In connection with the consummation of the Minimum Offering, an aggregate of 227,272 of the Shares, representing 47.1% of the Company Shares sold to date, were purchased for $2,500,003 by Dream Media Corporation, a Delaware corporation (“Dream Media”) owned by Oreva Capital Corp. (“Oreva”). Oreva is an affiliate of Adam E. Levin, the Chief Executive Officer and a director of the Company. Dream Media is currently a party to a loan and security agreement with ExWorks, dated November 21, 2017, that was entered into in connection with a unrelated financing transaction between such parties unrelated to the Company. Prior to August 31, 2018, a balance of approximately $2,000,000 in principal interest and fees was owed by Dream Media to ExWorks under a $10,200,000 original principal amount term note. Dream Media obtained the funds to enable it to purchase the 227,727 Company Shares by virtue of a $2,500,000 loan increase provided by ExWorks to Dream Media on August 31, 2018 pursuant to an amendment to the November 21, 2017 loan and security agreement. The increased $2,500,000 loan is secured by pledges to ExWorks of the 227,727 Shares and additional securities of an unrelated public company that was provided by the AEL Irrevocable Trust in which Mr. Levin and members of his family are beneficiaries. The $2,500,000 additional ExWorks loan to Dream Media is due and payable on November 30, 2018.
In addition to such 227,727 Shares, the Adam Levin Living Trust currently owns 304,573 shares of Class A common stock of the Company and the AEL Irrevocable Trust, in which Edwin Hur, trustee, has sole voting and dispositive power, currently owns 2,703,212 shares of Class A common stock of the Company. Mr. Levin disclaims beneficial interest in all 2,703,212 Shares owned by the AEL Irrevocable Trust.
A copy of the November 21, 2017 loan and security agreement between Dream Media Corporation and ExWorks and the amendment to the loan and security agreement are filed as Exhibits 6.2 and 6.3, respectively, to this Current Report on Form 1-U and any summary of the terms of such documents are subject to, and qualified in their entirety by, the full text of such documents, which are incorporated herein by reference.
2
Strategic Investment Agreement
On September 11, 2018, Hightimes entered into an agreement with Spectrum King, LLC, pursuant to which Hightimes has licensed to Spectrum the right to use the HightimesTM name, logo and brand in connection with the marketing and distribution of all Spectrum products and granted Spectrum over a period of three years an aggregate of $1,500,000 worth of advertising credits in the Hightimes print and internet magazines and at all festivals sponsored by Hightimes. In consideration, Hightimes received eleven units of Spectrum membership interests, representing 9.9099% of Spectrum's outstanding equity. Spectrum does business as “SPECTRUM KING LED,” and specializes in designing, manufacturing and selling high-end LED grow lights for indoor and greenhouse applications targeting all variety of growing industries, such as cannabis, leafy greens, tomatoes, ornamental plants and other plants and vegetables.
A copy of the agreement between Hightimes and Spectrum King is annexed to this Form 1-U Current Report as Exhibit 6.4 and is incorporated by reference herein.
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