Item 1.01 Entry into a Material
Definitive Agreement.
On August 30, 2016, Strategic Internet Investments,
Incorporated (the “
Company
”) entered into Securities Purchase Agreements (“
SPAs
”)
with Najibi Investment Trading FZC, G7 Entertainment Incorporated, SOHA Investment & Partners, and Royaltun General Trading
L.L.C. (the “
Investors
”). These SPAs were entered into in connection with the acquisition of 50% of the
stock of Parsan Turizm Anonim Sirketi (“
Parsan Turizm
”), which owns the Renaissance Izmir Hotel in Izmir,
Turkey (the “
Hotel
”). The Investors are related parties to our Chief Executive Officer and Director,
Abbas Salih, as a result of Mr. Salih’s ownership interest in and/or control of the Investors.
Pursuant to the SPAs, we issued convertible
debentures (“
Debentures
”) equal to 50% of the difference between $65 million minus the approximately
$23,731,064 million debt owed to T.C. Ziraat Bankasi A.S. (the “
Ziraat Bank Debt
”). In exchange for these
Debentures, the Investors sold and transferred their 50% ownership in Parsan Turizm to the Company. In addition, the Company issued
a Debenture in the amount of $23,731,064 to Najibi Investment Trading FZC in exchange for Najibi Investment Trading FZC agreeing
to pay the Ziraat Bank Debt in full.
On October 14, 2016, the Company and the Investors
entered into a Securities Exchange Agreement whereby they agreed to cancel the SPAs and the Debentures and enter into new SPAs
(the “
New SPAs
”) for the issuance of new, amended Debentures (the “
New Debentures
”)
in the principal amount of $47,400,000.
Under the New SPAs, the Company and the Investors
agreed that the closing of the purchase of 50% of Parzan Turism (the “
Closing
”) will occur upon the delivery
of certain documents and the occurrence of other events, the most important of which are:
-
Payment in full of the Ziraat Bank Debt and written confirmation thereof
-
Release of all liens on the Hotel
-
Transfer of 50% of the stock of Parzan Turizm to the Company
-
Payment of $3,000,000 to the Company for working capital
If the Ziraat Bank Debt is not satisfied within
a reasonable amount of time, as determined by the Company, the Company can cancel the New SPAs.
The Company has already received audited financial
statements and pro forma financial statements for Parzan Turizm which it will file with the SEC on a future current report on Form
8-K after the Closing.
In preparation for Closing, the Company has
executed the New Debentures; however, they are not binding obligations of the Company until all closing conditions are satisfied
or waived by the Company.
The Company is working diligently toward Closing
and intends to close the above transactions as soon as possible.
Item 1.02 Termination of a Material Definitive
Agreement.
The Company incorporates by reference the disclosure
set forth above under Item 1.01 for this Item. For clarity, the SPAs entered into on August 30, 2016 and the Debentures issued
on the same date have been canceled and replaced with the New SPAs and the New Debentures. The Company and the Investors canceled
the SPAs and the Debentures and entered into the New SPAs and the New Debentures so that the Debentures would no longer be binding
obligations
of the Company unless and until the closing
conditions set forth above are satisfied. In addition, the Company desired to obtain an additional $3,000,000 in working capital,
which one of the Investors has agreed to provide at Closing.