Item 1.01 Entry into a Material Definitive Agreement.
On January 13, 2020, NTN Buzztime, Inc. ("we," "us," "our," or the "Company")
entered into an asset purchase agreement with Sporcle, Inc., a Delaware
corporation ("Sporcle"), pursuant to which we agreed to sell to Sporcle all of
our assets necessary for Sporcle to conduct the live hosted knowledge-based
trivia events known as Stump! Trivia and OpinioNation. At the closing of the
transaction, we will receive approximately $1.4 million in cash. The transaction
is expected to close by January 31, 2020.
In addition to customary closing conditions, the closing of the transaction is
subject to Sporcle obtaining financing to pay the consideration at closing. The
asset purchase agreement may be terminated under specified circumstances,
including by mutual consent of the parties, by either party if representations
and warranties of the other party are not true or if the other party has failed
to perform its covenants, or if the transactions contemplated by the asset
purchase agreement are not consummated by January 31, 2020 (which date may be
extended by mutual written consent of the parties).
The foregoing summary of the material terms of the asset purchase agreement does
not purport to be complete and is qualified in its entirety by reference to the
asset purchase agreement, a copy of which is attached as an exhibit to this
report and is incorporated herein by reference.
The asset purchase agreement has been provided as an exhibit to this report to
provide investors with information regarding its terms. The asset purchase
agreement is not intended to provide any other information about the Company or
Sporcle or any of their respective subsidiaries or affiliates. The
representations, warranties and covenants in the asset purchase agreement were
made only for purposes of the asset purchase agreement as of the specific dates
therein, were made solely for the benefit of the parties to the asset purchase
agreement, may be subject to limitations agreed upon by the parties thereto, and
may be subject to standards of materiality applicable to such contracting
parties that differ from those applicable to our stockholders. For the foregoing
reasons, no person should rely on the representations, warranties or covenants
in the asset purchase agreement, or any descriptions thereof, as
characterizations of the actual state of facts or condition of the parties to
the asset purchase agreement or any of their respective subsidiaries or
affiliates.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On January 14, 2020, our board of directors, on the recommendation of its
nominating and corporate governance/compensation committee, appointed Allen
Wolff as our chief executive officer ("CEO"). Mr. Wolff served as our interim
CEO since September 17, 2019. In connection with his appointment as CEO, the
number of our board of directors was increased to five and Mr. Wolff was
appointed to our board of directors.
Mr. Wolff, age 48, was appointed as our chief financial officer and executive
vice president in January 2016 and served as chief financial officer from
December 2014 until he was appointed as our interim chief executive officer on
September 17, 2019. From July 2013 until December 2014, Mr. Wolff served as the
chief financial strategist of PlumDiggity, a privately-held financial and
marketing strategy firm that he co-founded. From October 2012 to July 2013, Mr.
Wolff served as the chief financial officer of 365 Retail Markets, a
privately-held company in the self-checkout point of sale technology industry,
where he also served on its board of directors during such period. From July
2011 to April 2013, simultaneous with his role at 365 Retail Markets, Mr. Wolff
held the leadership role of "Game Changer" at Crowdrise, an online fundraising
platform company. Mr. Wolff joined Crowdrise after serving as the chief
operating officer and chief financial officer from January 2011 to July 2011 of
RetailCapital, LLC, a small business specialty finance company. Mr. Wolff
co-founded PaySimple in January 2006 and held various roles including president,
chief financial officer, executive vice president and director, from 2006 until
he left the company in January 2011. From September 1998 until August 2012, Mr.
Wolff was a principal for a casual dining restaurant. Mr. Wolff holds a B.A.
from the University of Michigan and an MBA, from the University of Maryland,
R.H. Smith School of Business.
We are not aware of any transaction in which Mr. Wolff has an interest requiring
disclosure under Item 404(a) of Regulation S-K.
In connection his appointment as our CEO, we entered into an amendment to Mr.
Wolff's employment agreement dated March 19, 2018. We also entered into an
amendment to the employment agreement dated September 17, 2019 that we entered
into with Sandra Gurrola when she was appointed our senior vice president of
finance. The following is a summary of the material terms of the amendment to
each of Mr. Wolff's and Ms. Gurrola's employment agreement.
Effective January 18, 2020, Mr. Wolff's annual base salary will increase to
$325,000, and it will increase to $350,000 effective July 1, 2021. However, in
an effort to help us preserve cash, up to 20% of his base salary may be paid in
shares of our common stock. Mr. Wolff's target incentive performance-based bonus
for 2020 will be $150,000, or 43% of his base salary. Previously the amount of
such bonus was 50% of his base salary.
The performance-based bonus, if earned, will be payable as follows: 16.66% will
be payable if the applicable performance targets for each of our 1st, 2nd and
3rd fiscal quarters are achieved, and 50% will be payable if the applicable
performance targets for the applicable fiscal year are achieved. Ms. Gurrola's
employment agreement was amended to be consistent with the foregoing and her
target incentive performance-based bonus for 2020 continues to be $38,000, or
20% of her base salary. The performance targets will continue to be established
by our board of directors (or its nominating and corporate
governance/compensation committee), the level of achievement will continue to be
determined and approved by our board of directors (or its nominating and
corporate governance/compensation committee), and we anticipate that the
performance targets will continue to fall into three categories, the achievement
of which will be determined following each quarter or year, as applicable:
strategic, financial and operational. All incentive-based compensation payable
to Mr. Wolff and Ms. Gurrola will be subject to any clawback policy that we may
establish.
The amount of severance to which Mr. Wolff will be entitled if we terminate his
employment without cause or if he resigns for good reason will be equal to one
month of his base salary for every full year of full-time employment, subject to
a minimum of 6 months and a maximum of 9 months. Previously, Mr. Wolff was
entitled to 6 months of severance. Mr. Wolff has been employed with us for
slightly over 5 years. Similarly, the amount of severance to which Ms. Gurrola
will be entitled if we terminate her employment without cause or if she resigns
for good reason will be equal to 9 months of her base salary. She has been
employed with us for over 10 years.
We agreed to grant 75,000 and 25,000 restricted stock units to Mr. Wolff and Ms.
Gurrola, respectively, which will vest quarterly, subject to accelerated vesting
in the event of a change in control. We expect to grant such awards on or about
January 19, 2020.
To help us preserve cash, Mr. Wolff agreed to forfeit the $30,000 cash bonus to
which he would have been entitled if he remained employed with us for at least
180 days from September 17, 2019, the date on which he was appointed interim
CEO. In exchange we agreed to issue to him such number of shares of our common
stock equal to a pro rata amount of the $30,000 bonus (determined by multiplying
$30,000 by a fraction, the numerator of which is the number of days lapsed
between September 17, 2019 and the effective date of the amendment to his
employment agreement, and the denominator of which is 180) divided by the
closing price of our common stock on the effective date of the amendment to his
employment agreement.
The foregoing summary of the material terms of the amendments to the employment
agreements of Mr. Wolff and Ms. Gurrola does not purport to be complete and is
qualified in its entirety by reference to such amendments, copies of which are
attached hereto as an exhibit to this report and is incorporated herein by
reference.
Item 7.01 Regulation FD Disclosure.
On January 14, 2020, we issued a press release announcing that we entered into
the asset purchase agreement, a copy of which is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
The information contained in this Item 7.01 and Exhibit 99.1 to this report
shall not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liability of that section, and shall not be incorporated by reference into
any filings made by us under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1# Asset purchase agreement dated January 13, 2020 between NTN Buzztime,
Inc. and Sporcle, Inc.
10.2* Second Amendment to Employment Agreement dated January 14, 2020 by and
between NTN Buzztime, Inc. and Allen Wolff
10.3* First Amendment to Employment Agreement dated January 14, 2020 by and
between NTN Buzztime, Inc. and Sandra Gurrola
99.1 Press release dated January 14, 2020
# Schedules and exhibits to this agreement, as well as portions of this
agreement that are not material and would likely cause competitive harm to the
registrant if publicly disclosed, have been omitted from this exhibit pursuant
to Instructions 4 and 6 of Item 1.01 of Form 8-K. A copy of any omitted
schedule or exhibit and/or an unredacted copy of this agreement will be
provided to the Securities and Exchange Commission or its staff upon request.
* Indicates management contract or compensatory plan
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