SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 1996
NTN CANADA, INC.
(Exact name of registrant as specified in its charter)
New York 0-18066 11-2805051
--------- --------- ------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
14 Meteor Drive, Etobicoke, Ontario Canada M9W 1A4
(Address of principal executive offices, including zip code)
(416) 675-6666
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On October 2, 1996, NTN Canada, Inc. (the "Registrant"), through its
wholly-owned subsidiary NTN Interactive Network Inc. ("Interactive"), acquired,
effective as of October 1, 1996, all of the outstanding capital stock of Magic
Lantern Communications Ltd., a Canadian corporation ("Magic Lantern"), pursuant
to a Share Purchase Agreement, dated October 1, 1996 (the "Agreement"), among
Interactive, Connolly-Daw Holdings Inc. ("Connolly-Daw"), 1199846 Ontario Ltd.
("1199846") and Douglas Connolly and Wendy Connolly (jointly, the "Connollys"),
a copy of the Agreement being annexed hereto as Exhibit "10.1", and is
incorporated herein by reference thereto. The aggregate purchase price was
$1,450,000 (Canadian), $200,000 (Canadian) of which was paid in cash to
Connolly-Daw. The balance of the aggregate purchase price was satisfied by the
delivery of a Non-Negotiable Promissory Note (the "Connolly-Daw Note") in the
principal amount of $703,133 (Canadian) and payable to Connolly-Daw, and a
Non-Negotiable Promissory Note (the "1199846 Note" and, together with the
Connolly-Daw Note, the "Notes") in the amount of $546,867 and payable to
1199846. Copies of the Connolly-Daw Note and 1199846 Note are annexed hereto as
Exhibits "10.2" and "10.3", respectively, and are incorporated herein by
reference thereto.
Under the terms of the Notes, Interactive has the right (the "Share Payment
Option") to deliver to Connolly-Daw and 1199846 (the "Vendors"), respectively,
in lieu of payment of the principal amounts of the Notes, such shares of the
common stock, par value $.07 per share (the "Common Stock") of the Registrant,
in accordance with a specified schedule therein. Pursuant to the provisions of
the Notes, Interactive, the Registrant and Connolly-Daw have entered into an
option agreement (the "Connolly-Daw Option Agreement"), a copy of which is
annexed hereto as Exhibit "10.4" and is incorporated herein by reference
thereto, and Interactive, the Registrant and 1199846
2
have entered into an option agreement (the "1199846 Option Agreement"), a
copy of which is annexed hereto as Exhibit "10.5" and is incorporated herein by
reference thereto, pursuant to which the Registrant, at each of the Vendors'
option, shall be obligated to purchase from the Vendors, (the "Put Option") and
each of the Vendors, at the Registrant's option, shall be obligated to sell to
the Registrant (the "Call Option"), a specified number of shares of Common Stock
at a price (i) equal to 90% of the average closing price of Registrant's Common
Stock during the 20-day period ending on the business day preceding the exercise
of such Put Option, and (ii) equal to 110% of the average closing price of
Registrant's Common Stock for the 20-day period ending on the business day
preceding the exercise of such Call Option. In addition, the Vendors have the
right to require Interactive to deliver shares of Common Stock in lieu of
payment of the amounts due pursuant to the Notes. The Registrant has guaranteed
the delivery of the aforesaid shares to either, or both, of Connolly-Daw and
1199846 if such election is made.
Pursuant to a Registration Rights Agreement, dated October 1, 1996 (the
"Registration Rights Agreement"), a copy of which is annexed hereto as Exhibit
"10.6" and is incorporated herein by reference thereto, the Registrant has
granted certain registration rights under the Securities Act of 1933 with
respect to the shares issuable upon exercise of the Share Payment Option.
In addition, pursuant to a Share Purchase Agreement dated October 1, 1996,
Interactive acquired 1,000 Class A special shares of Magic Lantern owned by
Telesat Canada for $250,000 (Canadian). A copy of this agreement is annexed
hereto as Exhibit "10.7", and is incorporated herein by reference thereto.
3
The following schedules to the Agreement are not annexed hereto, but the
Registrant, upon request, shall provide a copy of any omitted schedule:
Schedule "A" - Financial Statements
Schedule "B" - Particulars of Purchased Shares; Information re:
Authorized and Issued Capital
Schedule "C" - List of Subsidiaries and Share Capital Thereof
Schedule "D" - Undisclosed Liabilities
Schedule "E" - Liens, Charges and Encumbrances
Schedule "F" - Equipment and Other Personal Property Leases
Schedule "G" - Real Property Leases
Schedule "H" - Legal Descriptions of Real Property Owned
Schedule "I" - Standard Form Distribution Rights Agreement
Schedule "J" - Employment Contracts, Directors, Officers,
Employees and Independent Contractors
Schedule "K" - Other Material Contracts
Schedule "L" - Litigation
Schedule "M" - Description of Insurance Policies
Schedule "N" - Bank Accounts
Schedule "O" - Intellectual and Industrial Property
Schedule "P" - Vehicular Equipment Owned or Leased
Schedule "Q" - Addresses of Company and Subsidiaries
4
Item 7. Financial Statements and Exhibits.
(a) The Registrant intends to provide the following financial statements
and pro forma financial information under cover of a Form 8 Amendment to this
Current Report on Form 8-K, which shall be filed no later than December 16,
1996.
(1) Audited balance sheet of Magic Lantern as of August 31, 1996.
(2) Audited statements of income and cash flows of Magic Lantern for
the twelve month period ended August 31, 1996.
(3) Pro forma information of Magic Lantern and the Registrant as of
and for the period ended August 31, 1996 and
(4) Audited balance sheet and statements of income and cash flows of
the Registrant for the periods required by Sections 3-01 and 3-02
of Regulation S-X.
(b) Set forth below is a list of the Exhibits applicable to this Current
Report on Form 8-K, numbered in accordance with Item 601 of Regulation S-K.
10.1 Share Purchase Agreement, dated the 1st day of October, 1996, by
and between Connolly-Daw Holdings Inc., 1199846 Ontario Ltd.,
Douglas Connolly and Wendy Connolly and NTN Interactive Network
Inc.
10.2 Non-Negotiable Promissory Note, dated October 1, 1996, by and
between NTN Interactive Network Inc., as Debtor, and Connolly-
Daw Holdings Inc., as Creditor.
10.3 Non-Negotiable Promissory Note, dated October 1, 1996 by and
between NTN Interactive Network Inc., as Debtor, and 1199846
Ontario Ltd., as Creditor.
10.4 Registration Rights Agreement, dated October 1, 1996, by and
between NTN Canada, Inc., Connolly-Daw Holdings Inc. and 1199846
Ontario Ltd.
5
10.5 Option Agreement, dated the 1st day of October, 1996, by and
between Connolly-Daw Holdings Inc., NTN Interactive Network Inc.
and NTN Canada, Inc.
10.6 Option Agreement, dated the 1st day of October, 1996, by and
between 1199846 Ontario Ltd., NTN Interactive Network Inc. and
NTN Canada, Inc.
10.7 Share Purchase Agreement, dated the 1st day of October, 1996 by
and between NTN Interactive Network Inc. and Telesat Canada.
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NTN CANADA, INC.
a New York Corporation
by: Peter Rona
---------------------------
Peter Rona, President
Date: October 2, 1996
EXHIBIT INDEX
10.1 Share Purchase Agreement, dated the 1st day of October, 1996, by
and between Connolly-Daw Holdings Inc., 1199846 Ontario Ltd.,
Douglas Connolly and Wendy Connolly and NTN Interactive Network
Inc.
10.2 Non-Negotiable Promissory Note, dated October 1, 1996, by and
between NTN Interactive Network Inc., as Debtor, and Connolly-Daw
Holdings Inc., as Creditor.
10.3 Non-Negotiable Promissory Note, dated October 1, 1996 by and
between NTN Interactive Network Inc., as Debtor, and 1199846
Ontario Ltd., as Creditor.
10.4 Registration Rights Agreement, dated October 1, 1996, by and
between NTN Canada, Inc., Connolly-Daw Holdings Inc. and 1199846
Ontario Ltd.
10.5 Option Agreement, dated the 1st day of October, 1996, by and
between Connolly-Daw Holdings Inc., NTN Interactive Network Inc.
and NTN Canada, Inc.
10.6 Option Agreement, dated the 1st day of October, 1996, by and
between 1199846 Ontario Ltd., NTN Interactive Network Inc. and
NTN Canada, Inc.
10.7 Share Purchase Agreement, dated the 1st day of October, 1996 by
and between NTN Interactive Network Inc. and Telesat Canada.