UNITED
STATES
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): August 13, 2008
ONSTREAM
MEDIA CORPORATION
(Exact
Name of Registrant as Specified in Charter)
Florida
(State
of
Jurisdiction of Incorporation)
|
000-22849
|
|
65-0420146
|
|
(Commission
File Number)
|
|
(I.R.S.
Employer Identification No.)
|
1291
SW 29 Avenue, Pompano Beach, Florida 33069
(Address
of Principal Executive Offices) (Zip Code)
(954)
917-6655
(Registrant's
telephone number, including area code)
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):
x
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01
Entry
into a Material Definitive Agreement
As
previously disclosed on a Current Report on Form 8-K filed with the Securities
and Exchange Commission on June 2, 2008, Onstream Media Corporation, a Florida
corporation (“
Onstream
”)
and
Onstream Merger Corp., a newly formed Delaware corporation and a wholly owned
subsidiary of Onstream (“
Merger
Sub
”)
entered into an Agreement and Plan of Merger (the “
Merger
Agreement
”)
with
Narrowstep Inc., a Delaware corporation (“
Narrowstep
”)
and W.
Austin Lewis IV, as stockholder representative (for the Narrowstep
stockholders), dated as of May 29, 2008. Pursuant to the Merger Agreement,
Onstream will acquire Narrowstep by means of a merger of Merger Sub with and
into Narrowstep (the
“Merger
”)
with
Narrowstep continuing as the surviving corporation and a wholly-owned subsidiary
of Onstream after the Merger (the “
Surviving
Corporation
”).
On
August
13, 2008, Narrowstep, Onstream and Merger Sub entered into an amendment to
the
Merger Agreement (the “
Amendment
”).
Pursuant to the Amendment, among other things, the aggregate number of shares
of
Onstream common stock, par value $0.0001 per share (“
Onstream
Common Stock
”),
initially issuable in the Merger in exchange for each outstanding share of
Narrowstep common stock, par value $0.000001 per share (“
Narrowstep
Common Stock
”),
other
than shares held by Onstream and shares held by an subsidiary of Narrowstep
(collectively, the “
Shares
to be Converted
”)
was
reduced from 10,500,000 to 9,100,000 shares. Narrowstep shares held by
stockholders who have perfected their appraisal rights under Delaware law are
subject to resolution as provided for in the Merger Agreement. In addition,
the
calculation of the aggregate number of shares of Onstream Common Stock initially
issuable in the Merger in exchange for the Shares to be Converted was modified
to limit the value attributed to Narrowstep’s cash balances at closing to a
maximum of $600,000. Further, Narrowstep agreed to increase the aggregate value
of its Series A Preferred Stock, par value $0.000001 per share (the
“
Series
A Preferred Stock
”),
from
at least $300,000 to $1,000,000 and to increase the number of shares of Onstream
Common Stock from an aggregate of 600,000 to 2,000,000 shares into which the
Series A Preferred Stock will convert. In order to assure that this condition
would be satisfied, Narrowstep entered into subscription agreements (the
“
Subscription
Agreements
”)
with
five of its existing stockholders. The sale of the Series A Preferred Stock
pursuant to the Subscription Agreements is exempt from registration pursuant
to
Section 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder.
In
accordance with the terms of the Amendment, the Contingent Value Rights
Agreement (the “
CVR
Agreement
”)
was
revised. Pursuant to those revisions, among other things, the relevant revenue
measurement time periods were changed so that the initial revenue measurement
time period will now commence on the 180th day following the date of closing
of
the Merger, rather than at closing and the second revenue period will now
commence on the 18th month anniversary of the closing date. In addition, the
revenue target for the first revenue time period was reduced from $4,500,000
to
$4,250,000, if the Minimum Exchange Ratio (as defined in the Merger Agreement)
is used. The definition of Second Year Revenue Shares was also revised so that
if the First Year Revenue is less than $4,250,000, no additional shares of
Onstream Common Stock will be issuable in respect of Second Year Revenue.
Finally, the amount that the future projected revenues from the Narrowstep
business, as determined in good faith by Onstream’s Board of Directors, if not
exceeded would allow Onstream to terminate the Narrowstep business at any time
after the third month anniversary of the closing date, and without obtaining
the
consent of, or incurring liability to, the CVR holders or the CVR
Representative, was adjusted to be at least $4,500,000 for the First Year
Revenue and $2,250,000 for the Second Year Revenue (the latter includes only
six
months of operation).
The
Amendment also extends the date by which the parties may terminate the Merger
Agreement (the “
Termination
Date
”)
if the
Merger has not been completed. The Termination Date, which was previously
October 1, 2008, is now November 30, 2008.
The
foregoing descriptions of the Amendment, which is attached as Exhibit 2.1,
and
the revisions to the CVR Agreement, attached as Exhibit C to the Amendment,
are
summaries only, do not purport to be complete and are qualified in their
entirety by reference to the full text of the agreements as described above
which are filed as Exhibits to this report and are incorporated herein by
reference.
Important
Additional Information Will be Filed with the SEC
Onstream
intends to file with the SEC a Registration Statement on Form S-4, which will
include a joint proxy statement/prospectus of Onstream and Narrowstep and other
relevant materials in connection with the proposed transaction. The joint proxy
statement/prospectus will be mailed to the stockholders of Onstream and
Narrowstep. Investors and security holders of Onstream and Narrowstep are urged
to read the joint proxy statement/prospectus and the other relevant materials
when they become available because they will contain important information
about
Onstream, Narrowstep and the proposed transaction. The joint proxy
statement/prospectus and other relevant materials (when they become available),
and any other documents filed by Onstream or Narrowstep with the SEC, may be
obtained free of charge at the SEC’s web site at www.sec.gov. Investors and
security holders may obtain free copies of the documents filed with the SEC
by
Narrowstep at narrowstep.com or by contacting Narrowstep Investor Relations
via
telephone at (609) 945-1772. In addition, investors and security holders may
obtain free copies of the documents filed with the SEC by Onstream at
www.onstreammedia.com or by contacting Onstream’s Investor Relations via
telephone at 646-536-7331. Investors and security holders are urged to read
the
joint proxy statement/prospectus and the other relevant materials when they
become available before making any voting or investment decision with respect
to
the proposed transaction.
Narrowstep
and its respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Narrowstep
and Onstream in favor of the proposed transaction. Information about the
directors and executive officers of Narrowstep and their respective interests
in
the proposed transaction will be available in the joint proxy
statement/prospectus.
Onstream
and its respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Onstream
and Narrowstep in favor of the proposed transaction. Information about the
directors and executive officers of Onstream and their respective interests
in
the proposed transaction will be available in the joint proxy
statement/prospectus.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
filing contains forward-looking statements as defined by the federal securities
laws which are based on our current expectations and assumptions, which are
subject to a number of risks and uncertainties that could cause actual results
to differ materially from those anticipated, projected or implied, including,
among other things, risks relating to the expected timing of the completion
and
financial benefits of the Merger. We undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
|
Exhibit
No.
|
Description
|
|
2.1
|
Amendment
to the Agreement and Plan of Merger, among Onstream Media Corporation,
Onstream Merger Corp. and Narrowstep Inc., dated as of August 13,
2008
|
|
10.1
|
Form
of Subscription Agreement, dated as of August 13, 2008, by and between
Narrowstep Inc. and the investors party
thereto.
|
__________________________
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.
|
|
ONSTREAM
MEDIA CORPORATION
|
|
|
|
|
|
|
By:
|
/s/ Robert
E. Tomlinson
|
|
August
15, 2008
|
|
Robert
E. Tomlinson, CFO
|
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