LOTON, CORP (OTCMKTS:LIVX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Material Definitive Agreement. |
Asset Purchase Agreement and Ancillary
Agreements
On May 5, 2017, LiveXLive Tickets, Inc. (LiveXLive Tickets), a
Delaware corporation and a wholly owned subsidiary of Loton,
Corp, a Nevada corporation (the Company), acquired substantially
all of the operating assets (the Acquisition) of Wantickets RDM,
LLC, a Delaware limited liability company (Wantickets), to the
Asset Purchase Agreement, dated as of May 5, 2017 (the Asset
Purchase Agreement), entered into by and among the Company,
LiveXLive Tickets, Wantickets, Danco Enterprises, LLC (Danco),
Joseph Schnaier and Gamtix, LLC (Gamtix, and collectively with
Danco and Mr. Schnaier, the Members). Wantickets is a branded
leading online nightlife, electronic dance music and event
ticketing company in North America that is designed to promote
ticket sales for live events. The Acquisition will allow the
Company to expand the reach of its content and build its
subscription model by utilizing Wantickets large database of
ticket buyers to live music events. As of the date of this
Current Report on Form 8-K (this Current Report) Gamtix has not
yet signed the Asset Purchase Agreement; provided, that Gamtixs
was not required for the parties to proceed with the Acquisition.
In consideration of the Acquisition, the Company issued an
aggregate of 2,000,000 shares (the Shares) of its common stock,
$0.001 par value per share (the Common Stock), to the Members;
provided, that 200,000 of the Shares will be held in escrow by
the Company pending Gamtix signing the Asset Purchase Agreement
and the other transaction documents. In connection with the
Acquisition, Danco entered into a lock-up agreement (the Lock-Up
Agreement) with respect to its 1,800,000 of the Shares. The
Lock-Up Agreement provides that Danco may not, subject to certain
exemptions, offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of its Shares prior to May 5, 2019.
The parties intend that Gamtix will also enter into the Lock-Up
Agreement if and when it signs the Asset Purchase Agreement and
the other transaction documents.
In addition, to the terms of the Asset Purchase Agreement and the
Letter Agreement, dated as of May 5, 2017 (the Letter Agreement),
entered into by and among the Company, LiveXLive Tickets and Mr.
Schnaier, the parties agreed that, commencing from and after May
5, 2017, Mr. Schnaier will promptly pay for all of LiveXLive
Tickets net losses of its business for each calendar month (or
pro rata thereof), up to a total of $100,000 per month, and for
any liabilities exceeding $100,000 in the aggregate that arose
from April 1, 2017 to May 5, 2017 (inclusive), until the earlier
of (x) such time as the Companys planned Registration Statement
on Form S-1 for its underwritten public offering of Common Stock
(the Public Offering) becomes effective and the Public Offering
closes or (b) May 5, 2018 (such earlier date as between clause
(x) and (y), the Funding End Date), and that any salaries or
other payments or amounts due to under the Employment Agreements
described below shall be included in the calculation of the net
loss for the applicable period (collectively, the JS Payment
Obligation). to the terms of the Letter Agreement, the parties
further agreed that all payments made by Mr. Schnaier as part of
the JS Payment Obligation shall be deemed to be a loan by Mr.
Schnaier to LiveXLive Tickets (the Loaned Funds), and that the
Company and LiveXLive Tickets shall repay to Mr. Schnaier the
total amount of the Loaned Funds within 5 business days after the
Funding End Date; provided that the Company and LiveXLive Tickets
may prepay or repay in full the Loaned Funds at any time prior to
the Funding End Date without any penalty.
Employment Agreements and Employee Offer
Letters
In connection with the Acquisition, (x) Mr. Schnaier, Wantickets
President and Chief Executive Officer, and Richard Blakeley,
Wantickets Chief Financial Officer, were appointed to serve as
the Chief Executive Officer and Chief Financial Officer of
LiveXLive Tickets, respectively, and (y) Robert Ellin, the
Companys Executive Chairman and President, was appointed as the
Executive Chairman of LiveXLive Tickets. In connection with such
appointments, each of Messrs. Schnaier and Blakeley entered into
an Employment Agreement with LiveXLive Tickets, dated as of May
5, 2017 (the Effective Date). In connection with the Acquisition,
LiveXLive Tickets has circulated employee offer letters to other
current employees of WT with the intention to have them become
employees of LiveXLive Tickets in similar capacities on at-will
basis.
Joseph Schnaier Employment Agreement (the JS Employment
Agreement) The term of the JS Employment Agreement is for
two years from the Effective Date. After the initial two-year
term, the agreement shall be automatically renewed for successive
one year periods unless terminated by a party on at least 60 days
written notice prior to the end of the then-current term. Mr.
Schnaiers annual base salary is $220,000 and is subject to annual
review by LiveXLive Tickets Board of Directors (the Board) at its
discretion to ensure that the base salary remains competitive
compared with senior executives at comparable companies and based
on the revenues and profits being generated by LiveXLive Tickets.
Mr. Schnaier is eligible, at the discretion of the Board, to
receive an annual performance bonus. All or any portion of any
such bonus may be paid in cash, securities of Loton or other
property. Mr. Schnaier shall also receive 2,000,000 shares of
Common Stock (the Earnout Shares) if LiveXLive Tickets earns a
net income (as defined in the JS Employment Agreement) of at
least $3,000,000 in the 12-month period immediately following the
Effective Date or $4,000,000 in the 12-month period immediately
thereafter. Mr. Schnaier is entitled to receive perquisites and
other fringe benefits that may be provided to, and is eligible to
participate in any other bonus or incentive program established
by LiveXLive Tickets, for its executives. Mr. Schnaier will be
entitled to be reimbursed for all reasonable travel,
entertainment and other expenses incurred or paid by him in
connection with, or related to, the performance of his duties,
responsibilities or services under his employment agreement, in
accordance with policies and procedures, and subject to
limitations, adopted by LiveXLive Tickets from time to time.
LiveXLive Tickets also agreed to reimburse Mr. Schnaier for the
lower of (x) 50% of the cost of his office space in New York, NY,
and (ii) $3,250, based on invoices that Mr. Schnaier submits to
LiveXLive Tickets on a monthly basis during the term of his
employment. Such reimbursement obligation is subject to the JS
Payment Obligation.
In the event that Mr. Schnaier is terminated by LiveXLive Tickets
without Cause (as defined in the JS Employment Agreement) or he
resigns for Good Reason (as defined in the JS Employment
Agreement) during the term of his employment, Mr. Schnaier would
be entitled to an amount equal to his annual base salary then in
effect (payable in accordance with LiveXLive Tickets normal
payroll practices) for a period of 12 months commencing on the
effective date of his termination (the JS Severance Period), plus
any accrued but unused vacation. For the duration of the JS
Severance Period, Mr. Schnaier will also be eligible to
participate in LiveXLive Tickets group health plan, if any, on
the same terms applicable to similarly situated active employees
during the JS Severance Period, provided Mr. Schnaier was
participating in such plan immediately prior to the date of
employment termination, and each other benefit program to the
extent permitted under the terms of such program (collectively,
the JS Termination Benefits). If Mr. Schnaiers employment is
terminated during the term by LiveXLive Tickets for Cause, by Mr.
Schnaier for any reason other than Good Reason or due to his
death, then he will not be entitled to receive the JS Termination
Benefits, and shall only be entitled to the compensation and
benefits which shall have accrued as of the date of such
termination. If Mr. Schnaiers employment is terminated during the
term due to his disability (as defined in the JS Employment
Agreement), then he will be entitled to receive an amount equal
to his annual base salary then in effect (payable in accordance
with LiveXLive Tickets normal payroll practices) for a period of
3 months commencing on the effective date of his termination. The
JS Employment Agreement contains covenants for the benefit of
LiveXLive Tickets relating to non-competition during the term of
employment and the JS Severance Period thereafter (the JS
Restricted Period) and protection of LiveXLive Tickets
confidential information, customary representations and
warranties and indemnification obligations; provided, that if Mr.
Schnaier is terminated for Cause, the JS Restricted Period shall
begin on the Effective Date and end on the date that is 12 months
from the date of termination of Mr. Schnaiers employment with
LiveXLive Tickets.
Richard Blakeley Employment Agreement (the RB Employment
Agreement) The term of the RB Employment Agreement is for
two years from the Effective Date. After the initial two-year
term, the agreement shall be automatically renewed for successive
one year periods unless terminated by a party on at least 60 days
written notice prior to the end of the then-current term. Mr.
Blakeleys annual base salary consists of (i) $160,000 in cash and
(ii) $15,000 in shares of Common Stock (the RB Shares) based on
the fair market value of Common Stock at the time of such
issuance, and is subject to annual review by the Board at its
discretion to ensure that the base salary remains competitive
compared with senior executives at comparable companies and based
on the revenues and profits being generated by LiveXLive Tickets.
Mr. Blakeley is eligible, at the discretion of the Board, to
receive an annual performance bonus. All or any portion of any
such bonus may be paid in cash, securities of Loton or other
property. Mr. Blakeley is entitled to receive perquisites and
other fringe benefits that may be provided to, and is eligible to
participate in any other bonus or incentive program established
by LiveXLive Tickets, for its executives. Mr. Blakeley will be
entitled to be reimbursed for all reasonable travel,
entertainment and other expenses incurred or paid by him in
connection with, or related to, the performance of his duties,
responsibilities or services under his employment agreement, in
accordance with policies and procedures, and subject to
limitations, adopted by LiveXLive Tickets from time to time. to
the terms of the RB Employment Agreement and the Restricted Stock
Agreement, dated as of May 5, 2017, entered into by and between
the Company and Mr. Blakeley, the RB Shares shall vest on the
first anniversary of the Effective Date and shall be subject a
one-year lock-up period after the vesting date.
In the event that Mr. Blakeley is terminated by LiveXLive Tickets
without Cause (as defined in the RB Employment Agreement) or he
resigns for Good Reason (as defined in the RB Employment
Agreement) during the term of his employment, Mr. Blakeley would
be entitled to an amount equal to his annual base salary then in
effect (payable in accordance with LiveXLive Tickets normal
payroll practices) for a period of 12 months commencing on the
effective date of his termination (the RB Severance Period), plus
any accrued but unused vacation. For the duration of the RB
Severance Period, Mr. Blakeley will also be eligible to
participate in LiveXLive Tickets group health plan, if any, on
the same terms applicable to similarly situated active employees
during the RB Severance Period, provided Mr. Blakeley was
participating in such plan immediately prior to the date of
employment termination, and each other benefit program to the
extent permitted under the terms of such program (collectively,
the RB Termination Benefits). If Mr. Blakeleys employment is
terminated during the term by LiveXLive Tickets for Cause, by Mr.
Blakeley for any reason other than Good Reason or due to his
death, then he will not be entitled to receive the RB Termination
Benefits, and shall only be entitled to the compensation and
benefits which shall have accrued as of the date of such
termination. If Mr. Blakeleys employment is terminated during the
term due to his disability (as defined in the RB Employment
Agreement), then he will be entitled to receive an amount equal
to his annual base salary then in effect (payable in accordance
with LiveXLive Tickets normal payroll practices) for a period of
3 months commencing on the effective date of his termination. The
RB Employment Agreement contains covenants for the benefit of
LiveXLive Tickets relating to non-competition during the term of
employment and the RB Severance Period thereafter (the RB
Restricted Period) and protection of LiveXLive Tickets
confidential information, customary representations and
warranties and indemnification obligations; provided, that if Mr.
Blakeley is terminated for Cause, the RB Restricted Period shall
begin on the Effective Date and end on the date that is 12 months
from the date of termination of Mr. Blakeleys employment with
LiveXLive Tickets.
The securities described above were issued in reliance on the
exemption from registration contained in Section 4(a)(2) of the
Securities Act of 1933, as amended (the Securities Act), and/or
Rule 506 of Regulation D promulgated thereunder and involve
transactions by an issuer not involving any public offering. This
Current Report does not constitute an offer to sell or the
solicitation of an offer to buy any security and shall not
constitute an offer, solicitation or sale in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
The foregoing description of the Asset Purchase Agreement, the
Lock-Up Agreement, the Letter Agreement, the JS Employment
Agreement, the RB Employment Agreement and the Restricted Stock
Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of such agreements, which
are filed as Exhibits 2.1, 10.4, 10.3, 10.5, 10.6 and 10.7 to
this Current Report and are incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of
Assets.
The information set forth in Item 1.01 above is incorporated
herein by reference.
Item 3.02 Unregistered Sales of Equity
Securities.
The information set forth in Item 1.01 above is incorporated
herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
(a) Financial statements of businesses acquired.
Wantickets financial statements for the periods required under
Regulation S-X shall be filed by the Company by an amendment to
this Current Report (the Amended 8-K) not later than 71 calendar
days after the date that this Current Report is filed.
(b) Pro forma financial information.
Pro forma financial information required under Regulation S-X
shall be filed in the Companys Amended 8-K.
| (d) | Exhibits: |
| Exhibit No. | Description | |
| 2.1* |
Asset Purchase Agreement, dated as of May 5, 2017, by and among the Company, LiveXLive Tickets, Inc., Wantickets RDM, LLC, Danco Enterprises, LLC, Joseph Schnaier and Gamtix, LLC. |
|
| 10.1* |
Bill of Sale, Assignment and Assumption Agreement, dated as of May 5, 2017, by and between LiveXLive Tickets, Inc. and Wantickets RDM, LLC. |
|
| 10.2* |
Trademark and Domain Name Assignment, dated as of May 5, 2017, by and between LiveXLive Tickets, Inc. and Wantickets RDM, LLC. |
|
| 10.3* |
Letter Agreement, dated as of May 5, 2017, by and among the Company, LiveXLive Tickets, Inc. and Joseph Schnaier. |
|
| 10.4* |
Lock-Up and No Shorting Agreement, dated as of May 5, 2017, by and between the Company and Danco Enterprises, LLC. |
|
| 10.5* |
Employment Agreement, dated as of May 5, 2017, by and between LiveXLive Tickets, Inc. and Joseph Schnaier. |
|
| 10.6* |
Employment Agreement, dated as of May 5, 2017, by and between LiveXLive Tickets, Inc. and Richard Blakeley. |
|
| 10.7* |
Restricted Stock Agreement, dated as of May 5, 2017, by and between the Company and Richard Blakeley. |
*Filed herewith.
About LOTON, CORP (OTCMKTS:LIVX)
Loton, Corp. is a holding company. The Company is engaged in the live and digital music space content, including live music events, through LiveXLive, Corp., which is a subsidiary of the Company. It provides three dimensional (3D) rendering, animation and architectural visualization services using computer technology to produce photo realistic 3D rendering, walk-through animation and 360-degree panorama. The LiveXLive network focuses on providing compelling and curated content that showcases the entire spectrum of music to include music inspired fashion, food, and lifestyle content and showcase interviews, backstage access and both fan and artist perspectives. It intends to provide various categories of music, including rock, pop, indie, electronic dance music (EDM), country and feature festival headliners, as well as artists performing at clubs and venues across the world. KOKO (Camden) Holdings (US), Inc. and KOKO (Camden) UK Limited are also the subsidiaries of the Company. LOTON, CORP (OTCMKTS:LIVX) Recent Trading Information
LOTON, CORP (OTCMKTS:LIVX) closed its last trading session 00.00 at 20.00 with 100 shares trading hands.