EXHIBIT 10.1

 

Digital Domain Media Group, Inc.
10250 SW Village Parkway
Port St. Lucie, Florida 34987

 

August 16, 2012

 

 

PBC Digital Holdings II, LLC (the “Purchaser”)

c/o Palm Beach Capital

505 Flagler Drive, Suite 1400

West Palm beach, FL  33401

Attn:  Shaun McGruder

 

Re:          Securities Purchase Agreement (the “Purchase Agreement”), dated as
of May 6, 2012, by and among the Company and the investors party thereto (the
“Initial Buyers”), as amended from time time

 

Dear Mr. McGruder:

 

All capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to such terms in the Purchase Agreement.

 

A.           Effective as of the Effective Date (as defined below), the Company
hereby agrees that notwithstanding anything contained in any of the Transaction
Documents to the contrary:

 

(i)            An additional “Closing” (the “Additional Closing”) shall occur on
August 16, 2012 (the “Additional Closing Date”) on the terms set forth in the
remainder of this paragraph A.  The parties hereto agree that the Purchase
Agreement shall, solely with respect to the issuances of Additional Securities
(as defined below) contemplated hereby, be adjusted, mutatis mutandis, to effect
such Additional Closing, including without limitation, each reference to
“Closing” or “Closing Date” therein, referring to the Additional Closing or the
Additional Closing Date and each reference to “Notes” or “Warrants” being
purchased on the Additional Closing Date, referring to the Additional Note (as
defined below) and Additional Warrants (as defined below) being purchased
hereunder, as applicable, in connection herewith and therewith.  After the
Additional Closing, for purpose of the Purchase Agreement and the other
Transaction Documents, the Purchaser shall be a “Buyer” under the Purchase
Agreement and the other Transaction Documents (including, without limitation,
the Security Documents), the definitions of (1) “Schedule of Buyers” shall be
amended to include the Additional Schedule of Buyers (as defined below),
(2) “Notes” shall be amended to include the Additional Note, (3) “Warrants”
shall be amended to include the Additional Warrants, (4) “Conversion Shares”
shall be amended to include the Additional Conversion Shares (as defined below)
and (5) “Warrant Shares” shall be amended to include the Additional Warrant
Shares (as defined below).

 

(ii)           On the Additional Closing Date, (1) the Company shall issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, a
senior secured convertible note, in the form attached hereto as Exhibit A (the
“Additional Note”) in the original principal

 

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amount as is set forth opposite the Purchaser’s name on Schedule 1 (the
“Additional Schedule of Buyers”) attached hereto, which shall be convertible
into shares of Common Stock (the “Additional Conversion Shares”) in accordance
with the terms of the Additional Note, along with warrants to purchase Common
Stock in the form attached hereto as Exhibit B (the “Additional Warrants”) to
initially acquire up to the aggregate number of shares of Common Stock as is set
forth opposite the Purchaser’s name on the Additional Schedule of Buyers (as
converted, the “Additional Warrant Shares”, and together with the Additional
Conversion Shares, the Additional Note and the Additional Warrants, the
“Additional Securities”), (2) the Purchaser shall execute and deliver that
certain “Agreement Among Buyers”, in the form attached hereto as Exhibit C (the
“Agreement Among Buyers”) and (3) the Company shall have delivered an executed
consent letter of the Subordinated Lender consenting to the issuance of the
Additional Securities in a form satisfactory to the Purchaser in its sole
discretion.  The Company also shall deliver to the Purchaser the deliveries
requested by the Purchaser to be delivered by the Company pursuant to Section 7
of the Purchase Agreement (other than those deliverables set forth in subclauses
(1) - (3) above, which shall be delivered on the Additional Closing Date) no
later than the fifteenth (15) calendar day following the Additional Closing
Date.  On the Additional Closing Date the Purchaser shall pay the Company its
purchase price (the “Additional Purchase Price”) for such Additional Note and
Additional Warrants to be purchased hereunder as is set forth opposite the
Purchaser’s name on the Additional Schedule of Buyers and, in connection
therewith, the Purchaser further agrees to comply with the second sentence of
Section 1(c) of the Purchase Agreement.

 

B.            The parties hereto acknowledge and agree that (1) the Purchaser
shall have all rights of a Buyer as set forth herein and under all the
Transaction Documents (including, without limitation, the Security Documents)
(other than rights under Section 4(o) of the Securities Purchase Agreement);
(2) notwithstanding anything set forth in any Transaction Document, the consent
of the Purchaser shall not be required for any amendment or waiver to the
Purchase Agreement or any other Transaction Document unless both (x) the
unanimous written consent of the parties to such Transaction Documents or
holders of such Securities, as applicable, is required by the applicable terms
and conditions thereof and (y) such amendment or waiver disproportionately and
adversely affects the Purchaser. The Company hereby acknowledges and agrees that
(i) none of the rights of the Purchaser contemplated hereunder shall limit any
rights of the Initial Buyers in any manner and (ii) the Purchaser shall be
entitled to rely on all representations and warranties contained in Section 3 of
the Purchase Agreement as if such representations and warranties were made to
the Purchaser on the Additional Closing Date, subject to qualification by
revised schedules thereto which may be delivered by the Company to the Purchaser
prior to or after the Additional Closing Date, but in no event later than the
fifteenth (15th) calendar day after the Additional Closing Date,
(I) notwithstanding anything herein or in the Transaction Documents (after the
Effective Date) to the contrary, but solely for purposes of the Registration
Rights Agreement, no shares of Common Stock issuable upon conversion or exercise
or otherwise pursuant to the Additional Note or the Additional Warrants, as
applicable, shall be Registrable Securities thereunder and (II) as of the
Effective Date, “Required Holders” as defined in the Purchase Agreement, shall
be amended and restated as follows:

 

“Required Holders” or “Requisite Holders” means holders of not less than 55% of
all Registrable Securities (excluding any Registrable Securities held by the
Company or any of its Subsidiaries) issued or issuable hereunder or pursuant to

 

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the Notes and/or the Warrants (or the Buyers, with respect to any waiver or
amendment of Section 4(o)); provided, that such holders (except to the extent
any such holder (together with its affiliates) does not beneficially own any
Notes or beneficially owns Notes with a then outstanding aggregate principal
amount of less than $1 million) must include (x) the Collateral Agent (if a
holder of Notes) and any affiliates of the Collateral Agent holding any Notes
and (y) the Buyer (other than the Collateral Agent and its affiliates) that
immediately following the initial Closing would beneficially own the largest
outstanding aggregate original principal amount of Notes.

 

D.            Except as expressly set forth herein, (i) each of the Transaction
Documents and each of the obligations of the Company thereunder, and each of the
rights of and benefits to the Buyers thereunder, is, and shall continue to be,
in full force and effect and each is hereby ratified and confirmed in all
respects, except that from and after the date hereof, without implication that
the contrary would otherwise be true, (A) all references in the Purchase
Agreement to “this letter agreement,” “hereto,” “hereof,” “hereunder” or words
of like import referring to the Purchase Agreement shall mean the Purchase
Agreement as amended by this letter agreement, (B) all references in the
Transaction Documents to “the Purchase Agreement,” “thereto,” “thereof,”
“thereunder” or words of like import referring to the Purchase Agreement shall
mean the Purchase Agreement as amended by this letter agreement, and (C) all
references in the Transaction Documents to “the Transaction Documents,”
“thereto,” “thereof,” “thereunder” or words of like import referring to the
Transaction Documents shall mean the Transaction Documents as amended by this
letter agreement, and (ii) the execution, delivery and effectiveness of this
letter agreement shall not operate as an amendment or waiver of any right, power
or remedy of any Buyer under any of the Transaction Documents, nor constitute an
amendment or waiver of any provision of any of the Transaction Documents and
each of the Transaction Documents shall continue in full force and effect, as
amended or modified by this letter agreement. The parties hereto agree that this
letter agreement (i) amends (and constitutes an amendment to) the Purchase
Agreement and all the other Transaction Documents as expressly contemplated by
this letter agreement to give full force and effect to the terms and conditions
of this letter agreement and (ii) constitutes a Transaction Document.

 

E.            This letter agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event that any signature is delivered by facsimile
transmission or by an e-mail which contains a portable document format (.pdf)
file of an executed signature page, such signature page shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such signature page were an
original thereof.

 

F.             The Company shall, on or before 8:30 a.m., New York time, on
August     , 2012, file a Current Report on Form 8-K describing all the material
terms of the transactions contemplated by this letter agreement in the form
required by the 1934 Act. From and after the filing of such 8-K, the Company
confirms that it will have disclosed all material, non-public information (if
any) regarding the Company and its Subsidiaries delivered to the Purchaser by
the Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by this letter agreement.

 

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G.            Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this letter agreement and the consummation of the transactions
contemplated hereby.

 

H.            This letter agreement shall become effective upon the later of
(a) such date as the Company shall have obtained a consent in the form attached
hereto as Exhibit D from each Initial Buyer and each Initial Buyer shall have
executed the Agreement Among Buyers and (b) the Purchaser has executed and
delivered the Agreement Among Buyers(the “Effective Date”).

 

I.             Concurrently herewith, the Company shall reimburse the Purchaser
for all reasonable costs and expenses incurred by it in connection with
preparing and delivering this letter agreement and the prior unpaid and
outstanding legal fees and expenses incurred by the Purchaser to date with
respect to the Transaction Documents, those certain call option agreements
entered into by the Purchaser at the request of the Company, matters related to
securities offerings made by the Company and other matters relating to the
Company, which amount shall be withheld by Purchaser from the Additional
Purchase Price at the Addiitonal Closing.  Except as otherwise set forth in this
letter agreement and the Transaction Documents, each party to this letter
agreement shall bear its own expenses in connection with the transactions
contemplated hereby.

 

J.             The language used in this letter agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

K.            The headings of this letter agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
letter agreement.

 

L.            If any provision of this letter agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
letter agreement so long as this letter agreement as so modified continues to
express, without material change, the original intentions of the parties as to
the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective expectations or reciprocal obligations of the parties or the
practical realization of the benefits that would otherwise be conferred upon the
parties.  The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

M.           No provision of this letter agreement may be amended other than by
an instrument in writing signed by the Company and the Purchaser.

 

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N.            Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with the
terms of the Purchase Agreement (with the Effective Date deemed to have occurred
for such purpose).

 

O.            This letter agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns in accordance
with the terms of the Purchase Agreement (with the Effective Date deemed to have
occurred for such purpose).

 

P.             All questions concerning the construction, validity, enforcement
and interpretation of this letter agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this letter agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS CONSENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

Q.            The obligations of the Purchaser under this letter agreement and
the other Transaction Documents are several and not joint with the obligations
of any other Buyer, and neither Purchaser nor any other Buyer shall be
responsible in any way for the performance of the obligations of Purchaser under
this letter agreement or of Purchaser or any other Buyer under any other
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by Purchaser pursuant hereto or by Purchaser or
any other Buyer pursuant thereto, shall be deemed to constitute the Purchaser or
any other Buyers as, and the Company acknowledges that neither Purchaser nor any
other Buyers so constitute, a partnership, an association, a joint venture or
any other kind of group or entity, or create a presumption that the Purchaser or
any other Buyers are in any way acting in concert or as a group or entity with
respect to such obligations or the transactions contemplated herein or by the
other Transaction Documents or any matters, and the Company acknowledges that
Purchaser and the other Buyers are not acting in concert or as a group, and the
Company shall not assert any such claim, with respect to such obligations or the
transactions contemplated by this letter agreement and the other Transaction
Documents. The decision of Purchaser to purchase securities pursuant to this
letter agreement and the other Transaction Documents has been made by Purchaser
independently of each other Buyer. Purchaser acknowledges that no other Buyer
has acted as agent for Purchaser in connection with Purchaser making its
investment hereunder and that no other Buyer will be

 

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acting as agent of Purchaser in connection with monitoring Purchaser’s
investment in the securities or enforcing its rights under this letter agreement
or the other Transaction Documents. The Company and Purchaser confirms that
Purchaser has independently participated with the Company and its Subsidiaries
in the negotiation of the transaction contemplated hereby and by the other
Transaction Documents with the advice of its own counsel and advisors. Purchaser
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this letter agreement or out of
any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose. It
is expressly understood and agreed that each provision contained in this letter
agreement and in each other Transaction Document is between the Company, each
Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries
and the Buyers collectively and not between and among the Buyers.

 

[signature page follows]

 

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Sincerely,

 

 

 

 

 

DIGITAL DOMAIN MEDIA GROUP, INC

 

 

 

 

 

 

 

 

By:

/s/ John C. Textor

 

 

 

Name: John C. Textor

 

 

 

Title: Chief Executive Officer

 

 

 

 

 

 

Agreed to and accepted:

 

 

 

 

 

PBC DIGITAL HOLDINGS II, LLC

 

 

 

 

 

By: PBC GP III, LLC, its Manager

 

 

 

 

 

 

 

 

By:

/s/ Shaun McGruder

 

 

 

Name: Shaun McGruder

 

 

 

Title: Manager

 

 

 

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Schedule 1

 

 

 

Address and Facsimile
Number

 

Original
Principal Amount
of Additional
Note

 

Number of
Additional
Warrant Shares
underlying
Additional
Warrants

 

Additional
Purchase
Price

 

Legal Representative’s
Address and Facsimile
Number

PBC Digital

Holdings II, LLC

 

c/o Palm Beach Capital

505 Flagler Drive

Suite 1400

West Palm beach, FL 33401

Attn: Shaun McGruder

Telephone: (561) 659-9022

Facsimile: (561) 659-9055

Attn: Shaun McGruder

 

$

5,000,000

 

 

 

$

5,000,000

 

Greenberg Traurig, P.A.

401 East Las Olas Blvd.

Suite 2000

Fort Lauderdale, FL 33301

Telephone: (954)765-0500

Facsimile: (954) 765-1477

Attention: Bruce I. March, Esq.

 

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