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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): April 5, 2017
SPECIAL DIVERSIFIED OPPORTUNITIES INC.
(Exact Name of Registrant as Specified in Charter)
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Delaware
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001-36696
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56-1581761
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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1521 Concord Pike, Suite 301, Wilmington, DE
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19803
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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: (302) 824-7062
Not applicable
(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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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
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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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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
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As described in its Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC, on November 25, 2016, Special Diversified Opportunities Inc. (the “Company”) is a party to that certain Contribution and Exchange Agreement (as previously amended, the “Existing Agreement”), dated as of November 25, 2016, among the Company, Standard General Master Fund L.P. (“SG Master Fund”), P Standard General Ltd. (“PSG”) and Standard General Focus Fund L.P. (“SG Focus Fund” and, collectively with SG Master Fund and PSG, the “SG Parties”).
On April 5, 2017, the parties to the Existing Agreement entered into an amendment (the “Amendment”) to the Existing Agreement (as so amended, the “Agreement”). The Amendment amends the definition of Pro Forma Book Value Per Share in the Agreement to exclude from the calculation of the Company’s stockholders’ equity the impact of the payment of the purchase price and the acquisition of shares under, as well as any fees and expenses incurred by the Company in connection with, the transactions contemplated by November 23, 2016 agreement to acquire, through its wholly owned subsidiary, Pillar General Inc., all of the outstanding capital stock of Interboro Holdings, Inc., an insurance company located in New York. The Amendment also caps the Company’s obligation under the Agreement to pay the fees and expenses of the SG Parties at $1.4 million in the aggregate.
Closing of the Contribution and Exchange is expected to occur in the second quarter of 2017.
The foregoing summary of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached hereto as Exhibit 2.1. The transactions contemplated by the Agreement are referred to herein as the “Contribution and Exchange.”
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, are forward-looking statements. These forward looking statements address, among other things activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including the Company’s statements relating to the anticipated effects of the proposed Contribution and Exchange. These forward-looking statements are subject to a number of risks that could cause actual results to differ materially from those contained in the forward-looking statements, including the risk that the Company’s stockholders may not approve the Company’s proposal to amend and restate the Company’s certificate of incorporation to approve changes to said certificate of incorporation contemplated by the Agreement (the “Charter Amendment Proposal”) and that the regulatory approvals and any other required approvals in connection with the Contribution and Exchange may not be obtained on the proposed terms or at the times anticipated, as well as the risk factors described Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 22, 2017.
Currently unknown or unanticipated risks, or risks that emerge in the future, could cause actual results to differ materially from those described in forward-looking statements, and it is not possible for the Company to predict all such risks, or the extent to which this may cause actual results to differ from those contained in any forward-looking statement. Except as required by law, the Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.
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Important Information
In connection with the Charter Amendment Proposal, the Company intends to file a proxy statement on Schedule 14A with the SEC and the Company intends to file other relevant materials with the SEC. Stockholders of the Company are urged to read all relevant documents filed with the SEC when they become available, including the Company’s proxy statement, because they will contain important information about the proposed transaction. A definitive proxy statement will be sent to holders of the Company’s common stock seeking their approval of the proposed transaction.
Investors and security holders will be able to obtain the documents (when available) free of charge at the SEC’s web site, http://www.sec.gov. In addition, the Company’s stockholders may obtain free copies of the documents filed with the SEC when available by contacting the Company at 1521 Concord Pike, Suite 301,
Wilmington, DE 19803, phone 1-302-824-7062. Such documents are not currently available. You may also read and copy any reports, statements and other information filed with the SEC at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.
Item 9.01.
Financial Statements and Exhibits.
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The following exhibit is being furnished with this report
(a)
Financial Statements of Businesses Acquired.
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None.
(b)
Pro Forma Financial Information.
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None.
(c)
Shell Company Transactions.
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None.
(d)
Exhibits.
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Exhibit
Number 		​ ​
Exhibit Title
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2.1
​ ​ Amendment to Contribution and Exchange Agreement, dated as of April 5, 2017, by and among Special Diversified Opportunities Inc., Standard General Master Fund L.P., P Standard General Ltd. and Standard General Focus Fund L.P. ​
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SIGNATURE
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.
​ ​ ​ ​ SPECIAL DIVERSIFIED OPPORTUNITIES INC. ​
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Date: April 6, 2017
​ ​ By: ​ ​ /s/ Kevin J. Bratton ​
​ ​ ​ ​ ​ ​ ​ Name: Kevin J. Bratton ​
​ ​ ​ ​ ​ ​ ​ Title: Chief Financial Officer ​
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EXHIBIT INDEX
Exhibit
Number 		​ ​
Exhibit Title
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2.1
​ ​ Amendment to Contribution and Exchange Agreement, dated as of April 5, 2017, by and among Special Diversified Opportunities Inc., Standard General Master Fund L.P., P Standard General Ltd. and Standard General Focus Fund L.P. ​
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Exhibit 2.1​
SECOND AMENDMENT TO CONTRIBUTION AND EXCHANGE AGREEMENT
This Second Amendment to the Contribution and Exchange Agreement (this “ Amendment ”), is entered into and effective as of April 5, 2017, by and among Special Diversified Opportunities Inc., a Delaware corporation (the “ Company ”), Standard General Master Fund L.P., a Cayman Islands limited partnership (“ SG Master Fund ”), P Standard General Ltd., a British Virgin Islands company (“ PSG ”) and Standard General Focus Fund L.P., a Delaware limited partnership (“ SG Focus Fund ” and, together with SG Master Fund and PSG, the “ SG Parties ” and each, a “ SG Party ”), for purposes of amending the Contribution and Exchange Agreement, dated as of November 25, 2016, by and among the SG Parties and the Company (the “ Agreement ”), as amended by the First Amendment to the Contribution and Exchange Agreement, dated as of January 24, 2017. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Agreement. For the purposes of the amendments set forth herein, double underlining indicates new language and strikethrough indicates deleted language.
WHEREAS, pursuant to Section 7.12 of the Agreement, the parties may amend the provisions of the Agreement by the mutual written agreement of the Company (following recommendation of the Special Committee) and the SG Parties;
WHEREAS, the Board of Directors, acting upon the unanimous recommendation of the Special Committee, has determined that it is advisable and in the best interests of the Company and its stockholders to amend the Agreement as set forth in this Amendment; and
WHEREAS, the SG Parties and the Company desire to amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements set forth herein, the Company and the SG Parties hereby agree as follows:
1.
Amendments to Agreement .
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1.1.
Amendment of Section 4.7 (Fees and Expenses ). Section 4.7 (Fees and Expenses) is hereby amended as follows:
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Section 4.7 Fees and Expenses . Except as set forth in this Agreement, all fees and expenses incurred in connection with this Agreement and the Transaction shall be paid by the party incurring such fees or expenses. Notwithstanding the foregoing, (i) following the date hereof, the Company shall promptly pay or reimburse any Turning Point Expenses as and when requested, and (ii) in the event the Transaction is consummated, the Company shall promptly pay or reimburse the SG Parties for any SG Party Expenses that have not been previously paid or reimbursed by the Company and that are either (x) Turning Point Expenses or (y) fees and expenses of counsel and any related fees, expenses and disbursements , provided that the aggregate amount of Turning Point Expenses and SG Party Expenses payable or reimbursable pursuant to the foregoing clauses (i) and (ii) (excluding any Turning Point Expenses or SG Party Expenses incurred in connection with any litigation relating to this Agreement or the Transaction) shall not exceed $1,400,000 .
1.2.
Amendment of Section 7.3 (Definitions) . The definition of  “Pro Forma Book Value Per Share” set forth in Section 7.3 (Definitions) is hereby amended as follows:
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“ Pro Forma Book Value Per Share ” means the quotient obtained by dividing (i) Company’s stockholders’ equity at the time of the Closing calculated in accordance with GAAP (disregarding the transactions contemplated by the Stock Purchase Agreement, dated as of November 23, 2016, by and between the Company and Interboro LLC, including the payment of the purchase price and the acquisition of the Shares (as defined therein) thereunder and any fees and expenses incurred by the Company in connection therewith) , less (x) all unpaid Company Expenses, less (y) any amounts payable or reimbursable by the Company pursuant to Section 4.7, plus (z) the sum of the cash exercise prices that would be payable upon exercise in full of all In the Money Options (whether or not vested) held by all
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holders following the Interim Amendment and immediately prior to the Exchange, by (ii) the Fully-Diluted Class A Common Stock Amount, provided , that in the case of the foregoing clauses (i)(x) and (i)(y), no such amounts shall be deducted to the extent such amounts have already been accrued as a liability on the Company’s balance sheet at the time of Closing as calculated in accordance with GAAP.
2.
No Other Amendments; Full Force and Effect . Except as set forth herein, the Agreement shall remain in full force and effect in accordance with its terms and be unaffected hereby. This Amendment shall constitute a part of the Agreement.
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3.
Construction . The Agreement, as referenced in any other document that the parties have executed and/or delivered in connection therewith, whether executed and/or delivered prior to or contemporaneously with this Amendment, shall mean the Agreement as amended by this Amendment.
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4.
Miscellaneous. Sections . 7.2 (Notices), 7.4 (Interpretation), 7.5 (Counterparts), 7.6 (Entire Agreement; Third Party Beneficiaries), 7.7 (Governing Law), 7.8 (Assignment), 7.9 (Consent to Jurisdiction), 7.11 (Severability), 7.12 (Waiver and Amendment; Remedies Cumulative), 7.13 (Waiver of Jury Trial) and 7.14 (Specific Performance) are hereby incorporated, mutatis mutandis , by reference as if such sections were set forth in full herein.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Amendment to the Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.
​ ​ ​ ​ SPECIAL DIVERSIFIED OPPORTUNITIES INC. ​
​ ​ ​ ​ By: ​ ​ /s/ Kevin J. Bratton ​
​ ​ ​ ​ ​ ​ ​ Name: ​ ​ Kevin J. Bratton ​
​ ​ ​ ​ ​ ​ ​ Title: ​ ​ CFO ​
​ ​ ​ ​ STANDARD GENERAL MASTER FUND L.P. ​
​ ​ ​ ​ By: ​ ​ Standard General L.P., its investment manager ​
​ ​ ​ ​ By: ​ ​ /s/ Soohyung Kim ​
​ ​ ​ ​ ​ ​ ​ Name: ​ ​ Soohyung Kim ​
​ ​ ​ ​ ​ ​ ​ Title: ​ ​ Chief Executive Officer ​
​ ​ ​ ​ P STANDARD GENERAL LTD. ​
​ ​ ​ ​ By: ​ ​ Standard General L.P., its investment manager ​
​ ​ ​ ​ By: ​ ​ /s/ Soohyung Kim ​
​ ​ ​ ​ ​ ​ ​ Name: ​ ​ Soohyung Kim ​
​ ​ ​ ​ ​ ​ ​ Title: ​ ​ Chief Executive Officer ​
​ ​ ​ ​ STANDARD GENERAL FOCUS FUND ​
​ ​ ​ ​ By: ​ ​ Standard General L.P., its investment manager ​
​ ​ ​ ​ By: ​ ​ /s/ Soohyung Kim ​
​ ​ ​ ​ ​ ​ ​ Name: ​ ​ Soohyung Kim ​
​ ​ ​ ​ ​ ​ ​ Title: ​ ​ Chief Executive Officer ​
[Signature Page to Second Amendment to Contribution and Exchange Agreement]