<PAGE>
As filed with the Securities and Exchange Commission on August 15, 1995
Reg. No. 33-95776
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
NTN COMMUNICATIONS, INC.
(Exact name of issuer as specified in its charter)
DELAWARE 31-1103425
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
THE CAMPUS
5966 LA PLACE COURT
CARLSBAD, CALIFORNIA 92008
(Address of principal executive offices)
-------------------------
NTN COMMUNICATIONS, INC. 1995 STOCK OPTION PLAN
(Full title of the plans)
-------------------------
RONALD E. HOGAN, CHIEF FINANCIAL OFFICER
NTN COMMUNICATIONS, INC.
THE CAMPUS
5966 LA PLACE COURT
CARLSBAD, CALIFORNIA 92008
(Name and address of agent for service)
(619) 438-7400
FAX: (619) 438-7470
(Telephone number, including area code, of agent for service)
Copy to:
DALE E. SHORT, ESQ.
TROY & GOULD PROFESSIONAL CORPORATION
1801 CENTURY PARK EAST, SUITE 1600
LOS ANGELES, CALIFORNIA 90067
(310) 553-4441
FAX: (310) 201-4746
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate offering Amount of
to be registered registered(1) per share price registration fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value... 200,000 shares $ 5.00 $ 1,000,000 $ 345
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, $.005 par value... 200,000 shares $ 6.00 $ 1,200,000 $ 414
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, $.005 par value... 160,000 shares $ 6.50 $ 1,040,000 $ 359
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, $.005 par value... 160,000 shares $ 8.00 $ 1,280,000 $ 441
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, $.005 par value... 85,000 shares $ 8.25 $ 701,250 $ 242
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, $.005 par value... 3,990,130 shares $ 4.625(2) $18,454,351(2) $6,364
- -----------------------------------------------------------------------------------------------------------------------
Total 4,795,130 shares $23,675,601 $8,165
=======================================================================================================================
</TABLE>
(1) In accordance with Rule 416(a) of the General Rules and Regulations under
the Securities Act of 1933 (the "General Rules"), there are also being
registered such indeterminate number of additional shares of Common Stock as
may become issuable pursuant to anti-dilution provisions of the NTN
Communications, Inc. 1995 Stock Option Plan.
(2) Estimated solely for the purpose of determining the amount of the
registration fee and based, in accordance with Rules 457(c) and 457(h) of
the General Rules, upon the average of the high and low sale prices of the
Common Stock as reported by the American Stock Exchange on August 8, 1995.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item l. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
_____________
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 of the General Rules and Regulations under the Securities Act of
1933 and the Note to Part I of Form S-8.
(i)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by NTN Communications, Inc. (the "Company")
with the Securities and Exchange Commission (the "Commission") under the
Securities Exchange Act of 1934 (the "Exchange Act") (Commission File No.
1-11460) are incorporated herein by reference: (a) the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994; (b) the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and June
30, 1995; (c) the Company's Current Reports on Form 8-K dated April 21, 1995
and July 5, 1995; and (d) the description of the Company's Common Stock
contained in the Company's Registration Statement on Form 8-A (Reg. No. 0-
19383) filed on July 3, 1991 with the Commission under the Exchange Act,
including any amendment or report subsequently filed by the Company for the
purpose of updating that description.
In addition, any document filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date hereof, but prior to the filing of a post-effective amendment to
this Registration Statement which indicates that all shares of Common Stock
registered hereunder have been sold or that deregisters all such shares of
Common Stock then remaining unsold, will be deemed incorporated herein by
reference and to be a part hereof from the date of filing of such document.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and Bylaws permit the Company
to indemnify officers and directors of the Company to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law. This
provision is intended to afford the Company's directors the benefit of the
Delaware General Corporation Law (the "GCL"), which provides that directors of
a Delaware corporation may be relieved of monetary liability for breach of
their fiduciary duty of care, except under certain circumstances involving
breach of a director's duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct or a knowing violation of law, or any
transaction from which the director derived an improper personal benefit.
Section 145 of the GCL authorizes indemnification by a Delaware
corporation when a person is made a party to any proceeding by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation or was serving as a director, officer, employee or agent of
another enterprise, at the request of the corporation, and if such person
acted in good faith and in a manner reasonably believed by him or her to be
in, or not opposed to, the best interests of the corporation. With respect to
any criminal proceeding, such person must have had no reasonable cause to
believe that his or her conduct was unlawful. If it is determined that the
conduct of such person meets these standards, he or she may be indemnified for
expenses incurred and amounts paid in such proceeding (including attorneys'
fees) if actually and reasonably incurred by him or her in connection
therewith.
If such a proceeding is brought by or on behalf of the corporation (i.e.,
a derivative suit), such person may be indemnified against expenses actually
and reasonably incurred if he or she acted in good faith and in a manner
reasonably believed by him or her to be in, or not opposed to, the best
interests of the corporation. There can be no indemnification with respect to
any matter as to which such person is adjudged to be liable to the
corporation; however, a court may, even in such case, allow such
indemnification to such person for such expenses as the court deems proper.
Where such person is successful in any such proceeding, he or she is entitled
to be indemnified against expenses actually and reasonably incurred by him or
her. In all other cases, indemnification is made by the corporation upon
determination by it that indemnification of such person is proper because such
person has met the applicable standard of conduct.
The Company has entered into indemnity agreements with certain of its
outside directors. Pursuant to the indemnity agreements, the Company agrees
to indemnify each outside director who is a party to an indemnity agreement
under certain circumstances in which such outside director or the Company is
named as a party to certain proceedings.
II-1
<PAGE>
The foregoing indemnification provisions are broad enough to encompass
certain liabilities of directors and officers of Company under the Securities
Act of 1933.
ITEM 8. EXHIBITS
The following exhibits included herewith or incorporated herein by
reference are made a part of this Registration Statement:
4.1 Specimen Common Stock certificate (previously filed as an exhibit to
the Company's registration statement on Form 8-A, File No. 0-19383,
and incorporated herein by reference).
4.2 NTN Communications, Inc. 1995 Stock Option Plan.*
5 Opinion of Troy & Gould Professional Corporation regarding the
legality of the securities registered hereunder.*
23.1 Consent of KPMG Peat Marwick LLP (included at page II-5).*
23.2 Consent of Troy & Gould Professional Corporation (included in
Exhibit 5).*
24 Power of Attorney (included on page II-4).*
_________________
* Included herewith.
ITEM 9. UNDERTAKINGS
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereunder which remain unsold
at the termination of the offering.
II-2
<PAGE>
(b) The undersigned Company hereby undertakes:
That for purposes of determining any liability under the Securities
Act of 1933, each filing of the Company's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement on Form S-8 to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Carlsbad, State of
California, on August 14, 1995.
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
------------------------------
Patrick J. Downs,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Patrick J. Downs and Ronald E. Hogan,
and each of them, his true and lawful attorneys-in-fact and agents, each with
power of substitution, for him in any and all capacities, to sign this
Registration Statement and any amendments hereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as he might do or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or his or their
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-8 has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Patrick J. Downs Chairman of the Board August 14, 1995
- ------------------------- of Directors and Chief
Patrick J. Downs Executive Officer
- ------------------------- President, Chief Operating
Daniel C. Downs Officer and Director
/s/ Kenneth B. Hamlet Executive Vice-President, August 14, 1995
- ------------------------- General Manager and Director
Kenneth B. Hamlet
/s/ Ronald E. Hogan Senior Vice President - August 14, 1995
- ------------------------- Finance and Secretary
Ronald E. Hogan (Principal Financial
and Accounting Officer)
/s/ Donald C. Klosterman Director August 14, 1995
- -------------------------
Donald C. Klosterman
/s/ Norman Lear Director August 14, 1995
- -------------------------
Norman Lear
/s/ Alan P. Magerman Director August 14, 1995
- -------------------------
Alan P. Magerman
/s/ A.R. Rozelle Director August 14, 1995
- -------------------------
A. R. Rozelle
</TABLE>
II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
NTN Communications, Inc.:
We consent to the use of our reports included herein.
Our report dated March 28, 1995, contains an explanatory paragraph that states
that the Company is a defendant in a class action lawsuit. The litigation is
in its early stages and no prediction can be made as to the likelihood of the
ultimate outcome. Accordingly, no provision for any liability that may result
from adjudication has been recognized in the consolidated financial
statements. Our report also refers to a change in the method of accounting
for investments in debt and equity securities in 1994.
KPMG Peat Marwick LLP
San Diego, California
August 7, 1995
II-5
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<C> <S>
4.1 Specimen Common Stock certificate (previously filed as an exhibit to the
Company's registration statement on Form 8-A, File No. 0-19383, and
incorporated herein by reference)............................................
4.2 NTN Communications, Inc. 1995 Stock Option Plan..............................
5 Opinion of Troy & Gould Professional Corporation regarding the legality of
the securities registered hereunder..........................................
23.1 Consent of KPMG Peat Marwick LLP (included at page II-5).....................
23.2 Consent of Troy & Gould Professional Corporation (included in Exhibit 5).....
24 Power of Attorney (included on page II-4)....................................
</TABLE>
<PAGE>
EXHIBIT 4.2
<PAGE>
NTN COMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
As adopted July 7, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. PURPOSE OF PLAN; ADMINISTRATION........................... 1
1.1 Purpose........................................ 1
1.2 Administration................................. 1
1.3 Participation.................................. 2
1.4 Stock Subject to the Plan...................... 2
2. STOCK OPTIONS............................................ 3
2.1 Option Price................................... 3
2.2 Option Period.................................. 4
2.3 Exercise of Options............................ 4
2.4 Transferability of Options..................... 5
2.5 Limitation on Exercise of Incentive Stock
Options........................................ 5
2.6 Disqualifying Dispositions of Incentive Stock
Options........................................ 6
2.7 Certain Timing Requirements.................... 6
2.8 No Affect on Employment........................ 6
2.9 Conditions to Issuance of Stock
Certificates................................... 6
3. OTHER PROVISIONS......................................... 7
3.1 Sick Leave and Leaves of Absence............... 7
3.2 Termination of Employment...................... 7
3.3 Issuance of Stock Certificates................. 8
3.4 Terms and Conditions of Options and Restricted
Stock.......................................... 8
</TABLE>
i.
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
3.5 Adjustments Upon Changes in Capitalization;
Merger and Consolidation....................... 8
3.6 Rights of Participants and Beneficiaries....... 9
3.7 Government Regulations......................... 9
3.8 Amendment and Termination...................... 9
3.9 Time of Grant and Exercise of Options.......... 10
3.10 Privileges of Stock Ownership; Non-Distributive
Intent; Reports to Option Holders.............. 10
3.11 Legending Share Certificates................... 10
3.12 Use of Proceeds................................ 11
3.13 Changes in Capital Structure; No Impediment
to Corporate Transactions...................... 11
3.14 Effective Date of the Plan..................... 11
3.15 Termination.................................... 11
3.16 Governing Law.................................. 11
3.17 Effect of Plan Upon Options and Compensation
Plans.......................................... 11
</TABLE>
ii.
<PAGE>
1. PURPOSE OF PLAN; ADMINISTRATION
1.1 Purpose.
-------
The NTN Communications, Inc. 1995 Stock Option Plan (hereinafter, the
"Plan") is hereby established to grant to directors, officers and other
employees of NTN Communications, Inc. ("NTN") or of its parent or subsidiaries
(as defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended (the "Code")), if any (individually and collectively,
the "Company"), and to non-employee consultants and advisors and other persons
who may perform significant services for or on behalf of the Company, a
favorable opportunity to acquire common stock, $.005 par value ("Common Stock"),
of NTN and, thereby, to create an incentive for such persons to remain in the
employ of or provide services to the Company and to contribute to its success.
The Company may grant under the Plan both incentive stock options within the
meaning of Section 422 of the Code ("Incentive Stock Options") and stock options
that do not qualify for treatment as Incentive Stock Options ("Nonstatutory
Options"). Unless expressly provided to the contrary herein, all references
herein to "options" shall include both Incentive Stock Options and Nonstatutory
Options.
1.2 Administration.
--------------
The Plan shall be administered by the Board of Directors or by a committee
(the "Committee"), which shall consist of two or more members of the Board of
Directors of NTN (the "Board") designated from time to time by the Board, whom
may or may not be "disinterested persons" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). Appointment of
Committee members shall be effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may be filled by the Board.
A majority of the members of the Committee shall constitute a quorum for the
purposes of the Plan. Provided a quorum is present, the Committee may take
action by affirmative vote or consent of a majority of its members present at a
meeting. Meetings may be held telephonically as long as all members are able to
hear one another, and a member of the Committee shall be deemed to be present
for this purpose if he or she is in simultaneous communication by telephone with
the other members who are able to hear one another. In lieu of action at a
meeting, the Committee may act by written consent of a majority of its members.
Subject to the express provisions of the Plan and as the Board may otherwise
determine, the Committee shall have the authority to construe and interpret the
Plan and all Stock Option Agreements (as defined in Section 3.4) entered into
pursuant hereto and to define the terms used therein, to prescribe, adopt, amend
and rescind rules and regulations relating to the administration of the Plan and
to make all other determinations necessary or advisable for the administration
of the Plan; provided, however, that the Committee may delegate nondiscretionary
administrative duties to such employees of the Company as it deems proper; and,
provided, further, in its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan. Subject to the express limitations of the Plan, the Committee shall
designate the individuals from among the class of persons eligible to
participate as provided in Section 1.3 who shall receive options, whether an
optionee will receive Incentive
1.
<PAGE>
Stock Options or Nonstatutory Options, or both, and the amount, price,
restrictions and all other terms and provisions of such options (which need not
be identical).
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and the Company's officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. No members of the Committee or Board shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, options and all members of the Committee shall be fully protected by the
Company in respect of any such action, determination or interpretation.
1.3 Participation.
-------------
Directors, officers and other employees of the Company, as well as non-
employee consultants and advisors and other persons who may perform significant
services for or on behalf of the Company, shall be eligible for selection to
participate in the Plan upon approval by the Committee; provided, however, that
only "employees" (within the meaning of Section 3401(c) of the Code) of the
Company shall be eligible for the grant of Incentive Stock Options. An
individual who has been granted an option may, if otherwise eligible, be granted
additional options if the Committee shall so determine. No person is eligible
to participate in the Plan by matter of right; only those eligible persons who
are selected by the Committee in its discretion shall participate in the Plan.
1.4 Stock Subject to the Plan.
-------------------------
Subject to adjustment as provided in Section 3.5, the stock to be offered
under the Plan shall be shares of authorized but unissued Common Stock,
including any shares repurchased under the terms of the Plan or any Stock Option
Agreement entered into pursuant hereto. The cumulative aggregate number of
shares of Common Stock to be issued under the Plan shall not exceed 2,000,000
plus such additional shares of Common Stock as are subject to options
outstanding as of the effective date of the Plan under NTN's 1985 Incentive
Stock Option Plan and 1985 Nonqualified Stock Option which expire or are
terminated without exercise, subject to adjustment as set forth in Section 3.5.
As of the effective date of the Plan, there were outstanding and unexercised
options to purchase 1,340,130 and 1,455,000 shares of Common Stock,
respectively, under such plans.
If any option granted hereunder shall expire or terminate for any reason
without having been fully exercised, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan. For purposes of this
Section 1.4, where the exercise price of options is paid by means of the
grantee's surrender of previously owned shares of Common Stock, only the net
number of additional shares issued and which remain outstanding in connection
with such exercise shall be deemed "issued" for purposes of the Plan.
2.
<PAGE>
2. STOCK OPTIONS
2.1 Option Price.
------------
The exercise price of each Incentive Stock Option granted under the Plan
shall be determined by the Committee, but shall not be less than 100% of the
"Fair Market Value" (as defined below) of Common Stock on the date of grant. If
an Incentive Stock Option is granted to an employee who at the time such option
is granted owns (within the meaning of Section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of capital stock of the
Company, the option exercise price shall be at least 110% of the Fair Market
Value of Common Stock on the date of grant. The exercise price of each
Nonstatutory Option also shall be determined by the Committee, but shall not be
less than 50% of the Fair Market Value of Common Stock on the date of grant. The
status of each option granted under the Plan as either an Incentive Stock Option
or a Nonstatutory Stock Option shall be determined by the Committee at the time
the Committee acts to grant the option, and shall be clearly identified as such
in the Stock Option Agreement relating thereto.
"Fair Market Value" for purposes of the Plan shall mean: (i) the closing
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on the day previous to such date, or, if
shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred; or (ii) if Common Stock is
not traded on an exchange but is quoted on NASDAQ or a successor quotation
system, (1) the last sales price (if Common Stock is then listed on the Nasdaq
Stock Market) or (2) the mean between the closing representative bid and asked
price (in all other cases) for Common Stock on the day prior to such date as
reported by NASDAQ or such successor quotation system; or (iii) if there is no
listing or trading of Common Stock either on a national exchange or over-the-
counter, that price determined in good faith by the Committee to be the fair
value per share of Common Stock, based upon such evidence as it deems necessary
or advisable.
In the discretion of the Committee exercised at the time the option is
exercised, the exercise price of any option granted under the Plan shall be paid
in full in cash, by check or by the optionee's interest-bearing full recourse
promissory note (subject to any limitations of applicable state corporations
law) delivered at the time of exercise; provided, however, that subject to the
timing requirements of Section 2.7, in the discretion of the Committee and upon
receipt of all regulatory approvals, the person exercising the option may
deliver as payment in whole or in part of such exercise price certificates for
Common Stock of the Company (duly endorsed or with duly executed stock powers
attached), which shall be valued at its Fair Market Value on the day of exercise
of the option, or other property deemed appropriate by the Committee; and,
provided further, that subject to Section 422 of the Code so-called cashless
exercises as permitted under applicable rules and regulations of the Securities
and Exchange Commission and the Federal Reserve Board shall be permitted in the
discretion of the Committee. Without limiting the Committee's discretion in
this regard, consecutive book entry stock-for-stock exercises of options (or
"pyramiding") also are permitted in the Committee's discretion.
Irrespective of the form of payment, the delivery of shares pursuant to the
exercise of an option shall be conditioned upon payment by the optionee to the
Company of amounts sufficient to enable the Company to pay all federal, state,
and local withholding taxes applicable, in the Company's judgment, to the
exercise. In the discretion of the Committee, such payment to the Company may
be effected through (i) the Company's withholding from the number of shares of
3.
<PAGE>
Common Stock that would otherwise be delivered to the optionee by the Company on
exercise of the option a number of shares of Common Stock equal in value (as
determined by the Fair Market Value of Common Stock on the date of exercise) to
the aggregate withholding taxes, (ii) payment by the optionee to the Company of
the aggregate withholding taxes in cash, (iii) withholding by the Company from
other amounts contemporaneously owed by the Company to the optionee, or (iv) any
combination of these three methods, as determined by the Committee in its
discretion.
2.2 Option Period.
-------------
(a) Each option and all rights or obligations thereunder shall expire
on such date as the Committee shall determine as set forth in the Stock Option
Agreement, but in no event shall any option granted hereunder expire prior to
the first to occur of the following events:
(i) Except as required by Section 422(c)(6) of the Code, the
expiration of ten years from the date the option was granted; or
(ii) Except in the case of any optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of three months from
the date of the optionee's Termination of Employment (as defined in Section 3.2)
for any reason other than such optionee's death unless the optionee dies within
said three-month period; or
(iii) In the case of an optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of six months from the
date of the Optionee's Termination of Employment by reason of such disability,
unless the Optionee dies within said six-month period; or
(iv) The expiration of six months from the date of the optionee's
death.
(b) Subject to the provisions of Section 2.2(a), the Committee shall
provide, in the terms of each Stock Option Agreement, when the option subject to
such agreement expires and becomes unexercisable. Without limiting the
generality of the foregoing, the Committee may provide in the Stock Option
Agreement that the option subject thereto expires 30 days following a
Termination of Employment for any reason other than death or disability or six
months following a Termination of Employment for disability or following an
optionee's death.
(c) Outside Date for Exercise. Notwithstanding any provision of this
-------------------------
Section 2.2, in no event shall any option granted under the Plan be exercised
after the expiration date of such option set forth in the applicable Stock
Option Agreement.
2.3 Exercise of Options.
-------------------
Each option granted under the Plan shall become exercisable and the total
number of shares subject thereto shall be purchasable, in a lump sum or in such
installments, which need not be equal, as the Committee shall determine;
provided, however, that each option shall become exercisable in full no later
than five years after such option is granted, and each option shall become
exercisable as to at least 20% of the shares of Common Stock covered thereby on
each anniversary of the date such option is granted; and provided, further, that
if the holder of an option shall not in any given installment period purchase
all of the shares which such holder is
4.
<PAGE>
entitled to purchase in such installment period, such holder's right to purchase
any shares not purchased in such installment period shall continue until the
expiration or sooner termination of such holder's option. The Committee may, at
any time after grant of the option and from time to time, increase the number of
shares purchasable in any installment, subject to the total number of shares
subject to the option and the limitations set forth in Section 2.5. At any time
and from time to time prior to the time when any exercisable option or
exercisable portion thereof becomes unexercisable under the Plan or the
applicable Stock Option Agreement, such option or portion thereof may be
exercised in whole or in part; provided, however, that the Committee may, by the
terms of the option, require any partial exercise to be with respect to a
specified minimum number of shares. No option or installment thereof shall be
exercisable except with respect to whole shares. Fractional share interests
shall be disregarded, except that they may be accumulated as provided above and
except that if such a fractional share interest constitutes the total shares of
Common Stock remaining available for purchase under an option at the time of
exercise, the optionee shall be entitled to receive on exercise a certified or
bank cashier's check in an amount equal to the Fair Market Value of such
fractional share of stock.
2.4 Transferability of Options.
--------------------------
In the discretion of the Committee, an option granted under the Plan may be
transferable by the optionee (a) by gift or other transfer to the optionee's
spouse or other immediate relative, or to a trust or estate in which the
optionee or the optionee's spouse or other immediate relative has a substantial
beneficial interest, and (b) pursuant to a qualified domestic relations order
(as defined by the Code). However, any option so transferred shall continue to
be subject to all the terms and conditions contained in the Stock Option
Agreement evidencing such options.
Except as the Committee may determine as aforesaid, an option granted under
the Plan shall, by its terms, be non-transferable by the optionee other than by
will or the laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by the optionee or by his or her guardian or legal
representative. More particularly, but without limiting the generality of the
immediately preceding sentence, an option may not be assigned, transferred
(except as provided in the preceding sentence), pledged or hypothecated (whether
by operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of any option contrary to the provisions of
the Plan and the applicable Stock Option Agreement, and any levy of any
attachment or similar process upon an option, shall be null and void, and
otherwise without effect, and the Committee may, in its sole discretion, upon
the happening of any such event, terminate such option forthwith.
2.5 Limitation on Exercise of Incentive Stock Options.
-------------------------------------------------
To the extent that the aggregate Fair Market Value (determined on the date of
grant) of the Common Stock with respect to which Incentive Stock Options granted
hereunder (together with all other Incentive Stock Option plans of the Company)
are exercisable for the first time by an optionee in any calendar year under the
Plan exceeds $100,000, such options granted hereunder shall be treated as
Nonstatutory Options to the extent required by Section 422 of the Code. The
rule set forth in the preceding sentence shall be applied by taking options into
account in the order in which they were granted.
5.
<PAGE>
2.6 Disqualifying Dispositions of Incentive Stock Options.
-----------------------------------------------------
If Common Stock acquired upon exercise of any Incentive Stock Option is
disposed of in a disposition that, under Section 422 of the Code, disqualifies
the option holder from the application of Section 421(a) of the Code, the holder
of the Common Stock immediately before the disposition shall comply with any
requirements imposed by the Company in order to enable the Company to secure the
related income tax deduction to which it is entitled in such event.
2.7 Certain Timing Requirements.
---------------------------
At the discretion of the Committee, shares of Common Stock issuable to the
optionee upon exercise of an option may be used to satisfy the option exercise
price or the tax withholding consequences of such exercise, in the case of
persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
optionee to use shares of Common Stock issuable to the optionee upon exercise of
the option to pay all or part of the option price or the withholding taxes made
at least six months prior to the payment of such option price or withholding
taxes.
2.8 No Affect on Employment.
-----------------------
Nothing in the Plan or in any Stock Option Agreement hereunder shall confer
upon any optionee any right to continue in the employ of the Company, any Parent
Corporation or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company, its Parent Corporation and its Subsidiaries, which are
hereby expressly reserved, to discharge any optionee at any time for any reason
whatsoever, with or without cause.
For purposes of the Plan, "Parent Corporation" shall mean any corporation in
an unbroken chain of corporations ending with the Company if each of the
corporations other than the Company then owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain. For purposes of the Plan, "Subsidiary" shall mean
any corporation in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain then owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
2.9 Conditions to Issuance of Stock Certificates.
--------------------------------------------
The Company shall not be required to issue or deliver any certificate or
certificates for shares of Common Stock purchased upon the exercise of any
option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange
6.
<PAGE>
Commission or any other governmental regulatory body which the Committee or
Board shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee or Board shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise
of the option as the Committee or Board may establish from time to time solely
for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
3. OTHER PROVISIONS
3.1 Sick Leave and Leaves of Absence.
--------------------------------
Unless otherwise provided in the Stock Option Agreement, and to the extent
permitted by Section 422 of the Code, an optionee's employment shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Company if the period of any such leave does not exceed
a period approved by the Company, or, if longer, if the optionee's right to
reemployment by the Company is guaranteed either contractually or by statute. A
Stock Option Agreement may contain such additional or different provisions with
respect to leave of absence as the Committee may approve, either at the time of
grant of an option or at a later time.
3.2 Termination of Employment.
-------------------------
For purposes of the Plan, "Termination of Employment" shall mean the time
when the employee-employer relationship between the optionee and the Company,
any Subsidiary or any Parent Corporation is terminated for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an optionee by
the Company, any Subsidiary or any Parent Corporation, (ii) at the discretion of
the Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company, a Subsidiary or any Parent Corporation
with the former employee. Subject to Section 3.1, the Committee, in its absolute
discretion, shall determine the affect of all matters and questions relating to
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, a leave of absence or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that, such leave of absence or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then-applicable regulations
and revenue rulings under said Section.
7.
<PAGE>
3.3 Issuance of Stock Certificates.
------------------------------
Upon exercise of an option, the Company shall deliver to the person
exercising such option a stock certificate evidencing the shares of Common Stock
acquired upon exercise. Notwithstanding the foregoing, the Committee in its
discretion may require the Company to retain possession of any certificate
evidencing stock acquired upon exercise of an option which remains subject to
repurchase under the provisions of the Stock Option Agreement or any other
agreement signed by the optionee in order to facilitate such repurchase
provisions.
3.4 Terms and Conditions of Options and Restricted Stock.
----------------------------------------------------
Each option granted under the Plan shall be evidenced by a written Stock
Option Agreement ("Stock Option Agreement") between the option holder and the
Company providing that the option is subject to the terms and conditions of the
Plan and to such other terms and conditions not inconsistent therewith as the
Committee may deem appropriate in each case.
3.5 Adjustments Upon Changes in Capitalization; Merger and Consolidation.
--------------------------------------------------------------------
If the outstanding shares of Common Stock are changed into, or exchanged for
cash or a different number or kind of shares or securities of the Company or of
another corporation through reorganization, merger, recapitalization,
reclassification, stock split-up, reverse stock split, stock dividend, stock
consolidation, stock combination, stock reclassification or similar transaction,
an appropriate adjustment shall be made by the Committee in the number and kind
of shares as to which options and restricted stock may be granted. In the event
of such a change or exchange, other than for shares or securities of another
corporation or by reason of reorganization, the Committee shall also make a
corresponding adjustment changing the number or kind of shares and the exercise
price per share allocated to unexercised options or portions thereof, which
shall have been granted prior to any such change, shall likewise be made. Any
such adjustment, however, shall be made without change in the total price
applicable to the unexercised portion of the option but with a corresponding
adjustment in the price for each share (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices).
In the event of a "spin-off" or other substantial distribution of assets of
the Company which has a material diminutive effect upon the Fair Market Value of
the Common Stock, the Committee in its discretion shall make an appropriate and
equitable adjustment to the exercise prices of options then outstanding under
the Plan.
Where an adjustment under this Section 3.5 of the type described above is
made to an Incentive Stock Option, the adjustment will be made in a manner which
will not be considered a "modification" under the provisions of subsection
424(b)(3) of the Code.
In connection with the dissolution or liquidation of NTN or a partial
liquidation involving 50% or more of the assets of NTN, a reorganization of NTN
in which another entity is the survivor, a merger or reorganization of NTN under
which more than 50% of the Common Stock outstanding prior to the merger or
reorganization is converted into cash or into another security, a sale of more
than 50% of the Company's assets, or a similar event that the Committee
determines, in its discretion, would materially alter the structure of NTN's or
its ownership, the Committee, upon 30 days prior written notice to the option
holders, may, in its discretion, do one or more of the following: (i) shorten
the period during which options are exercisable (provided
8.
<PAGE>
they remain exercisable for at least 30 days after the date the notice is
given); (ii) accelerate any vesting schedule to which an option is subject;
(iii) arrange to have the surviving or successor entity grant replacement
options with appropriate adjustments in the number and kind of securities and
option prices; or (iv) cancel options upon payment to the option holders in
cash, with respect to each option to the extent then exercisable (including any
options as to which the exercise has been accelerated as contemplated in clause
(ii) above), of any amount that is the equivalent of the Fair Market Value of
the Common Stock (at the effective time of the dissolution, liquidation, merger,
reorganization, sale of other event) or the fair market value of the option. In
the case of a change in corporate control, the Committee may, in considering the
advisability or the terms and conditions of any acceleration of the
exercisability of any option pursuant to this Section 3.5, take into account the
penalties that may result directly or indirectly from such acceleration to
either the Company or the option holder, or both, under Section 280G of the
Code, and may decide to limit such acceleration to the extent necessary to avoid
or mitigate such penalties or their effects.
No fractional share of Common Stock shall be issued under the Plan on
account of any adjustment under this Section 3.5.
3.6 Rights of Participants and Beneficiaries.
----------------------------------------
The Company shall pay all amounts payable hereunder only to the optionee
holder or beneficiaries entitled thereto pursuant to the Plan. The Company
shall not be liable for the debts, contracts or engagements of any optionee or
his or her beneficiaries, and rights to cash payments under the Plan may not be
taken in execution by attachment or garnishment, or by any other legal or
equitable proceeding while in the hands of the Company.
3.7 Government Regulations.
----------------------
The Plan, and the grant and exercise of options and the issuance and
delivery of shares of Common Stock under Options granted hereunder, shall be
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law) and
federal margin requirements and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.
3.8 Amendment and Termination.
-------------------------
The Board or the Committee may at any time suspend, amend or terminate the
Plan and may, with the consent of the option holder, make such modifications of
the terms and conditions of such option holder's option as it shall deem
advisable; provided, however, that, without approval of the Company's
stockholders given within twelve months before or after the action by the
Committee, no action of the Committee may, except as provided in Section 3.5,
increase any limit imposed in Section 1.4 on the maximum number of shares which
may be issued on exercise of options, materially modify the eligibility
requirements of Section 1.3, reduce the minimum stock option exercise price
requirements of Section 2.1, extend the limit imposed in
9.
<PAGE>
this Section 3.8 on the period during which options may be granted or amended.
No option may be granted during any suspension of the Plan or after such
termination. The amendment, suspension or termination of the Plan shall not,
without the consent of the option holder affected thereby, alter or impair any
rights or obligations under any option theretofore granted under the Plan. No
option may be granted during any period of suspension nor after termination of
the Plan, and in no event may any option be granted under the Plan after the
expiration of ten years from the date the Plan is adopted by the Board.
3.9 Time of Grant and Exercise of Options.
-------------------------------------
An option shall be deemed to be exercised when the Secretary of the Company
receives written notice from an option holder of such exercise, payment of the
purchase price determined pursuant to Section 2.1 of the Plan and set forth in
the Stock Option Agreement, and all representations, indemnifications and
documents reasonably requested by the Committee.
3.10 Privileges of Stock Ownership; Non-Distributive Intent; Reports to
------------------------------------------------------------------
Option Holders.
--------------
A participant in the Plan shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued to the optionee.
Upon exercise of an option at a time when there is not in effect under the
Securities Act of 1933, as amended, a Registration Statement relating to the
Common Stock issuable upon exercise or payment therefor and available for
delivery a Prospectus meeting the requirements of Section 10(a)(3) of said Act,
the optionee shall represent and warrant in writing to the Company that the
shares purchased are being acquired for investment and not with a view to the
distribution thereof.
The Company shall furnish to each optionee under the Plan the Company's
annual report and such other periodic reports, if any, as are disseminated by
the Company in the ordinary course to its stockholders.
3.11 Legending Share Certificates.
----------------------------
In order to enforce any restrictions imposed upon Common Stock issued upon
exercise of an option granted under the Plan or to which such Common Stock may
be subject, the Committee may cause a legend or legends to be placed on any
share certificates representing such Common Stock, which legend or legends shall
make appropriate reference to such restrictions, including, but not limited to,
a restriction against sale of such Common Stock for any period of time as may be
required by applicable laws or regulations. If any restriction with respect to
which a legend was placed on any certificate ceases to apply to Common Stock
represented by such certificate, the owner of the Common Stock represented by
such certificate may require the Company to cause the issuance of a new
certificate not bearing the legend.
Additionally, and not by way of limitation, the Committee may impose such
restrictions on any Common Stock issued pursuant to the Plan as it may deem
advisable, including, without limitation, restrictions under the requirements of
any stock exchange upon which Common Stock is then traded.
10.
<PAGE>
3.12 Use of Proceeds.
---------------
Proceeds realized pursuant to the exercise of options under the Plan shall
constitute general funds of the Company.
3.13 Changes in Capital Structure; No Impediment to Corporate Transactions.
---------------------------------------------------------------------
The existence of outstanding options under the Plan shall not affect the
Company's right to effect adjustments, recapitalizations, reorganizations or
other changes in its or any other corporation's capital structure or business,
any merger or consolidation, any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the dissolution or
liquidation of the Company's or any other corporation's assets or business, or
any other corporate act, whether similar to the events described above or
otherwise.
3.14 Effective Date of the Plan.
--------------------------
The Plan shall be effective as of the date of its approval by the
stockholders of NTN within twelve months after the date of the Board's initial
adoption of the Plan. Options may be granted but not exercised prior to
stockholder approval of the Plan. If any options are so granted and stockholder
approval shall not have been obtained within twelve months of the date of
adoption of this Plan by the Board of Directors, such options shall terminate
retroactively as of the date they were granted.
3.15 Termination.
-----------
The Plan shall terminate automatically as of the close of business on the
day preceding the tenth anniversary date of its adoption by the Board or earlier
as provided in Section 3.8. Unless otherwise provided herein, the termination of
the Plan shall not affect the validity of any option agreement outstanding at
the date of such termination.
3.16 Governing Law.
-------------
The Plan shall be governed by, and construed in accordance with the laws of
the State of California (without giving effect to conflicts of law principles).
3.17 Effect of Plan Upon Options and Compensation Plans.
--------------------------------------------------
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Subsidiary or any Parent
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or compensation for
employees of the Company, any Subsidiary or any Parent Corporation or (ii) to
grant or assume options or other rights otherwise than under the Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
* * *
11.
<PAGE>
EXHIBIT 5
<PAGE>
[LETTERHEAD OF TROY & GOULD]
August 14, 1995
FILE NO.
NTN 1.1
NTN Communications, Inc.
The Campus
5966 La Place Court
Carlsbad, California 92008
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen/Ladies:
We have acted as counsel for NTN Communications, Inc. (the "Company") in
connection with the preparation and filing of the Company's Registration
Statement on Form S-8 under the Securities Act of 1933, as amended (the
"Registration Statement"), in connection with the registration of 4,795,130
shares of the Company's Common Stock, $.005 par value (the "Common Stock"),
issuable under the Company's 1995 Stock Option Plan (the "Plan").
For purposes of this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Plan and of such
other documents, corporate records, certificates of public officials and other
instruments relating to the adoption and implementation of the Plan as we deemed
necessary or advisable for purposes of this opinion. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified, photostatic or conformed copies, and the
authenticity of originals of all such latter documents. We have also assumed
the due execution and delivery of all documents where due execution and delivery
are prerequisites to the effectiveness thereof.
<PAGE>
[LETTERHEAD OF TROY & GOULD]
NTN Communications, Inc.
August 14, 1995
Page 2
Based on the foregoing examination, we are of the opinion that the shares
of Common Stock issuable upon exercise of stock options granted pursuant to the
Plan are duly authorized and, when issued in accordance with the Plan, will be
validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to all references therein to our firm.
Very truly yours,
/s/ TROY & GOULD
--------------------------------
Troy & Gould
Professional Corporation
