Item
1.01 Entry into a Material Definitive Agreement.
Salinas,
CA Acquisition
On
May 24, 2018, Players Network (the “Company”), through its newly-formed wholly-owned subsidiary, Players Michigan
LLC (“Players Michigan”), acquired substantially all of the assets of LCG Business Enterprises, LLC (“LCG”),
pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between Players Michigan and LCG. The assets include
LCG’s leasehold interest in a 56,000 square foot commercial cannabis agricultural facility located at 25600 Encinal Road
in Salinas, California (the “Facility”), and the tangible assets related to the cannabis cultivation activities previously
conducted by LCG at the Facility.
The
consideration for the acquisition is (i) $5,000,000 in cash, of which $1,000,000 was paid at closing, with the remaining $4,000,000
to be paid in four monthly installments of $1,000,000 each; and (ii) the assumption of LCG’s trade payables.
Pursuant
to the Purchase Agreement, Players Michigan and LCG entered into a management agreement pursuant to which Players Michigan with
will pay LCG a percentage of Net Profits (as defined in the Purchase Agreement) generated by the business conducted at the Facility
until all four remaining installments of the cash purchase price have been paid in full, as follows:
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Percentage
of Net Profit
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Payment
Period
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30%
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Between
Closing until payment in full of first installment
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25%
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Between
payment of first installment and payment in full of second installment
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20%
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Between
payment of second installment and payment in full of third installment
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15%
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Between
payment of third installment and payment in full of final installment
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0%
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Following
payment of fourth installment or, if earlier, the prepayment in full of the reaming unpaid portion of the purchase price pursuant
to the Purchase Agreement
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The
information set forth above is a summary, and is qualified in its entirety by reference to the actual terms of the Purchase Agreement,
which has been filed as Exhibit 10.1 to this Current Report on Form 8-K.
Loan
Agreement
On
May 23, 2018, the Company obtained a convertible loan in the principal amount of $1,100,000 (the “Loan”) pursuant
to a Loan Agreement dated May 18, 2018 between the Company and Grass Roots Investors, LLC (the “Loan Agreement”) and
the Convertible Promissory Note (the “Note”) issued to the Lender thereunder. The proceeds of the Loan were used primarily
to fund the closing payment due under the Purchase Agreement for the Facility.
Pursuant
to the Loan Agreement and related loan documents, among other things:
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The
Loan bears interest at the rate of 12% per annum, payable semi-annually, and matures on May 18, 2019.
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The
Company’s obligation to repay the Loan is secured by a pledge of its membership interests in Green Leaf Holdings LLC
and Players Michigan LLC.
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Beginning
90 days after May 18, 2018, the Lender may convert outstanding principal and interest on the Loan into shares of common stock
of the Company at a discount of between 30% and 50% of Fair Market Value (as defined in the Note) of the Company’s common
stock, depending on such Fair Market Value at the time of conversion.
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The
information set forth above is a summary, and is qualified in its entirety by reference to the actual terms of the Loan Agreement
and Convertible Promissory Note, which have been filed as Exhibits 4.1 and 10.2, respectively, to this Current Report on Form
8-K.