deemed to have been accepted, and that
the execution of the Form of Acceptance will constitute an authority to DDN from
such Shareholder to send any notice, circular, warrant or document or other
communication which may be required to be sent to him as a member of Pro.Net in
respect of such shares to DDN and an authority to the Attorney to sign as his
attorney in his or the Attorney's name and on his behalf, any consent to short
notice of a general meeting or separate class meeting and/or to execute a form
of proxy in respect of such shares appointing any person appointed by DDN to
attend general meetings and separate class meetings of Pro. Net or its members
or any of them and to exercise the votes attaching to such ordinary shares on
its behalf and will also constitute the agreement of such Shareholder not to
exercise any of such rights without the consent of DDN and the irrevocable
undertaking of such Shareholder not to appoint a proxy for or attend such
general meeting or separate class meetings of Pro. Net;
(v) that he will deliver to Davis & Company (attention: Stuart Morrow) 2800
Park Place, 666 Burrard Street, Vancouver, B.C., V6C 2Z7, his share
certificate(s), duly endorsed for transfer, and/or other document(s) of title in
respect of the number of Ordinary Shares referred to in subparagraph (i) above,
or a reasonably acceptable indemnity in lieu thereof, as soon as possible and in
any event within five (5) days after the Closing;
(vi) that the terms of this paragraph 2 shall be incorporated in and form part
of the Form of Acceptance, which shall be read and construed accordingly;
(vii) that he shall do all such acts and things as shall be necessary or
reasonable to vest in DDN or its nominee the Ordinary Shares referred to in sub-
paragraph (i) above;
(viii) that he agrees to ratify each and every act or thing which may be done
or effected by any Director of DDN or his delegate, in the exercise of any of
the powers and/or authorities hereunder; and
(ix) in the case where the Shareholder has previously given an undertaking to
accept the Offer, that the provisions of the Offer and the Form of Acceptance
shall not supersede or vary the terms of that undertaking (including in
particular the power of attorney therein contained) but shall be without
prejudice to and in addition to them.
References in this paragraph 2 to a Shareholder shall include references to the
person or persons
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executing a Form of Acceptance, and in the event of more than
one person executing a Form of Acceptance the provisions of this paragraph 2
shall apply to them jointly and individually.
3. General
(a) The Offer and all acceptances thereof, and the Form of Acceptance shall be
governed by, and construed in accordance with, the laws of the Province of
British Columbia and any laws of Canada having application therein.
(b) All powers of attorney and authorities on the terms conferred by or
referred to in this Appendix I or in the Form of Acceptance are given by way of
security for the performance of the obligations of the Shareholder concerned and
shall endure not withstanding any mental infirmity of the Shareholder in
accordance with section 7 of the Power of Attorney Act (British Columbia).
(c) No acknowledgment of receipt of any Form of Acceptance, share
certificate(s) and/or other document(s) of title will be given.
(d) All communications, notices, certificates, documents of title and
remittances to be delivered by or sent from Shareholders will be delivered by or
sent to or from such Shareholders (or their designated agents) at their own
risk.
