Effective on August 31, 2017, we entered into a Purchase Agreement (the “ Purchase Agreement ”) with Bettwork Industries, Inc. (“ Bettwork ”). Bettwork’s common stock is quoted on the OTC Pink market under the symbol “ BETW ”.
Pursuant to the Purchase Agreement, we sold Bettwork:
(a)our 71.5% membership interest in Voyages North America, LLC, a Delaware limited liability company (“ Voyages ”), including the voyage.tv website and 16,000 hours of destination and promotional videos;
(b)our 10% ownership in Launch360 Media, Inc., a Nevada corporation (“ Launch360” );
(c)Rights to broadcast television commercials for 60 minutes every day on R&R TV network stations which rights remain in place until the earlier of (a) the date the shares of Launch360 are no longer held by Bettwork; and (b) the date that Launch360 no longer has rights to broadcast television commercials on R&R TV network stations, for whatever reason; and
(d)Our Technology Platform for Home & Away Club and supporting I.C.E. partnership (collectively (a) through (d), the “ Assets ”).
Bettwork agreed to pay $2.9 million for the Assets, payable in the form of a Secured Convertible Promissory Note (the “ Secured Note ”). The amount owed under the Secured Note accrues interest at the rate of (a) six percent per annum until the end of the last day of the month in which the sale occurred; and (b) the greater of (i) six percent per annum and (ii) the prime rate plus 3 3/4% per annum, thereafter through maturity, which maturity date is August 31, 2020, provided that the interest rate increases to twelve percent upon the occurrence of an event of default.
Bettwork may prepay the Secured Note at any time, subject to its obligation to provide us 15 days prior written notice prior to any prepayment. The Secured Note is convertible into shares of Bettwork’s common stock, at our option, subject to a 4.99% beneficial ownership limitation (which may be waived by us with at least 61 days prior written notice). The conversion price of the Secured Note is $1.00 per share (the “ Conversion Price ”), unless, prior to the Secured Note being paid in full, Bettwork completes a capital raise or acquisition and issues common stock or common stock equivalents (including, but not limited to convertible securities) with a price per share (as determined in our reasonable discretion) less than the Conversion Price then in effect (each a “ Transaction ”), at which time the Conversion Price will be adjusted to match such lower pricing structure associated with the Transaction (provided such repricing shall continue to apply to subsequent Transactions which occur prior to the Secured Note being paid in full as well).
The repayment of the Secured Note is secured by a first priority security interest in all of the Assets.
Separate from the Purchase Agreement, on August 31, 2017, we entered into an Assignment and Novation Agreement (the “ Assignment ”) with Bettwork and Crystal Falls Investments, LLC (“ Crystal Falls ”), which entity purchased our 51% membership interest in Name Your Fee, LLC in May 2016, in consideration for among other things, $750,000 evidenced by a Promissory Note (the “ Name Your Fee Note ”). Pursuant to the Assignment, the Name Your Fee Note, which had a principal balance of $750,000 as of the date of the Assignment, was assigned from Crystal Falls to Bettwork, we agreed to only look to Bettwork for the repayment of the Name Your Fee Note, Bettwork agreed to repay the Name Your Fee Note pursuant to its terms, and we provided Crystal Falls a novation of amounts owed thereunder. Crystal Falls also released us from any and all claims in connection with such Name Your Fee Note and any other claims which Crystal Falls then had. The Assignment also amended the Name Your Fee Note to include an option which allows us to convert the amount owed under the Name Your Fee Note into shares of Bettwork’s common stock at a conversion price of $1.00 per share.
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