Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
SEPTEMBER 13, 1999
NETWORKS NORTH, INC.
(Exact Name of Registrant as specified in its charter)
NEW YORK 0-18066 11-2805051
(State of other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification No.)
14 METEOR DRIVE, TORONTO, ONTARIO M9W 1A4
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(416) 675-6666
Not applicable
(Former name or former address, if changes since last report)
Item 2. Acquisition or Disposition of Assets
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On September 13, 1999, pursuant to an Asset Purchase Agreement dated as of
the 10th day of September, 1999 (the "Agreement"), Networks North Inc. (the
"Registrant"), through its wholly-owned subsidiary, 1373224 Ontario Limited (the
"Purchaser"), acquired, effective as of September 13th, 1999, substantially all
of the property and assets (excluding accounts receivable) of GalaVu
Entertainment Inc., ("GalaVu") from the person appointed by the court of
competent jurisdiction as the receiver or receiver and manager of the property,
assets and undertaking of GalaVu (the "Receiver"). A copy of the Agreement is
annexed hereto as Exhibit "10.1", and is incorporated herein by reference
thereto.
Pursuant to the Agreement, the Purchaser acquired substantially all of the
property and assets (excluding accounts receivable) of GalaVu for the
consideration of 100,000 shares of the Company's common stock and a Promissory
Note (the "Note"), which is secured by a general security interest in all of the
Purchaser's present and after-acquired assets. A copy of the Note is annexed
hereto as Exhibit "10.2" and is incorporated herein by reference thereto. The
Note shall be payable in cash or in common shares of the Registrant annually,
for the term consisting of each of the next five fiscal years in an amount equal
to 50% of the earnings before interest, taxes, depreciation and amortization
("EBITDA") of the Purchaser for the immediately preceding annual period with
such amount to be
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adjusted so that the total annual payment required to be made to the Receiver or
Holder of the Note for each fiscal year is an amount equal to 50% of the EBITDA
of the Purchaser for such fiscal year. Pursuant to the provisions of the Note,
the minimum amount to be received annually by the Holder of the Note is as
follows: Fiscal 2000-$300,000, Fiscal 2001-$500,000, Fiscal 2002-$750,000,
Fiscal 2003-$875,000 and Fiscal 2004-$875,000.
The assets acquired from GalaVu were utilized by GalaVu and shall be
utilized by the Purchaser in the same manner, i.e., to provide interactive,
in-room entertainment systems to hotels.
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The following schedules to the Agreement are not annexed hereto, but the
Registrant, upon request, shall provide a copy of any omitted schedule:
Schedule "F" - Excluded Assets
Schedule "J" - Certificates referred to in section 5.2(a)(v) of the
Agreement
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Item 7. Exhibits
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(a) 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 Asset Purchase Agreement, dated September 10, 1999, by and between 1373224
Ontario Limited, Networks North Inc. and Arthur Andersen Inc., to acquire
the property and assets of GalaVu Entertainment Inc., from the person
appointed by the court of competent jurisdiction as the receiver or
receiver and manager of the property, assets and undertaking of GalaVu.
10.2 Promissory Note, dated September 10, 1999, by and between 1373224 Ontario
Limited, as Debtor, and the Holder, as Creditor.
10.3 General Security Agreement, dated September 10, 1999, by between 1373224
Ontario Limited to acquire the property and assets of GalaVu Entertainment
Inc., from the person appointed by the court of competent jurisdiction as
the receiver or receiver and manager of the property, assets and
undertaking of GalaVu.
10.4 Securities Pledge Agreement, dated September 10, 1999, by between 1373224
Ontario Limited to acquire the property and assets of GalaVu Entertainment
Inc., from the person appointed by the court of competent jurisdiction as
the receiver or receiver and manager of the property, assets and
undertaking of GalaVu.
10.5 Certificate to the Escrow Agent certifying that the conditions of Closing
have been satisfied or waived.
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10.6 Certificate to the Escrow Agent certifying that the conditions of Closing
have not been satisfied or waived.
10.7 Occupancy and Indemnity Agreement, dated September 13, 1999, by between
1373224 Ontario Limited to acquire the property and assets of GalaVu
Entertainment Inc., from the person appointed by the court of competent
jurisdiction as the receiver or receiver and manager of the property,
assets and undertaking of GalaVu.
10.8 Order of the Ontario Superior Court of Justice, dated September, 1999,
approving the transactions contemplated herein, and vesting in the
Purchaser the right, title and interest of GalaVu and the Receiver, if
any, in and to the Purchased Assets, free and clear of the right, title
and interest of any other person other than Permitted Encumbrances.
10.9 Bill of Sale, dated September 13, 1999, by between 1373224 Ontario Limited
to acquire the property and assets of GalaVu Entertainment Inc., from the
person appointed by the court of competent jurisdiction as the receiver or
receiver and manager of the property, assets and undertaking of GalaVu.
10.10 Covenant of Networks North Inc., dated September 13, 1999, to allot and
issue and pay to the Bank in writing 100,000 common shares of NETN.
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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.
Networks North Inc.
a New York Corporation
By: /s/ Peter Rona
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Peter Rona, President
Date: September 27, 1999
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EXHIBIT INDEX
10.1 Asset Purchase Agreement, dated September 10, 1999, by between 1373224
Ontario Limited to acquire the property and assets of GalaVu Entertainment
Inc., from the person appointed by the court of competent jurisdiction as
the receiver or receiver and manager of the property, assets and
undertaking of GalaVu.
10.2 Promissory Note, dated September 10, 1999, by and between 1373224 Ontario
Limited, as Debtor, and the Holder, as Creditor.
10.3 General Security Agreement, dated September 10, 1999, by between 1373224
Ontario Limited to acquire the property and assets of GalaVu Entertainment
Inc., from the person appointed by the court of competent jurisdiction as
the receiver or receiver and manager of the property, assets and
undertaking of GalaVu.
10.4 Securities Pledge Agreement, dated September 10, 1999, by between 1373224
Ontario Limited to acquire the property and assets of GalaVu Entertainment
Inc., from the person appointed by the court of competent jurisdiction as
the receiver or receiver and manager of the property, assets and
undertaking of GalaVu.
10.5 Certificate to the Escrow Agent certifying that the conditions of Closing
have been satisfied or waived.
10.6 Certificate to the Escrow Agent certifying that the conditions of Closing
have not been satisfied or waived.
10.7 Occupancy and Indemnity Agreement, dated September 13, 1999, by between
1373224 Ontario Limited to acquire the property and assets of GalaVu
Entertainment Inc., from the person appointed by the court of competent
jurisdiction as the receiver or receiver and
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manager of the property, assets and undertaking of GalaVu.
10.8 Order of the Ontario Superior Court of Justice, dated September, 1999,
approving the transactions contemplated herein, and vesting in the
Purchaser the right, title and interest of GalaVu and the Receiver, if
any, in and to the Purchased Assets, free and clear of the right, title
and interest of any other person other than Permitted Encumbrances.
10.9 Bill of Sale, dated September 13, 1999, by between 1373224 Ontario Limited
to acquire the property and assets of GalaVu Entertainment Inc., from the
person appointed by the court of competent jurisdiction as the receiver or
receiver and manager of the property, assets and undertaking of GalaVu.
10.10 Covenant of Networks North Inc., dated September 13, 1999, to allot and
issue and pay to the Bank in writing 100,000 common shares of NETN.
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