TEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 28, 2015, our newly-formed Delaware subsidiary, Viva Entertainment Group, Inc. (“Viva Entertainment” or the “Subsidiary”) entered into an employment agreement (“Agreement”) expiring December 31, 2018 with Johnny Falcones, for Mr. Falcones to act as the President and Chief Executive Officer of Viva Entertainment and to manage the development and marketing of its over the top (IPTV/OTT ) application for connected tvs, desktop computers, tablets, smart phones. The IPTV/OTT streamlining platform is designed to be used at homes, offices or during travel, where users may pay and watch what entertainment they choose based on a subscription or on a pay per view basis.
As compensation for services to be rendered under the Agreement in calendar 2016 (January 1 through December 31, 2016), in addition to the compensation specified below, Mr. Falcones will receive a bonus of a five-year common stock purchase warrant to purchase 3,000,000 shares of common stock of the Company at an exercise price of $.74 per share and three-year warrants to purchase up to Five (5%) Percent of the restricted common stock of Viva Entertainment, at an exercise price of Fifty ($0.50) Cents per share, which are exercisable in the event that Viva Entertainment is spun out of the Company. For calendar 2016, Mr. Falcones will receive 500,000 shares of common stock of the Company for his services as a director of the Company in that year, and will receive an additional 375,000 shares of restricted common stock of the Company, on a monthly basis, starting in 2016 month 2 (February, 2016), for a period of four months, ending at 2016 month 5 (May), for an aggregate total of 1,500,000 shares of restricted common stock of the Company.
ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
On October 28, 2015, the Board of Directors of the Company appointed Johnny Falcones as President and Chief Executive Officer of our subsidiary Viva Entertainment and as a member of our Board of Directors effective immediately. [Reference is made to Item 1.01 above, for a detailed description of compensation arrangements provided for in the Employment Agreement with Mr. Falcones.] Mr. Falcones will be issued 500,000 shares of our common stock for his services as a director in 2016.
In connection with the appointment of Mr. Falcones as the CEO of Viva Entertainment Group, the Board on October 28, 2015, approved the issuance of three-year common stock purchase warrants granting Mr. Falcones, and the Company’s CEO Steve Rubakh, each the right to purchase 5% of the equity of the Viva Entertainment, exercisable in the event, and only in the event, that the Subsidiary is spun off to stockholders of the Company.
Johnny Falcones , age 46, has worked as in development and management of stars and music events in the popular music business, as well as production and marketing of music events, for some of which he has acted as executive producer. Mr. Falcones has also worked for and developed a record label. He has worked with Celia Cruz and Tito Puente in a management and marketing capacity. Mr. Falcones was also asked to co-manage and produced the White House’s 24th Annual Hispanic Heritage Awards in September, 2010 and 2014.
Mr. Falcones received a degree in Business from La Guardia College, New York, New York in 1991.
Item 1.01. Entry into Material Definitive Agreement.
Restructure of Outstanding Viva Entertainment Group Promissory Note
In connection with the sale on April 5, 2016 of our Viva Entertainment Group Subsidiary to Black River Petroleum Corp. (“Black River”, which subsequently changed its name to “Viva Entertainment Group”), Black River issued to the Company in exchange for control of our subsidiary, a 10% promissory note in the principal amount of $100,000, due six months from the closing of the sale (the “Original Note”), which represented the purchase price paid by Black River (now Viva Entertainment Group) for our subsidiary. The Original Note did not have a Convertible Structure.
As of February 27, 2017, the Company and Viva Entertainment Group have signed an amendment to the Original Note (which as so amended is referred to herein as the “Amended Note”). The Amended Note is due on demand and convertible into shares of Viva Entertainment Group (Symbol: OTTV) common stock at a variable Conversion Price defined as 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the lowest one (1) Trading Prices for the Viva Entertainment common stock the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service reporting service. The Amended Note is filed as an exhibit to this Current Report, and reference is hereby made to that exhibit for the complete terms of the Amended Note.
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