EXHIBIT 10.21
STOCK PURCHASE AGREEMENT
by and among
NTN COMMUNICATIONS, INC.
IWN, INC.
and
SYMPHONY MANAGEMENT ASSOCIATES, INC.
Dated and effective as of December 31, 1995
TABLE OF CONTENTS
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Page
SECTION 1. Sale and Purchase of IWN Common Stock;
Stockholders Agreement.................................... 1
1.1 Sale and Purchase of IWN Common Stock..................... 1
1.2 Stockholders Agreement.................................... 1
SECTION 2. Representations and Warranties of IWN..................... 1
2.1 Organization; Qualification............................... 1
2.2 Authorization of the Shares............................... 2
2.3 Capitalization............................................ 2
2.4 Financial Information; Absence
of Undisclosed Liabilities................................ 2
2.5 Absence of Certain Changes................................ 2
2.6 Title to Assets, Properties and Rights.................... 4
2.7 Intellectual Property Rights.............................. 4
2.8 Litigation................................................ 4
2.9 ERISA Plans............................................... 4
2.10 No Defaults............................................... 5
2.11 Equity Investments........................................ 5
2.12 Compliance................................................ 5
SECTION 3. Representations and Warranties of Symphony................ 5
3.1 Investment Intent......................................... 5
3.2 Corporate Power and Authorization
No Conflicts.............................................. 6
3.3 No Consent or Approval Required........................... 7
i.
SECTION 4. Representations and Warranties of NTN........................ 7
4.1 Title to Shares.............................................. 7
4.2 Corporate Power and Authorization;
No Conflicts................................................. 7
4.3 No Consent or Approval Required.............................. 8
SECTION 5. Additional Agreements of IWN................................. 8
5.1 Access to Records............................................ 8
5.2 Financial Reports............................................ 8
SECTION 6. Restriction on Transfer...................................... 8
SECTION 7. Remedies..................................................... 10
SECTION 8. Successors and Assigns....................................... 10
SECTION 9. Entire Agreement............................................. 10
SECTION 10. Notices...................................................... 10
SECTION 11. Amendment.................................................... 10
SECTION 12. Counterparts................................................. 11
SECTION 13. Headings..................................................... 11
SECTION 14. Nouns and Pronouns........................................... 11
SECTION 15. Governing Law................................................ 11
EXHIBITS:
A- Form of Promissory Note .................................... A-1
B- Form of Stockholders Agreement ............................. B-1
ii
Symphony Management Associates, Inc.
900 Bestgate Road
Suite 400
Annapolis, Maryland 21401
Gentlemen:
The undersigned, NTN Communications, Inc., a Delaware corporation ("NTN"),
and IWN, Inc., a Delaware corporation ("IWN"), hereby agree with Symphony
Management Associates, Inc., a Delaware corporation ("Symphony"), as follows:
SECTION 1. Sale and Purchase of IWN Common Stock; Stock holders Agreement.
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1.1 Sale and Purchase of IWN Common Stock. Concurrently with the
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execution of this Agreement, NTN is selling and as signing to Symphony, and
Symphony is purchasing and acquiring from NTN, 100,000 shares (the "Shares") of
common stock, $.001 par value per share ("Common Stock"), of IWN for an
aggregate purchase price of $350,000, which is being paid by delivery to NTN of
a Promissory Note of Symphony in the form attached as Exhibit A to the Agreement
(the "Note"). Symphony hereby acknowledges receipt of one or more certificates
evidencing the Shares against delivery by Symphony of the Note, receipt of which
is hereby acknowledged by NTN.
1.2 Stockholders Agreement. Concurrently with the execution of this
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Agreement, the parties also are entering into a stockholders agreement,
substantially in the form attached as Exhibit B to this Agreement (the
"Stockholders Agreement").
SECTION 2. Representations and Warranties of IWN. IWN hereby represents and
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warrants to Symphony as follows:
2.1 Organization; Qualification. IWN is a corporation duly organized,
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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 IWN 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
IWN (a "Material Adverse Effect"). IWN has provided Symphony with true, correct
and complete copies of the Certificate of Incorporation and the Bylaws of IWN,
in each case, as amended to, and as in effect on, the date hereof.
1.
2.2 Authorization of the Shares. The Shares have been duly authorized by
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all requisite corporate and shareholder action of IWN, and are validly issued
and outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, and not subject to preemptive or any other
similar rights of the shareholders of IWN or others. The Shares are owned
beneficially and of record as of the date hereof by NTN, free and clear of any
liens or encumbrances whatsoever and the transfer and delivery of the Shares by
NTN to Symphony as contemplated herein will transfer good title to the Shares
free and clear of any liens or encumbrances whatsoever.
2.3 Capitalization. The authorized capital stock of IWN immediately upon
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the consummation of the transaction contemplated hereby consists of 1,000,000
shares of Common Stock, all of which 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 IWN is or may become obligated to issue any shares of the capital stock or
other securities of IWN, and there are no preemptive or similar rights to
purchase or otherwise acquire shares of the capital stock of IWN pursuant to any
provision of law, the Certificate of Incorporation or the Bylaws of IWN or any
agreement to which IWN is a party or otherwise; and, except as otherwise
contemplated hereby, there is no agreement, restriction or encumbrance (such as
a right of first refusal, right of first offer, proxy, voting trust or voting
agreement) with respect to the sale or voting of any shares of capital stock of
IWN (whether outstanding or issuable upon conversion or exercise of outstanding
securities).
2.4 Financial Information; Absence of Undisclosed Liabilities. Attached
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hereto as Schedule 2.4 is the unaudited balance of IWN at December 31, 1995 (the
"Balance Sheet"), which presents fairly the financial condition of IWN at that
date.
2.5 Absence of Certain Changes. From the date of the Balance Sheet
--------------------------
through the date of NTN's delivery to Symphony IWN Investment LLC of the Warrant
(as defined in Section 3.1 of the Investment Agreement, dated as of even date,
among NTN, IWN and Symphony), IWN shall not suffer or permit any of the
following:
(a) any material adverse change in the business, operations, assets,
liabilities, results of operations, condition (financial or otherwise),
performance or prospects of IWN (a "Material Adverse Change");
2.
(b) any borrowing or agreement to borrow funds or any material
liability incurred by IWN, other than current liabilities incurred in the
ordinary course of business;
(c) any material asset or property of IWN made subject to a lien of
any kind;
(d) any waiver of any material right of IWN, or the cancellation of
any material debt or claim held by IWN;
(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 IWN, or any agreement or commitment therefor;
(f) any issuance of any stock, bond or other security of IWN, 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
IWN employee stock option plans or agreements);
(g) any sale, assignment, pledge, license, mortgage or transfer of
any tangible or intangible assets of IWN, except in the ordinary course of
business;
(h) any loan by IWN to any officer, director, employee, consultant or
shareholder of IWN 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 IWN);
(i) any damage, destruction or casualty loss (whether or not covered
by insurance) to any material assets or property of IWN;
(j) any transaction relating to IWN other than in the ordinary course
of business;
(k) any change in the accounting methods or practices of IWN;
(l) any liability or obligation (whether absolute or contingent)
incurred by IWN except liabilities incurred, and obligations under agreements
entered into, in the ordinary course of IWN's business;
(m) any capital expenditure or commitment for additional purchases in
excess of $10,000 in the aggregate;
(n) any agreement or commitment by IWN other than as set forth in
Schedule 2.5; or
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3.
(o) any agreement entered into with respect to any of the foregoing.
2.6 Title to Assets, Properties and Rights. IWN has good and valid title
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to all of the properties, interests in properties and assets, real, personal,
intangible or mixed, reflected on the Balance Sheet as being owned by IWN 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 mortgages, judgments, claims, liens, security
interests, pledges, 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 IWN which are not owned by IWN are leased or licensed to IWN under
valid, binding and enforceable agreements in full force and effect.
2.7 Intellectual Property Rights. To the best knowledge of IWN (but
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without having conducted any special investigation or patent search), IWN 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. IWN 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 IWN.
2.8 Litigation. There is no action, suit, claim, arbitration, proceeding
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or investigation at law or in equity or by or before any Governmental Authority
(as hereinafter defined) now pending nor, to the best knowledge of IWN,
threatened against or affecting IWN. There are no judgments of any Governmental
Authority to which IWN is a party or by which any of its properties or assets
are bound.
2.9 ERISA Plans. IWN does not maintain and is not a party to (and has
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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 IWN 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.
4.
2.10 No Defaults. IWN is not in default (i) under its Certificate of
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Incorporation or the Bylaws of IWN, or any material indenture, mortgage, lease,
purchase or sales order, or other contract to which IWN is a party or by which
IWN 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 IWN, 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.
2.11 Equity Investments. IWN has had, and does not presently have, any
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subsidiaries, nor has it owned, nor does it presently own, any capital stock or
other proprietary interest, directly or indirectly, in any Person other than
IWN, L.P., a Delaware limited partnership.
2.12 Compliance. To the best knowledge of IWN, IWN has (or has applied
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for) all governmental approvals, authoriza tions, consents, licenses and permits
necessary or required to conduct its business as presently conducted, except
those the failure of which to obtain would not have a Material Adverse Effect.
All such licenses and permits are in full force and effect and no violations
exist in respect of any such licenses or permits and no proceeding is pending
or, to the best knowledge of IWN, threatened to revoke or limit any thereof. To
the best knowledge of IWN, it is presently and at all times since its inception
has been in compliance with all laws, statutes, ordinances, rules, regulations,
certificates, permits and judgments of any Governmental Authority applicable to
IWN, its business or the ownership of its assets or properties ("Applicable
Laws").
SECTION 3. Representations and Warranties of Symphony. Symphony hereby
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represents and warrants to IWN and NTN as follows:
3.1 Investment Intent.
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(a) Symphony 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) Symphony understands that the Shares have not been registered
under the Securities Act and must be held by Symphony indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from registration thereunder.
(c) Symphony will not transfer the Shares except in compliance with
this Agreement and the Stockholders Agreement.
5.
(d) Symphony has not employed any broker or finder in connection with
the transactions contemplated by this Agreement.
(e) Symphony is an "accredited investor" within the meaning of Rule
501 under the Securities Act.
(f) Symphony 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.
(g) During the course of the transactions contemplated hereby and
prior to the purchase of the Shares Symphony has had the opportunity to ask
questions of and receive answers from IWN concerning IWN, IWN's business and its
financial condition and prospects.
3.2 Corporate Power and Authorization; No Conflicts. Symphony has the
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corporate power to execute, deliver and perform its obligations under this
Agreement and the Stockholders Agreement and to purchase and acquire the Shares
hereunder. The execution, delivery and performance by Symphony of this
Agreement and the Stockholders Agreement have been duly authorized by all
requisite corporate and shareholder action by Symphony, and this Agreement and
the Stockholders Agreement constitute legal, valid and binding obligations of
Symphony, enforceable against Symphony in accordance with their respective
terms. The execution, delivery and performance of this Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof by Symphony will not (a)
violate or conflict with any provision of any Applicable Law, or any ruling,
writ, injunction, order, judgment or decree (a "Judgment") of any Governmental
Authority applicable to Symphony or any of its properties or assets, or the
Certificate of Incorporation or the Bylaws of Symphony, (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 the Symphony is a party
or by which its properties or assets is bound or affected or (c) result in the
creation or imposition of any material Encumbrance upon the properties or assets
of Symphony.
6.
3.3 No Consent or Approval Required. No consent of any natural person,
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company, partnership, joint venture, corporation, 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 Symphony
of this Agreement or the Stockholders 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. Representations and Warranties of NTN. NTN hereby represents and
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warrants to Symphony as follows:
4.1 Title to Shares. NTN owns the Shares, of record and beneficially,
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free and clear of all encumbrances whatsoever.
4.2 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 the Stockholders Agreement and to sell and deliver the Shares
hereunder. The execution, delivery and performance by NTN of this Agreement and
the Stockholders Agreement have been duly authorized by all requisite corporate
and shareholder action by NTN, and this Agreement and the Stockholders Agreement
constitute legal, valid and binding obligations of NTN, enforceable against NTN
in accordance with their respective 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, or any
Judgment of any Governmental Authority applicable to NTN or any of its
properties or assets, or the Certificate of Incorporation or the Bylaws of NTN,
(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 the NTN is a
party or by which its properties or assets is bound or affected or (c) result in
the creation or imposition of any material Encumbrance upon the properties or
assets of NTN.
7.
4.3 No Consent or Approval Required. No consent of any natural person,
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company, partnership, joint venture, corporation, business trust, unincorporated
organization or other entity (a "Person") and no consent, approval or
authorization of, or declaration to or filing with, any Governmental Authority,
is or will be required for the valid authorization, execution and delivery by
NTN of this Agreement or the Stockholders 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 5. Additional Agreements of IWN.
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5.1 Access to Records. For so long as Symphony or its affiliates shall
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hold any Shares, IWN shall afford to Symphony and its affiliates and its
employees, counsel and other authorized representatives reasonable access, upon
reasonable advance notice during normal business hours, to all of the books,
records and properties of IWN and to all officers and employees of IWN, for any
purpose reasonably related to the transactions contemplated hereby. The
investor, its employees, counsel and other authorized representatives shall use
their best efforts to maintain the confidentiality of any confidential or
propriety information of IWN so obtained by it.
5.2 Financial Reports. For so long as Symphony holds any Shares, IWN
-----------------
agrees to furnish Symphony and its affiliates with such annual and quarterly
financial statements (which need not be audited), annual budgets and other
financial information prepared in the regular course of business of IWN as
Symphony may reasonably request.
SECTION 6. 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 6 or in the Stockholders Agreement, which
conditions are intended to assure compliance with the provisions of the
Securities Act.
(b) Each certificate for the Shares held by Symphony and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions of Sections 6(c)
and 6(d) below) be stamped or otherwise imprinted with a legend in substantially
the following form:
8.
"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
REGIS TRATION OR AN EXEMPTION THEREFROM."
(c) With the exception of the Transfer of the Shares to Symphony IWN
Investment LLC, an affiliate of Symphony ("LLC"), Symphony agrees, prior to any
Transfer of any Shares, to give written notice to IWN of Symphony's intention to
effect such Transfer and to comply in all other respects with the provisions of
this Section 6. In connection with and as a condition to any Transfer of the
Shares to LLC, LLC shall agree in writing to be bound by the terms and
provisions of the Agreement and the Stockholders Agreement and shall represent
and warrant to IWN and NTN the matters set forth in Section 3. Each such notice
shall describe the manner and circumstances of the proposed Transfer and shall
be accompanied by the written opinion, addressed to IWN, of counsel for the
holder of such Shares, stating that in the opinion of such counsel (which
opinion and counsel shall be reasonably satisfactory to IWN) such proposed
Transfer does not involve a transaction requiring registration or qualification
of such Shares under the Securities Act or the securities "blue sky" laws of any
relevant state of the United States. Each certificate or other instrument
evidencing the securities issued upon the Transfer of any such Shares (and each
certificate or other instrument evidencing any untransferred balance of such
Shares) shall bear the legend set forth in Section 6(b) unless (x) in such
opinion of counsel registration of any future Transfer is not required by the
applicable provisions of the Securities Act or (y) IWN shall have waived the
requirement of such legends. Symphony shall not Transfer any Shares until such
opinion of counsel has been given (unless waived by IWN or unless such opinion
is not required in accordance with the provisions of this Section 6(c)).
(d) Notwithstanding the foregoing provisions of this Section 6, the
restrictions imposed by this Section 6 upon the transferability of any Shares
held by Symphony 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 6(c) and, pursuant to
Section 6(c), the Shares so transferred are not required to bear the legend set
forth in Section 6(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 6 shall terminate, as herein provided,
Symphony shall be entitled to receive from IWN, without expense, a new
certificate not bearing the restrictive legend
9.
set forth in Section 6(b) and not containing any other reference to the
restrictions imposed by this Section 5.
SECTION 7. 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 or parties may proceed to protect and enforce their 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 8. Successors and Assigns. Subject to the restrictions on Transfer of
----------------------
the Shares set forth herein, this Agreement shall bind and inure to the benefit
of the parties and their respective successors and assigns.
SECTION 9. Entire Agreement. This Agreement, the Stockholders Agreement, and
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that certain Investment Agreement, of even date herewith, among the parties (the
"Investment Agreement") and the other writings referred 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 10. Notices. All notices, requests, consents and other communications
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hereunder to any party shall be deemed to be sufficient if given in the manner
specified in the Investment Agreement.
SECTION 11. 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 12. 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 13. 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 14. 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.
10.
SECTION 15. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware applicable to contracts
made and to be performed wholly therein.
Very truly yours,
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
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Name: Patrick J. Downs
Its: President
IWN, INC.
By: /s/ Daniel C. Downs
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Name: Daniel C. Downs
Its: Chairman
ACCEPTED AND AGREED
TO AS OF DECEMBER 31, 1995:
SYMPHONY MANAGEMENT
ASSOCIATES, INC.
By: /s / Valerie S. Hart
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Name: Valerie S. Hart
Its: Vice President
11.