EXHIBIT 10.33
STOCK PURCHASE AGREEMENT
by and between
NTN COMMUNICATIONS, INC.
and
ASSOCIATED VENTURES MANAGEMENT, INC.
Dated as of December 22, 1995
TABLE OF CONTENTS
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Page
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SECTION 1. Sale and Purchase of LearnStar Common Stock... 1
1.1 Sale and Purchase of LearnStar Common Stock..... 1
1.2 Pledge Agreement................................ 1
SECTION 2. Representations and Warranties of NTN......... 1
2.1 Title to Shares................................. 1
2.2 Organization; Qualification..................... 1
2.3 Corporate Power and Authorization;
No Conflicts................................... 2
2.4 Capitalization.................................. 2
2.5 Financial Information; Absence of
Undisclosed Liabilities........................ 2
2.6 Absence of Certain Changes...................... 2
2.7 Title to Assets, Properties and Rights.......... 3
2.8 Intellectual Property Rights.................... 4
2.9 Litigation...................................... 4
2.10 Tax Matters..................................... 4
2.11 ERISA Plans..................................... 5
2.12 No Defaults..................................... 5
SECTION 3. Representations and Warranties of Associated 5
3.1 Investment Intent............................... 5
3.2 Corporate Power and Authorization;
No Conflicts................................... 6
3.3 No Consent or Approval Required................. 6
SECTION 4. Restriction on Transfer....................... 7
SECTION 5. Remedies...................................... 8
SECTION 6. Successors and Assigns........................ 8
SECTION 7. Entire Agreement.............................. 8
SECTION 8. Amendment..................................... 8
SECTION 9. Counterparts.................................. 8
SECTION 10. Confidentiality.............................. 8
SECTION 11. Headings..................................... 8
SECTION 12. Nouns and Pronouns........................... 8
SECTION 13. Governing Law................................ 9
SECTION 14. Jurisdiction and Forum....................... 9
i.
Gentlemen:
The undersigned, NTN Communications, Inc., a Delaware corporation ("NTN"),
hereby agrees with Associated Ventures Management, Inc., a Delaware corporation
("Associated"), as follows:
SECTION 1. Sale and Purchase of LearnStar Common Stock.
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1.1 Sale and Purchase of LearnStar Common Stock. Concurrently with the
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execution of this Agreement, NTN is selling and assigning to Associated, and
Associated is purchasing and acquiring from NTN, 45,000 shares (the "Shares") of
common stock, $.001 par value per share ("Common Stock"), of LearnStar, Inc.,
("LearnStar") representing 45% of the outstanding shares of LearnStar Common
Stock for an aggregate purchase price of $2,500,000. Payment shall be in the
form of a non-interest bearing, non-recourse promissory note in the amount of
$2,500,000 (the "Promissory Note"), in the form attached hereto as Exhibit A.
The Promissory Note is payable as follows: $100,000 to be paid by January 30,
1996; $100,000 to be paid by April 15, 1996; $100,000 to be paid by July 15,
1996; $100,000 to be paid by October 15, 1996; and the remaining balance of
$2,100,000 to be paid by January 30, 1997. The Promissory Note shall be secured
by the Shares and a pledge and security agreement between NTN and Associated
(the "Pledge Agreement") in the form attached hereto as Exhibit B. Associated
hereby acknowledges receipt of one or more certificates evidencing the Shares
against delivery by Associated of the Promissory Note, receipt of which is
hereby acknowledged by NTN.
1.2 Pledge Agreement. Concurrently with the execution of this Agreement,
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the parties also are entering into the Pledge Agreement.
SECTION 2. Representations and Warranties of NTN. NTN hereby represents and
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warrants to Associated as follows:
2.1 Title to Shares. NTN owns the Shares, of record and beneficially,
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free and clear of all Encumbrances.
2.2 Organization; Qualification. LearnStar is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to transact business as a foreign corporation and is
in good standing in those jurisdictions, if any, wherein the character of the
property owned or leased or the nature of the activities conducted by LearnStar
makes such qualification necessary, except where the failure to so qualify would
not have a material adverse effect on the business, operations or financial
condition of LearnStar (a "Material Adverse
1.
Effect"). NTN has provided Associated with true, correct and complete copies of
the Certificate of Incorporation and the Bylaws of LearnStar, in each case, as
amended to, and as in effect on, the date hereof.
2.3 Corporate Power and Authorization; No Conflicts. NTN has the
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corporate power to execute, deliver and perform its obligations under this
Agreement and to sell and deliver the Shares hereunder. The execution, delivery
and performance by NTN of this Agreement have been duly authorized by all
requisite corporate and shareholder action by NTN, and this Agreement
constitutes a legal, valid and binding obligation of NTN, enforceable against
NTN in accordance with its terms. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof by NTN will not (a) violate or conflict
with any provision of any Applicable Law (as defined in Section 3.2), or any
Judgment (as defined in Section 3.2) of any Governmental Authority (as defined
in Section 3.3) applicable to NTN or any of its properties or assets, or the
Certificate of Incorporation or the Bylaws of NTN, or (b) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under any material
lease, license, franchise, contract, agreement, commitment, arrangement,
understanding or instrument, oral or written, to which NTN is a party or by
which its properties or assets are bound or affected.
2.4 Capitalization. The authorized capital stock of LearnStar consists of
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100,000 shares of Common Stock, all of which shares (including the Shares) have
been validly issued and are outstanding, fully paid and nonassessable. There
are no outstanding warrants, options, agreements, convertible securities or
other commitments pursuant to which LearnStar is or may become obligated to
issue any shares of the capital stock or other securities of LearnStar, and
there are no preemptive or similar rights to purchase or otherwise acquire
shares of the capital stock of LearnStar pursuant to any provision of law, the
Certificate of Incorporation or the Bylaws of LearnStar or any agreement to
which LearnStar is a party or otherwise.
2.5 Financial Information; Absence of Undisclosed Liabilities. Attached
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hereto as Schedule 2.5 is the unaudited balance sheet and related income
statement of LearnStar as of September 30, 1995 (the "Balance Sheet"), which
presents fairly the financial condition of LearnStar at that date.
2.6 Absence of Certain Changes. Since the date of the Balance Sheet,
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there has not been:
(a) any material adverse change in the business, operations, assets,
liabilities, results of operations,
2.
condition (financial or otherwise), performance or prospects of LearnStar (a
"Material Adverse Change");
(b) any borrowing or agreement to borrow funds or any material
liability incurred by LearnStar, other than current liabilities incurred in the
ordinary course of business;
(c) any material asset or property of LearnStar made subject to any
Encumbrances (as defined in Section 2.7) of any kind;
(d) any waiver of any material right of LearnStar, or the
cancellation of any material debt or claim held by LearnStar;
(e) any payment of dividends on, or other distributions with respect
to, or any direct or indirect redemption or acquisition of, any shares of the
capital stock of LearnStar, or any agreement or commitment therefor;
(f) any issuance of any stock, bond or other security of LearnStar,
or any agreement or commitment therefor (including, without limitation, options,
warrants or rights or agreements or commitments to purchase such securities or
grant such options, warrants or rights other than options issuable pursuant to
LearnStar employee stock option plans or agreements);
(g) any sale, assignment, pledge, license, mortgage or transfer of
any tangible or intangible assets of LearnStar, except in the ordinary course of
business;
(h) any loan by LearnStar to any officer, director, employee,
consultant or shareholder of LearnStar or other person, or any agreement or
commitment therefor (other than advances to such persons in the ordinary course
of business in connection with business expenses incurred on behalf of
LearnStar);
(i) any damage, destruction or casualty loss (whether or not covered
by insurance) to any material assets or property of LearnStar; or
(j) any agreement entered into with respect to any of the foregoing.
2.7 Title to Assets, Properties and Rights. LearnStar has good and valid
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title to all of the material properties, interests in properties and assets,
real, personal, intangible or mixed, reflected on the Balance Sheet as being
owned by LearnStar or acquired after the date of the Balance Sheet (except
inventory or other property sold or otherwise disposed of since such date, in
the ordinary course of business and accounts receivable and notes receivable
paid in full subsequent to such date), free and clear of all material mortgages,
Judgments, claims, liens, security interests, pledges,
3.
escrows, charges or other encumbrances of any kind or character whatsoever,
except liens for current taxes not yet due and payable (collectively,
"Encumbrances"). Any material assets or properties used or utilized by
LearnStar which are not owned by LearnStar are leased or licensed to LearnStar
under valid, binding and enforceable agreements in full force and effect.
2.8 Intellectual Property Rights. To the best knowledge of NTN (but
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without having conducted any special investigation or patent search), LearnStar
owns or possesses, has access to, or can become licensed on reasonable terms
under, all material patents, inventions, trademarks, trade names, copyrights,
licenses, trade secrets, information, proprietary rights and processes
necessary for the lawful conduct of its business as now conducted and as
proposed to be conducted, without any infringement of or conflict with the
rights of others. LearnStar has taken reasonable measures to protect the
secrecy, confidentiality and value of all material trade secrets, know-how,
inventions, designs, processes, computer programs and technical data required
for or incident to the development, manufacture, operation and sale of all
products proposed to be sold by LearnStar.
2.9 Litigation. There is no material action, suit, claim, arbitration,
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proceeding or investigation at law or in equity or by or before any Governmental
Authority now pending nor, to the best knowledge of NTN, threatened against or
affecting LearnStar. There are no Judgments of any Governmental Authority to
which LearnStar is a party or by which any of its properties or assets are
bound.
2.10 Tax Matters. LearnStar has (a) filed all returns, declarations of
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estimated tax, tax reports, information returns and statements (collectively,
the "Returns") required to be filed by it prior to the date hereof (other than
those for which extensions shall have been granted prior to the date hereof)
relating to any Taxes (as defined below) with respect to any income, properties
or operations of LearnStar, and has paid all Taxes shown thereon to be due; (b)
as of the time of filing, the Returns were complete and correct; (c) LearnStar
has timely paid or made provisions for all Taxes payable for all periods and for
any period that began on or before the date hereof and ends after the date
hereof, to the extent such Taxes are attributable to the portion of any such
period ending on or before the date hereof; (d) LearnStar is not delinquent in
the payment of any Taxes, nor has it requested any extension of time within
which to file any Return, which Return has not since been filed; (e) there are
no pending tax audits of any Returns of LearnStar; (f) no tax liens have been
filed and no deficiency or addition to Taxes, interest or penalties for any
Taxes with respect to any income, properties or operations of LearnStar have
been proposed, asserted or assessed in writing against LearnStar; (g) LearnStar
has not granted any extension of the statute of limitations applicable to any
Return or other Tax claim with respect to any income,
4.
properties or operations of LearnStar. As used in this Agreement, the term
"Tax" shall mean any of the Taxes and the term "Taxes" shall mean, with respect
to any Person (as hereinafter defined), (i) all income taxes (including any tax
on or based upon net income, or gross income, or income as specifically defined,
or earnings, or profits, or selected items of income, earnings or profits) and
all gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
documentary, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties or other taxes, fees, levies, imposts, deductions,
withholding assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign) on such person or entity, (ii) any
liability for the payment of any amount of the type described in the immediately
preceding clause (i) as a result of being a "transferee" (within the meaning of
Section 6901 of the Code or any Applicable Law) of another person or entity or a
member of an affiliated or combined group and (iii) all other liabilities with
respect to any of the foregoing.
2.11 ERISA Plans. LearnStar does not maintain and is not a party to (and
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has never maintained or been a party to) any "employee welfare benefit plan" as
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or any "employee pension benefit plan" as defined in
Section 3(2) of ERISA, and LearnStar does not contribute (and has never
contributed) to any "multiemployer plan" as defined in Section 3(37) of ERISA or
"multiple employer plan" as defined in Section 413 of the Code.
2.12 No Defaults. LearnStar is not in default (i) under its Certificate
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of Incorporation or its Bylaws, or any material indenture, mortgage, lease,
purchase or sales order, or other contract to which LearnStar is a party or by
which LearnStar or any of its properties is bound or affected or (ii) with
respect to any Judgment of any Governmental Authority. To the best knowledge of
NTN, there exists no condition, event or act which constitutes, or which after
notice, lapse of time or both, would constitute, a default under any of the
foregoing.
SECTION 3. Representations and Warranties of Associated. Associated hereby
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represents and warrants to NTN as follows:
3.1 Investment Intent.
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(a) Associated is acquiring the Shares for its own account, for
investment and not with a view to the distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act").
(b) Associated understands that the Shares have not been registered
under the Securities Act and must be held by
5.
Associated indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration thereunder.
(c) Associated will not transfer the Shares except in compliance with
this Agreement.
(d) Associated has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
(e) Associated is experienced in the evaluation of businesses and
investments, is able to fend for itself in the transactions contemplated by this
Agreement, has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment in the
Shares and this Agreement, and has the ability to bear the economic risks of
such investment.
(f) During the course of the transactions contemplated hereby and
prior to the purchase of the Shares, Associated has had the opportunity to ask
questions of and receive answers from LearnStar concerning LearnStar,
LearnStar's business and its financial condition and prospects.
3.2 Corporate Power and Authorization; No Conflicts. Associated has the
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corporate power to execute, deliver and perform its obligations under this
Agreement and to purchase and acquire the Shares hereunder. The execution,
delivery and performance by Associated of this Agreement have been duly
authorized by all requisite corporate and shareholder action by Associated, and
this Agreement constitutes a legal, valid and binding obligation of Associated,
enforceable against Associated in accordance with its terms. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof by
Associated will not (a) violate or conflict with any provision of any statute,
rule or regulation by which Associated is bound (an "Applicable Law"), or any
ruling, writ, injunction, order, judgment or decree (a "Judgment") of any
Governmental Authority applicable to Associated or any of its properties or
assets, or the Certificate of Incorporation or the Bylaws of Associated, (b)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any material lease, license, franchise, contract, agreement, commitment,
arrangement, understanding or instrument, oral or written, to which Associated
is a party or by which its properties or assets are bound or affected or (c)
result in the creation or imposition of any material Encumbrance upon the
properties or assets of Associated.
3.3 No Consent or Approval Required. No consent of any natural person,
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company, partnership, joint venture, corpora-
6.
tion, business trust, unincorporated organization or other entity (a "Person")
and no consent, approval or authorization of, or declaration to or filing with,
any federal, state, municipal or other government department, commission, board,
bureau, agency or instrumentality, or any court, arbitral tribunal or
arbitrator, and any non-governmental regulating body, to the extent that the
rules and regulations or orders of such body have the force of law, in each case
whether of the United States of America or any foreign country (a "Governmental
Authority"), is or will be required for the valid authorization, execution and
delivery by Associated of this Agreement or for the consummation of the
transactions contemplated hereby, other than those consents, approvals,
authorizations, declarations or filings which have been obtained or made, as the
case may be.
SECTION 4. Restriction on Transfer.
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(a) The Shares shall not be sold, transferred, assigned, pledged,
encumbered or otherwise disposed of (each, a "Transfer") except upon the
conditions specified in this Section 4, which conditions are intended to assure
compliance with the provisions of the Securities Act.
(b) Each certificate for the Shares held by Associated and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions of Sections 4(c)
and 4(d) below) be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. ADDITIONALLY, THE TRANSFER OF
THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK
PURCHASE AGREEMENT DATED AS OF DECEMBER 22, 1995, BETWEEN NTN
COMMUNICATIONS, INC. AND ASSOCIATED VENTURES MANAGEMENT, INC. AND NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED.
(c) Associated agrees, prior to any Transfer of any Shares, to give
written notice to NTN of Associated's intention to effect such Transfer and to
comply in all other respects with the provisions of this Section 4.
(d) Notwithstanding the foregoing provisions of this Section 4, the
restrictions imposed by this Section 4 upon the transferability of any Shares
held by Associated shall cease and terminate when (i) any such Shares are sold
or otherwise disposed of pursuant to an effective registration statement under
the Securities Act or as otherwise contemplated by Section 4(c) and, pursuant to
Section 4(c), the Shares so transferred are not required to bear the legend
7.
set forth in Section 4(b) or (ii) the holder of such Shares has met the
requirements for Transfer of such shares pursuant to subparagraph (k) of Rule
144. Whenever the restrictions imposed by this Section 4 shall terminate, as
herein provided, Associated shall be entitled to receive from LearnStar, without
expense, a new certificate not bearing the restrictive legend set forth in
Section 4(b) and not containing any other reference to the restrictions imposed
by this Section 4.
SECTION 5. Remedies. In case any one or more of the covenants and agreements
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set forth in this Agreement shall have been breached by any party, the non-
breaching party may proceed to protect and enforce its rights either by suit in
equity or by action at law, including, but not limited to, an action for damages
as a result of any such breach, or an action for specific performance of any
such covenant or agreement contained in this Agreement, or any combination of
such remedies.
SECTION 6. Successors and Assigns. Subject to the restrictions on Transfer of
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the Shares set forth herein, this Agreement shall bind and inure to the benefit
of the parties and their respective successors and assigns.
SECTION 7. Entire Agreement. This Agreement and the other writings referred
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to herein or delivered pursuant hereto which form a part hereof contain the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
SECTION 8. Amendment. The terms and provisions of this Agreement may not be
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modified or amended, nor may any of the provisions hereof be waived, temporarily
or permanently, except pursuant to a written instrument executed by the parties.
SECTION 9. Counterparts. This Agreement may be executed by original or
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facsimile signatures, in any number of counterparts, each of which shall be
deemed to be an original instrument, but all of which together shall constitute
but one agreement.
SECTION 10. Confidentiality. Associated agrees to keep confidential all
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information regarding LearnStar.
SECTION 11. Headings. The headings of the sections of this Agreement have been
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inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
SECTION 12. Nouns and Pronouns. Whenever the context may require, any pronouns
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used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and vice-
versa.
8.
SECTION 13. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of California applicable to contracts
made and to be performed wholly therein.
SECTION 14. Jurisdiction and Forum. The parties, on their own behalf and on
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behalf of their respective successors and permitted assigns, hereby consent to
the exclusive jurisdiction of any court of the State of California or the United
States District Court for the Central District of California over all actions or
proceedings with respect to this Agreement, and agree that all such actions or
proceedings may be instituted and maintained only in such forum. The parties
further agree that service of process in the manner specified herein for
providing notice for purposes of this Agreement shall constitute valid service
of process for all purposes with respect to any such action or proceeding.
Very truly yours,
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
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Patrick J. Downs,
President
ACCEPTED AND AGREED TO
AS OF December 12, 1995:
ASSOCIATED VENTURES
MANAGEMENT, INC.
By: /s/ Selig Zises
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Selig Zises
President
9.