Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On February 29, 2024, the Board of Directors of Digital World Acquisition Corp., a Delaware corporation (“Digital World” or the “Company”), with its principal place of business in Miami, Florida, approved, in supplement to, not in replacement of any applicable provisions in the Company’s Certificate of Incorporation, an amendment to the Company’s bylaws to add a new Section 9.16 to Article IX pursuant to which the Company selects the federal district courts of the United States of America, and specifically the United States District Court for the Southern District of Florida to be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Exchange Act, Securities Act of 1933, as amended (the “Securities Act”), or the rules and regulations promulgated under the Exchange Act or Securities Act. In addition, pursuant to such new Section 9.16, any stockholder bringing an action against the Company outside the scope of Section 12.1 of the Certificate of Incorporation is deemed to have consented to the jurisdiction of the federal courts located within the Southern District of Florida in connection with any action brought in any such court to enforce such Section 9.16.
The foregoing description is qualified in its entirety by reference to the amended bylaws, a copy of which is attached as Exhibit 3.1 hereto and is incorporated herein by reference.
Item 8.01 Other Events.
As previously disclosed, the Company, DWAC Merger Sub Inc., a Delaware corporation (“Merger Sub”), a direct and wholly owned subsidiary of Digital World, and Trump Media & Technology Group Corp., a Delaware corporation (“TMTG”), entered into an Agreement and Plan of Merger, dated as of October 20, 2021 (as amended by the First Amendment to Agreement and Plan of Merger, dated May 11, 2022, the Second Amendment to Agreement and Plan of Merger, dated August 9, 2023, the Third Amendment to Agreement and Plan of Merger, dated September 29, 2023, and as it may be further amended or supplemented from time to time, the “Merger Agreement”), pursuant to which, among other transactions, Merger Sub will merge with in and into TMTG (the “Business Combination”), with TMTG surviving as a wholly owned subsidiary of Digital World. Upon the consummation of the Business Combination, Digital World will change its name to “Trump Media & Technology Group Corp.”
Extension to Liquidation Date
On February 29, 2024, the Board of Directors of Digital World (the “Board”), extended the date by which the Company has to complete its initial business combination from March 8, 2024 to June 8, 2024 (the “Extension”). The Extension is the third of four three-month extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Digital World Charter”), and provides the Company with additional time to complete its initial business combination as determined by the Board. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Litigation Relating to the Business Combination
As disclosed in Digital World’s definitive proxy statement/prospectus related to the Business Combination (the “Proxy Statement”) filed with the Securities and Exchange Commission (the “SEC”) on February 16, 2024, Mr. Patrick Orlando, Digital World’s former chairman of the board of directors and chief executive officer and a current member of the Board and managing member of ARC Global Investments II, LLC’s (“ARC” or the “Sponsor”), has demonstrated persistent conduct to frustrate and obstruct the consummation of the Business Combination. Notwithstanding Mr. Orlando’s and the Sponsor’s fiduciary and contractual obligations to facilitate the consummation of the Business Combination, subsequent to filing the Proxy Statement, ARC, which is solely controlled by Mr. Orlando, threatened to outright enjoin the Business Combination as leverage for negotiating post-merger conditions more favorable for himself and/or ARC to the detriment of Digital World’s public shareholders. On February 26, 2024, ARC, through its representatives, asserted that— after a “more thorough review”—the conversion ratio in connection with the conversion of the Class B common stock into Class A common stock upon consummation of the Business Combination was “approximately 1.8:1.” This 1.8:1 ratio is contrary to prior claims by Mr. Orlando as the managing member of ARC, that the conversion ratio was 1.69:1, as previously disclosed in the Proxy Statement. Digital World and the independent members of the Board believe the calculation underlying the 1.8:1 ratio is incorrect because this calculation appears to inappropriately include certain securities issuances that should be excluded from the ratio’s calculation under the Digital World Charter. The members of the Board further believe that such claims are another attempt by Mr. Orlando to extract personal benefits in breach of his fiduciary duty to Digital World and its shareholders.
Accordingly, because of the foregoing developments in the relationship with Mr. Orlando and the Sponsor, on February 27, 2024, Digital World and TMTG filed a lawsuit, captioned Digital World Acquisition Corp. v. ARC Global Investments II, LLC (Case No. 192862534), in the Civil Division for the Twelfth Judicial Circuit Court in Sarasota County, Florida. The lawsuit seeks (i) a declaratory judgment that the appropriate conversion ratio is 1.34:1, as previously disclosed in the Proxy Statement, (ii) damages for tortious interference with the contractual and business relationship between TMTG and Digital World, (iii) damages for conspiracy with unnamed co-conspirators to tortuously interfere with the contractual and business relationship between TMTG and Digital World, (iv) damages to TMTG as a result of (a) the breach of fiduciary duty by Mr. Orlando, which exposed Digital World to regulatory liability through the practice of targeting and resulted in an $18 million dollar penalty to Digital World and significant reputational harm and (b) Mr. Orlando’s continuous obstruction of Digital World’s merger with TMTG to extort various concessions that only benefit him and harm Digital World and its shareholders; and (v) damages for wrongfully asserted dominion over Digital World’s assets inconsistent with Digital World’s possessory rights over those assets. In the early afternoon on February 28, 2024, ARC’s registered agent in Wilmington, Delaware was served with the complaint filed by Digital World and TMTG against ARC and Mr. Orlando. Mr. Orlando was also personally served with the complaint filed by Digital World and TMTG against ARC and Mr. Orlando. Later in the day on February 28, 2024, ARC’s counsel electronically mailed Digital World’s counsel a lawsuit, captioned ARC Global Investments II, LLC v. Digital World Acquisition Corp., Eric Swider, Frank J. Andrews, Edward J. Preble and Jeffery A. Smith, which was filed in the Court of Chancery of the State of Delaware. The complaint alleges impending violation of the Digital World Charter for failure to commit to issue the number of conversion shares to ARC that ARC claims it is owed upon the consummation of the Business Combination. The complaint claims a new conversion ratio of 1.78:1. Digital World believes the difference between Digital World’s calculation of the previously disclosed conversion ratio of 1.34:1 and ARC’s now claimed ratio of 1.78:1 results from ARC improperly