<PAGE>
As filed with the Securities and Exchange Commission on October 15, 1996
Reg. No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NTN COMMUNICATIONS, INC.
(Exact name of registrant 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
(619) 438-7400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Gerald Sokol, Jr., Chief Financial Officer
NTN Communications, Inc.
The Campus
5966 La Place Court
Carlsbad, California 92008
(619) 438-7400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With a copy to:
Dale E. Short, Esq.
Troy & Gould Professional Corporation
1801 Century Park East, Suite 1600
Los Angeles, California 90067
(310) 553-4441
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================
<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered(1) per share(2) offering price (2) registration fee
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $.005 par value .... 565,000 shares $4.91 $2,774,150 $841
===================================================================================================================
</TABLE>
(1) Consists of shares underlying the warrants described herein. In accordance
with Rule 416 of the General Rules and Regulations under the Securities Act
of 1933, there are also being registered such indeterminate number of
additional shares of Common Stock as may become issuable pursuant to
antidilution provisions of such warrants.
(2) Estimated solely for the purpose of calculating the registration fee and
based, pursuant to Rule 457(c), on the average of the high and low sale
prices of the Common Stock as reported on the American Stock Exchange on
October 9, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
565,000 Shares
NTN COMMUNICATIONS, INC.
Common Stock
All of the 565,000 shares of Common Stock offered hereby are being offered
by NTN Communications, Inc. for issuance and sale upon the exercise of certain
Redeemable Common Stock Purchase Warrants (the "Settlement Warrants"). Unless
otherwise indicated herein, references herein to the "Company" mean NTN
Communications, Inc. and its subsidiaries.
The Settlement Warrants are being distributed pursuant to a court-approved
settlement of a class-action lawsuit previously pending against the Company. See
"Plan of Distribution." Each Settlement Warrant entitles the holder thereof to
purchase one share of Common Stock at a price (the "Exercise Price") of $_______
per share. The Exercise Price and the number of shares of Common Stock issuable
upon exercise of the Settlement Warrants are subject to adjustment under certain
circumstances. During the period from the second anniversary of the date of
issuance until the expiration of the Settlement Warrants, holders of Settlement
Warrants will have the right to require the Company to redeem their Settlement
Warrants for $3.25 per Settlement Warrant. This redemption right will expire,
however, if at any time during the exercise period the closing price per share
of Common Stock as reported on the American Stock Exchange ("AMEX") exceeds the
exercise price by more than $3.25 per share for any seven trading days, whether
or not consecutive. See "Description of Securities --Settlement Warrants."
The Common Stock is traded on the AMEX under the symbol "NTN." As of
October __, 1996, the last sale price for the Common Stock as reported on the
AMEX was $________. See "Price Range of Common Stock and Dividend Policy."
Prior to this offering, there has been no public market for the Settlement
Warrants. It is anticipated that the Settlement Warrants will be approved for
listing on the AMEX under the symbol ["NTNW"], subject to official notice of
issuance.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN MATERIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE SHARES OFFERED
HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===============================================================================
Proceeds to
Price to Public the Company(1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Per Share............................. $ $
- -------------------------------------------------------------------------------
Total................................. $ $
===============================================================================
</TABLE>
(1) The amount shown is without deduction for offering expenses, estimated at
$________, payable by the Company. See "Use of Proceeds."
The date of this Prospectus is October 15, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following regional offices: Seven
World Trade Center, New York, New York 10048, and Northwestern Atrium Center,
500 W. Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common
Stock is listed on the AMEX, and the Company's reports, proxy and information
statements and other information filed with the AMEX may be inspected at the
AMEX's offices at 86 Trinity Place, New York, New York 10006-1881.
Additional information regarding the Company, the Settlement Warrants
and the shares of Common Stock offered hereby is contained in the Registration
Statement of which this Prospectus forms a part, and the exhibits thereto, filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information pertaining to the Company and such
securities, reference is made to the Registration Statement and the exhibits
thereto, which may be inspected without charge at, and copies thereof may be
obtained at prescribed rates from, the office of the Commission at Judiciary
Plaza, 450 Fifth Street, Washington, D.C. 20549. Statements contained herein
concerning the provisions of any document are not necessarily complete and in
each instance reference is made to the copy of the document filed as an exhibit
or schedule to the Registration Statement. Each such statement is qualified in
its entirety by reference to the copy of the applicable documents filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act (Commission file no. 1-11460) are incorporated in this
Prospectus by reference: (a) the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, which contains consolidated financial statements
of the Company for the year then ended; (b) Amendment No. 1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, filed with the
Commission on April 29, 1996; (c) the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996; (d) the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996; (e) the Company's Current Reports on
Form 8-K filed with the Commission on June 24, 1996, July 15, 1996, July 24,
1996 and September 27, 1996, respectively; and (f) the description of the
Company's Common Stock contained in its Registration Statement on Form 8-A (File
No. 0-19383) filed on July 31, 1991.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Shares offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such documents. Any statement contained in
a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference (other than exhibits to such documents that are not specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to Gerald Sokol, Jr., Chief Financial Officer, NTN
Communications, Inc., The Campus, 5966 La Place Court, Carlsbad, California
92008. Telephone requests may be directed to Mr. Sokol at (619) 438-7400.
2.
<PAGE>
RISK FACTORS
The shares of Common Stock offered hereby are speculative in nature and
involve a high degree of risk. The following risk factors should be considered
carefully in evaluating the Company and its business before purchasing the
shares of Common Stock offered hereby.
HISTORY OF SIGNIFICANT LOSSES; RECENT RESULTS OF OPERATIONS
The Company has a history of significant losses and had an accumulated
deficit of $23,187,000 and $20,556,000 as of December 31, 1995 and June 30,
1996, respectively. The Company reported a net loss of $3,948,000 for the year
ended December 31, 1995, as compared to net income of $707,000 for the prior
fiscal year, which was the Company's only year of profitable operations.
Although the Company reported a net profit of $2,631,000 for the six months
ended June 30, 1996, $1,918,000 of such profit was attributable to a gain from
discontinued operations, discussed below under "Risk Factors -- Need for
Additional Financing." Further, there can be no assurance that the Company will
operate profitably in the future. See "Selected Consolidated Financial Data."
NEED FOR ADDITIONAL FINANCING
The Company's working capital increased from $13,886,000 at December 31,
1994 to $18,416,000 at December 31, 1995, primarily due to significant proceeds
from financing activities, and at June 30, 1996, the Company had working capital
of $18,452,000. There can be no assurance that the Company's working capital or
other currently available resources will be sufficient to support the Company's
operations until such time, if any, as the Company is able to consistently
operate profitably, and the Company may continue to require additional
financings to fund its ongoing operations. There can be no assurance as to
whether or on what terms such financing may be available to the Company.
In June 1996, the Company sold to the 3DO Company ("3DO") substantially
all of the assets of the Company's New World Computing, Inc. subsidiary ("New
World") in exchange for 1,017,953 shares of 3DO Common Stock and 3DO's
assumption of certain liabilities of New World. In connection with the
transaction, Jon Van Caneghem, the former president of New World, received
135,000 of such shares. The remaining 3DO shares held by the Company may be
resold publicly pursuant to a currently effective registration statement under
the Securities Act, and, depending on prevailing market conditions, the Company
anticipates that it will sell all or substantially all such shares in the
foreseeable future. Under its agreement with 3DO, the Company and Mr. Van
Caneghem collectively may not sell more than 50,000 3DO shares in any single
trading day without 3DO's consent. 3DO has guaranteed that the Company's 3DO
shares will have a value to the Company of not less than $10 per share (plus
underwriting discounts and commissions not to exceed 3%) and has agreed to pay
the Company in cash as of December 31, 1996 the difference, if any, between the
value of such shares from the guaranteed value. The net proceeds from the
Company's sales of 3DO shares and any payments by 3DO pursuant to its guarantee
will be used to augment the Company's working capital.
PENDING LITIGATION
On April 18, 1995, a class action lawsuit was filed in the United States
District Court for the Southern District of California (San Diego). The
complaint alleges violations of federal securities laws based upon the Company's
projections for the fourth quarter of 1994 and for the 1994 fiscal year, and
further alleges that certain of the Company's insiders sold stock on information
not generally known to the public. The Company, which has assumed the defense of
this matter on behalf of all defendants, has denied liability based upon the
allegations contained in the complaint. Plaintiffs have claimed to be entitled
to damages between $8 million and $10 million. The Company believes, based in
part on the advice of outside counsel, that the actual damages, if any, would be
substantially less than such amount. This lawsuit has been scheduled for trial
to commence on May 6, 1997.
On July 3, 1995, a single shareholder filed a separate lawsuit in the
United States District Court for the Northern District of Texas containing
allegations essentially identical to those raised in the shareholder lawsuit in
April 1995. Upon the Company's motion, the case has been transferred from Texas
to California. The discovery
3.
<PAGE>
and other proceedings of this case are being coordinated with the lawsuit
referred to in the immediately preceding paragraph. The Company denies the
allegations in the complaint and has filed its own counterclaim against third
parties for indemnification.
There can be no assurance that any or all of the foregoing claims will
be decided in favor of the Company, which is not insured against the claims
made. During the pendency of such claims, the Company will continue to incur the
costs of defense of same. If the shareholder litigation is decided in a manner
adverse to the Company, it may have a material effect on the Company's financial
condition and result of operations. Management believes, however, based in part
on the advice of outside counsel, that the likelihood of such an outcome is
remote.
Until recently, the Company was involved as a plaintiff or defendant in
various previously reported lawsuits in Federal courts in both the United States
and Canada involving Interactive Network, Inc. ("IN"). With the court's
assistance, the Company and IN have been able to reach a resolution of all
pending disputes in the United States and have agreed to private arbitration
regarding any future licensing, copyright or infringement issues which may arise
between the parties. There remain two lawsuits among the Company, its
unaffiliated Canadian licensee and IN, which were filed in Canada in 1992. No
substantive action has been taken in furtherance of either action.
Other than as set forth above, there is no material litigation pending
or threatened against the Company.
DEPENDENCE ON LICENSES FOR BROADCAST RIGHTS; LACK OF CERTAIN LICENSES
The Company's interactive sports games are broadcast in conjunction with
live telecasts of football, baseball, basketball and hockey games. In order to
effect this simultaneous broadcast, wherever possible the Company seeks to
obtain licenses from the owners of the broadcast rights to the sporting events
to utilize such telecasts for its interactive game programming. The Company's
original, exclusive license agreement with the National Football League ("NFL")
expired on March 31, 1995 and in August 1995, the Company entered into a new,
exclusive license with National Football League Properties, Inc. ("NFLP") for
QB1, which will expire on March 31, 1997 unless renewed by the NFLP. The
Company's rights under the license may not be transferred or assigned without
the NFLP's consent. For this purpose, an assignment includes, among other
things, a merger or consolidation of the Company or the termination of
employment of any of the Company's key management personnel. Major League
Baseball Properties, Inc. ("MLBP") has agreed to grant the Company a license for
the Company's proprietary interactive baseball game, "Diamondball." The license,
which will expire December 31, 1996 unless renewed, is subject to approval by
the 28 major league clubs and the execution of MLBP's standard form licensing
agreement. The Company currently is broadcasting QB1 in conjunction with college
football games without any license. Limitations on the Company's sports licenses
could have an adverse effect upon the Company's business. In addition, legal
action by the owners or licensees of broadcast rights to college football games
seeking to enjoin further broadcasts by the Company or money damages could
preclude the playing of QB1 in connection with college football games.
RELIANCE ON INDEPENDENT DISTRIBUTORS
The Company relies in large part on the efforts of independent
distributors to market and sell the NTN Network to its subscriber locations. The
Company currently uses approximately 25 distributors who cover 49 states. The
Company has entered into long-term agreements with certain of its distributors,
but such agreements are typically terminable upon short notice. The loss of a
significant number of these distributors would have a material adverse effect on
the Company's business until such time, if any, as the Company found alternate
means of servicing the markets currently served by such distributors.
COMPETITION
The interactive entertainment industry is in its formative stage, but
currently may be divided into three major segments: (1) media distribution
services such as on-line services, telephone companies and cable television
companies and the Company's NTN Network; (2) equipment providers such as
computer and peripheral equipment
4.
<PAGE>
manufacturers; and (3) content and programming providers, such as movie studios
and software publishers. The Company does not act as a direct provider of
equipment to consumers. The Company operates as a media distribution service
through its own NTN Network. Also, the Company is a program provider to an array
of other media distribution services to consumers utilizing a variety of
equipment.
NTN has a growing number of competitors in the programming segment of
the interactive entertainment industry. The Company's programming content is not
dependent upon, and consequently not bound by any particular technology or
method of distribution to the consumer. The Company's programming is, therefore,
readily available to consumers on a wide variety of entertainment and media
services including: the NTN Network; on-line services including America Online,
Genie, and The ImagiNation Network; and cable television, including GTE
MainStreet, which is available to households in certain regions.
The Company's programming competes generally with broadcast television,
pay-per-view, and other content offered on cable television. In other mediums,
the Company competes with other content and services available to the consumer
through on-line services such as America Online and Prodigy. Presently, the
technological capabilities of transmitting entertainment products to the
consumer exceed the supply of quality programming and services available on the
existing delivery systems.
The Company's LearnStar affiliate competes with some established
businesses which offer educational products, such as Jostens' Learning, C.C.C
and the Eduquest Division of IBM.
With the entrance of motion picture, cable and TV companies, competition
in the interactive entertainment and multimedia industries will likely intensify
in the future. Moreover, the expanded use of on-line networks and the Internet
provide computer users an increasing number of alternatives to video games and
entertainment software. The Company seeks to compete by providing high quality
products at reasonable prices, thereby establishing a favorable reputation among
frequent buyers, thus providing repeat sales on sequels and other products
manufactured or distributed by the Company. There can be no assurance, however,
that the Company can compete effectively.
POTENTIAL FOR TECHNOLOGICAL OBSOLESCENCE
The computer industry and related businesses have been marked by rapid
and significant technological development and change. There can be no assurance
that ongoing technological developments will not render the Company's
interactive technology and services obsolete, or that the Company will have the
resources to respond to such technological change.
UNCERTAIN PROPRIETARY PROTECTION
The Company has two patent applications pending for its proprietary
interactive technology. In addition, the Company relies on a combination of
trademark and unfair competition laws, trade secrets and confidentiality
procedures and agreements to protect rights it considers proprietary. The
Company has copyrights for all of its programming, and the Company has
registered the trademark QB1 and has registered trademarks for a significant
number of its other services. However, no assurance can be given that such
patents will issue, or if issued, the scope of the protection afforded by such
patents. The Company currently is involved in litigation concerning the
enforceability, scope and validity of proprietary rights. See "Risk Factors -
Pending Litigation."
INFLUENCE OF MANAGEMENT
The Company's officers and directors and their affiliates owned, in the
aggregate, approximately 5% of the outstanding Common Stock as of October 1,
1996, and have the right, through the exercise of currently exercisable options
and warrants to purchase shares of Common Stock, to increase their percentage
ownership to 19%. Therefore, these securityholders, if acting together, would
have the ability to significantly influence the Company's affairs and
operations. See "Description of Securities."
5.
<PAGE>
ANTI-TAKEOVER PROVISIONS; TERMS OF EMPLOYMENT AGREEMENTS
The Company's Certificate of Incorporation and Bylaws contain certain
provisions that may discourage attempts to acquire control of the Company that
are not negotiated with the Company's Board of Directors. These provisions may
have the effect of discouraging takeover attempts that some securityholders
might deem to be in their best interests, including takeover proposals in which
securityholders might receive a premium for their shares over the then current
market price, as well as making it more difficult for individual securityholders
or a group of securityholders to elect directors. The Board of Directors
believes, however, that these provisions are in the best interests of the
Company and its securityholders because such provisions may encourage potential
acquirors to negotiate directly with the Board of Directors, which is in the
best position to act on behalf of all securityholders. The Certificate of
Incorporation provides that the affirmative vote of the holders of at least 80%
of the total voting power of all outstanding securities of the Company then
entitled to vote generally in the election of directors, voting together as a
single class, is required to amend certain provisions of the Certificate of
Incorporation, including among others, those provisions relating to the number,
election and term of directors; the removal of directors and the filing of
vacancies; and the supermajority voting requirements of the Certificate of
Incorporation. These voting requirements will have the effect of making more
difficult any amendments, even if a majority of the Company's securityholders
believes that such amendment would be in their best interest. See "Description
of Securities -- Anti-Takeover Provisions."
VOLATILITY OF STOCK PRICE
Historically, the trading price of the Company's Common Stock has
fluctuated widely, and it may be subject to similar future fluctuations in
response to quarter-to-quarter variations in the Company's operating results,
announcements regarding litigation, technological innovations or new products by
the Company or its competitors, general conditions in the industries in which
the Company competes and other events or factors, including factors such as
analysts' expectations which are beyond the Company's control. In addition, in
recent years, broad stock market indices, in general, and the securities of
technology companies, in particular, have experienced substantial price
fluctuations. Such broad market fluctuations also may adversely affect the
future trading price of the Company's Common Stock, and there can be no
assurance that the trading price will not decline from is current level. See
"Price Range of Common Stock and Dividend Policy."
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock and
anticipates that for the foreseeable future earnings, if any, will be retained
for the operation and expansion of the Company's business. See "Price Range of
Common Stock and Dividend Policy."
EFFECT OF OUTSTANDING OPTIONS, WARRANTS AND PREFERRED STOCK
As of September 1, 1996, there were 4,777,230 shares of Common Stock
reserved for issuance upon the exercise of stock options outstanding under the
Company's stock option plans at exercise prices ranging from $2.25 to $8.25 per
share, of which options to purchase 3,591,858 shares are currently exercisable.
An additional 2,312,193 shares of Common Stock (plus any shares of Common Stock
covered by stock options currently outstanding under the Company's 1985
Incentive Stock Option Plan and 1985 Nonqualified Stock Option Plan which are
subsequently terminated or expire without being exercised) are reserved for
issuance upon the exercise of options available for future grant under the
Company's 1995 Stock Option Plan.
The Company also has outstanding warrants, including the Settlement
Warrants described herein, to purchase an aggregate of 4,608,315 shares of
Common Stock at exercise prices ranging from $2.00 to $8.00 per share,
substantially all of which warrants are currently exercisable. Substantially all
of the underlying shares of such warrants are subject to currently effective
registration statements covering the resale of the underlying warrant shares by
the holders. The Company also has outstanding 161,112 shares of preferred stock
which entitle holders thereof, upon surrender of the shares of preferred stock,
to receive 45,129 shares of Common Stock.
6.
<PAGE>
The foregoing options, warrants and preferred stock could adversely
affect the Company's ability to obtain future financing, since the holders of
those options, warrants and preferred stock can be expected to exercise or
surrender them for conversion, as the case may be, at a time when the Company
would be able to obtain additional capital through a new offering of securities
on terms more favorable than those provided by such options, warrants and
preferred stock. For the life of such options, warrants and preferred stock, the
holders are given the opportunity to profit from a rise in the market price of
the Common Stock without assuming the risk of ownership. To the extent the
trading price of the Common Stock at the time of exercise of any such options or
warrants exceeds the exercise price, such exercise will also have a dilutive
effect on the Company's stockholders.
SHARES ELIGIBLE FOR FUTURE SALE
Approximately 5,820,000 shares of Common Stock outstanding as of the
date of this Prospectus and 782,500 shares of Common Stock underlying currently
exercisable warrants are "restricted securities," as that term is defined under
Rule 144 promulgated under the Act. All or substantially all of such shares are
covered by currently effective registration statements and can be offered and
sold publicly by the beneficial owners at any time so long as registration
statements remain effective. Moreover, in general under Rule 144 as currently in
effect, subject to the satisfaction of certain conditions, if two years have
elapsed since the later of the date of acquisition of restricted shares from an
issuer or from an affiliate of an issuer, the acquiror or subsequent holder is
entitled to sell in the open market, within any three-month period, a number of
shares that does not exceed the greater of 1% of the outstanding shares of the
same class or the average weekly trading volume during the four calendar weeks
preceding the filing of the required notice of sale. A person who has not been
an affiliate of the Company for at least the three months immediately preceding
the sale and who has beneficially owned shares of Common Stock as described
above for at least three years is entitled to sell such shares under Rule 144(k)
without regard to any of the limitations described above.
No predictions can be made with respect to the effect, if any, that
sales of Common Stock in the market or the availability of shares of Common
Stock for sale pursuant to currently effective registration statements or under
Rule 144 will have on the market price of Common Stock prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock may
be sold in the public market may adversely affect prevailing market prices for
the Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities.
RECENT DEVELOPMENTS
The Company recently announced the appointments of Robert M. Bennett and
Edward C. Frazier as directors of the Company, increasing the membership of the
Board of Directors to seven. Messrs. Bennett and Frazier will serve as directors
until the Company's next annual meeting of shareholders or until their
successors are elected or appointed.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common
Stock upon exercise of the Settlement Warrants will be realized only if and to
the extent any of the Settlement Warrants are exercised. The holders of the
Settlement Warrants are not obligated to exercise the Settlement Warrants, and
there can be no assurance that the holders will choose to exercise the
Settlement Warrants in whole or in part. The Settlement Warrants and redeemable
under certain circumstances at the option of the holders. See "Description of
Securities - Settlement Warrants." The estimated net proceeds to the Company in
the event that the Settlement Warrants are exercised in full would be
$__________.
The Company intends to apply any net proceeds it receives from the
exercise of the Settlement Warrants to augment its working capital and for
general corporate purposes.
7.
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the AMEX under the symbol "NTN."
The prices below are the high and low sales prices for the Common Stock as
reported on the AMEX for periods shown.
<TABLE>
<CAPTION>
LOW HIGH
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<S> <C> <C>
1994
----
First Quarter............................. $6 $10-1/8
Second Quarter............................ 4-5/8 7-1/2
Third Quarter............................. 6-3/8 8-1/2
Fourth Quarter............................ 5-3/4 7-7/8
1995
----
First Quarter............................. $5-5/8 $ 8-1/4
Second Quarter............................ 4-7/16 5-13/16
Third Quarter............................. 4-4/38 6-1/8
Fourth Quarter............................ 4-1/8 5-3/16
1996
----
First Quarter............................. $3-1/8 $ 4-7/8
Second Quarter............................ 3-7/8 5-1/8
Third Quarter............................. 4-3/4 6-1/2
Fourth Quarter (through October 9, 1996).. 4-11/16 5-3/8
</TABLE>
For a recent closing price for the Common Stock as reported on the AMEX see
the cover page of this Prospectus. As of September 1, 1996, there were
approximately 4,100 record owners of the Common Stock according to information
available from the Company's transfer agent.
To date, the Company has not declared or paid any cash dividends with
respect to its Common Stock, and the current policy of the Board of Directors is
to retain earnings, if any, after payment of dividends on the Company's
outstanding preferred stock to provide for the growth of the Company.
Consequently, no cash dividends are expected to be paid on the Company's Common
Stock in the foreseeable future. Further, there can be no assurance that the
proposed operations of the Company will generate the revenues and cash flow
needed to declare a cash dividend or that the Company will have legally
available funds to pay dividends.
8.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected data presented below under the captions "Selected Consolidated
Statement of Operations Data" and "Selected Consolidated Balance Sheet Data"
for, and as of the end of, each of the years in the five-year period ended
December 31, 1995, are derived from the consolidated financial statements of NTN
and its subsidiaries, which financial statements have been audited by KPMG Peat
Marwick LLP, independent certified public accountants. The consolidated
financial statements as of December 31, 1995 and 1994, and for each of the years
in the three-year period ended December 31, 1995, and the independent auditor's
report thereon, are incorporated by reference elsewhere in this Prospectus. The
selected data should be read in conjunction with the consolidated financial
statements for the three-year period ended December 31, 1995, the related notes
and the independent auditors' report, which refers to a change in the method of
accounting for investments in debt and equity securities in 1994. The selected
consolidated statement of operations data for the six months ended June 30, 1996
and 1995 and related consolidated balance sheet data as of June 30, 1996 are
derived from the unaudited consolidated financial statements of the Company and
reflect all adjustments (including only normal recurring accruals) which in the
opinion of management are necessary for a fair presentation of the Company's
financial position and results of operations for these periods. The following
data should be read in conjunction with "Management's Discussions and Analysis
of Results of Operations and Financial Condition" and the Consolidated Financial
Statements and notes thereto incorporated by reference elsewhere in this
Prospectus.
SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
--------------------------------------------------- ------------------
1995 1994 1993 1992 1991 1996 1995
-------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues............................... $26,392 $18,899 $11,123 $ 6,047 $ 3,506 $16,336 $10,551
Total cost of sales.......................... 13,717 7,951 5,977 2,854 1,740 7,943 5,088
------- ------- ------- ------- ------- ------- -------
Gross profit................................. 12,675 10,948 5,146 3,193 1,766 8,423 5,463
Total operating expenses..................... 16,772 10,903 7,233 5,612 3,462 8,151 6,529
Investment income, net....................... 80 411 457 24 (574) 108 9
Minority interest............................ 0 0 0 0 0 333 -
Income taxes................................. 0 0 0 0 0 - -
------- ------- ------- ------- ------- ------- -------
Earnings (loss) from continuing operations... (4,017) 458 (1,630) (2,395) (2,270) 713 (1,057)
Gain (loss) from discontinued operations..... 69 251 329 155 (124) 1,918 (715)
Earnings (loss) before extraordinary item.... (3,948) 707 (1,301) (2,240) (2,394) 273 (1,897)
Extraordinary item........................... 0 0 0 0 3,889 - -
Net earnings (loss).......................... (3,948) $ 707 $(1,301) $(2,240) $ 1,495 273 (1,897)
------- ------- ------- ------- ------- ------- -------
Earnings (loss) per share before
extraordinary item(1)...................... $(.19) $.03 $(.08) $(.20) $(.38) .01 (.10)
Net earnings (loss) per share................ $(.19) $.03 $(.08) $(.20) $.24 .01 (.10)
------- ------- ------- ------- ------- ------- -------
Weighted average equivalent shares
outstanding(1)............................. 20,301 21,124 17,135 11,344 6,263 23,678 19,217
_______________
(1) As adjusted to reflect a 1-for-20 reverse stock split effected in June 1991.
SELECTED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
<CAPTION>
December 31
---------------------------------------------------- June 30,
1995 1994 1993 1992 1991 1996
------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total current assets......................... $26,530 $18,844 $23,102 $ 9,004 $ 5,119 28,055
Total assets................................. 42,813 31,239 27,240 10,171 5,604 45,061
Total current liabilities.................... 8,114 4,958 2,933 2,554 2,810 9,603
Long-term debt, less current portion......... 2 8 163 18 91 --
Shareholders' equity......................... 33,451 25,457 23,653 7,432 2,703 33,992
</TABLE>
9.
<PAGE>
PLAN OF DISTRIBUTION
The Settlement Warrants are being offered and distributed in an offering
exempt from registration under the Securities Act pursuant to Section 3(a)(10)
thereof, in settlement of a class-action lawsuit (the "Action"). The Action,
originally filed by various shareholders of the Company in June 1993 in the
United States District Court for the Southern District of California (San Diego)
(the "Court"), was a consolidation of four lawsuits seeking class action status
to recover damages for a drop in the market price of the Company's Common Stock
following an announcement that an anticipated agreement under which the Company
would sell certain equipment and services to an arm of the Mexican Government
may be put out for bid. While the Company denies any wrongdoing or liability, it
agreed to the Settlement in order to avoid substantial expenses and the
inconvenience and distraction of burdensome and protracted litigation. The
Settlement was entered into by the parties on June 18, 1996, and approved by the
Court, after a hearing, by order dated and entered on September 23, 1996.
Pursuant to the Settlement, the Company has established a settlement
fund consisting of $400,000 plus Settlement Warrants to purchase an aggregate of
565,000 shares of the Company's Common Stock. For a description of the terms of
the Settlement Warrants, see "Description of Securities -- Settlement Warrants."
Claimants submitting claims to the administrator administering the Settlement
which are timely filed and satisfactorily demonstrate proof of loss are
considered approved claimants under the terms of the Settlement. Approved
claimants are entitled to participate in a distribution of the settlement fund
(which includes the Settlement Warrants) in proportion to their recognized loss.
Holders of the Settlement Warrants may sell the shares of Common Stock
issuable upon exercise of such Settlement Warrants directly or through brokers
in negotiated transactions or in one or more transactions on the AMEX, or
otherwise, at the price prevailing at the time of sale.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 10,000,000 shares of
preferred stock, par value $.005 per share ("Preferred Stock"), and 50,000,000
shares of Common Stock. The Preferred Stock may be issued in one or more series;
the only series currently designated is a series of 5,000,000 shares of Series A
Convertible Preferred Stock (the "Series A Preferred Stock").
COMMON STOCK
On October 1, 1996, there were 23,130,000 shares of Common Stock
outstanding.
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the securityholders. The holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by
the Company's Board of Directors out of legally available funds, after payment
of any dividends required on the outstanding Preferred Stock. Upon liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets that are legally available for
distribution, after payment of or provision for all debts and liabilities and
for any payments with respect to the Preferred Stock. The holders of Common
Stock have no preemptive, subscription or conversion rights, and there are no
redemption or sinking fund provisions applicable to such shares. All of the
outstanding shares of Common Stock are fully paid and nonassessable. The rights,
preferences and privileges of holders of Common Stock are subject to the rights
of the holders of shares of the Series A Preferred Stock, and may be subject to
the rights of the holders of such other Preferred Stock as the Company may issue
in the future, although the Company has no plans at this time to issue
additional Preferred Stock.
PREFERRED STOCK
On October 1, 1996, there were 161,112 shares of Series A Preferred
Stock outstanding. The holders of the Series A Preferred Stock are entitled to
an annual dividend of 10% of the original issue price of $1.00 per share,
payable semiannually on December 1 and June 1 of each year in cash or, at the
option of the Company, by means of the issuance of shares of Common Stock, which
are to be valued for this purpose at the fair market
10.
<PAGE>
value of the Common Stock. The Company is current in the payment of all
dividends on the Series A Preferred Stock. Upon liquidation, dissolution and
winding up of the Company, each holder of the Series A Preferred Stock shall be
entitled to receive $1.00 per share before any payment shall be made with
respect to the outstanding shares of the Common Stock. Each share of the Series
A Preferred Stock is convertible into approximately .2801 share of Common Stock
at any time at the option of the holders of the Series A Preferred Stock. The
rate of conversion is subject to certain antidilution provisions. The holders of
the Series A Preferred Stock do not have any voting, preemptive, subscription or
redemption rights.
Additional shares of Preferred Stock may be issued without
securityholder approval. The Board of Directors is authorized to issue such
shares in one or more series and to fix the rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend rights
and rates, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any series
or the designation of such series, without any vote or action by the
shareholders. Any Preferred Stock to be issued could rank prior to the Common
Stock with respect to dividend rights and rights on liquidation. The Board of
Directors, without securityholder approval, may issue Preferred Stock with
voting and conversion rights that could adversely affect the voting power of
holders of Common Stock or create impediments to persons seeking to gain control
of the Company. The Company has no present plan or arrangement to issue any
additional shares of Preferred Stock.
SETTLEMENT WARRANTS
The Settlement Warrants will be issued in registered form, and will be
subject to the terms and conditions of a Warrant Agreement between the Company
and American Stock Transfer & Trust Company, as Warrant Agent. The following
description of the Settlement Warrants is not complete and is qualified in all
respects by the Warrant Agreement, the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
Each Settlement Warrant will entitle the holder thereof to purchase one
share of Common Stock at an exercise price equal to $[__________] [the average
closing price of the Company's Common Stock as reported on the American Stock
Exchange during the 20 trading days immediately preceding the date the
Settlement Warrants are mailed to authorized claimants]. The Settlement Warrants
will be exercisable for a period of three years from the date of issuance, and
during the period from the second anniversary of the date of issuance until the
expiration of the Settlement Warrants, the holders will have the right (but will
not be obligated) to require the Company to redeem the Settlement Warrants for
cash at a price of $3.25 per Settlement Warrant unless the Settlement Warrants
have previously been exercised. The redemption right will expire, however, if at
any time during the exercise period the closing price per share of Common Stock
as reported on the AMEX exceeds the exercise price by more than $3.25 per share
for any seven trading days, whether or not consecutive. In the event the Company
is required to redeem all or a portion of the Settlement Warrants, there can be
no assurance that the Company will have available funds sufficient to pay for
the redemption price of the Settlement Warrants so tendered for redemption. The
cost to the Company to redeem all of the Settlement Warrants would be
$1,836,250. Upon expiration of the redemption right, NTN will have no further
obligation to repurchase the Settlement Warrants. On and after the expiration
date, the Settlement Warrants become wholly void and of no value.
The Settlement Warrants contain antidilution provisions to avoid
dilution of the equity interest represented by the underlying shares upon the
occurrence of certain events such as share dividends or splits, reorganizations,
consolidations, mergers or like occurrences.
It is anticipated that the Settlement Warrants will be approved for
listing on the AMEX under the symbol ["NTNW"], subject to official notice of
issuance.
Pursuant to the Settlement, the Company has agreed to file the
Registration Statement of which this Prospectus is a part in order to register
the issuance of the shares of Common Stock underlying the Settlement Warrants.
The Company will use its best efforts to keep the Registration Statement and any
registration or qualification required under state securities laws with respect
to the shares of Common Stock offered hereby
11.
<PAGE>
effective during the term of the Settlement Warrants. The Settlement Warrants
may not be exercised during any period in which any such registration or
qualification is required but is not in effect.
ANTI-TAKEOVER PROVISIONS
The provisions of the Company's Restated Certificate of Incorporation
(the "Certificate") and Bylaws (the "Bylaws"), summarized in the succeeding
paragraphs, may be deemed to have anti-takeover effects and may delay, defer or
prevent a tender offer, takeover attempt or change in control that a
securityholder might consider to be in such securityholder's best interest,
including those attempts that might result in a premium over the market price
for the shares held by securityholders.
Amendment of Certain Provisions of the Certificate of Incorporation and
Bylaws
The Certificate provides that the affirmative vote of the holders of at
least 80% of the total voting power of all outstanding securities of the Company
then entitled to vote generally in the election of directors, voting together as
a single class, is required to amend certain provisions of the Certificate,
including those provisions relating to the number, election and term of
directors; the removal of directors and the filling of vacancies;
indemnification of directors, officers and others; and the supermajority voting
requirements in the Certificate. The Certificate further provides that the
Bylaws may be amended by the Board of Directors or by an affirmative vote of the
holders of not less than 80% of the total voting power of all outstanding
securities of the Company then entitled to vote generally in the election of
directors, voting together as a single class. These voting requirements will
have the effect of making more difficult any amendment by securityholders, even
if a majority of the Company's securityholders believes that such amendment
would be in their best interests.
Classified Board of Directors
The Certificate and the Bylaws divide the Board of Directors into three
classes, each class to be nearly equal in number as possible, each class serving
staggered three-year terms. Approximately two-thirds of the directors of the
Company are subject to re-election at each annual meeting of securityholders.
The classification of directors and provisions in the Certificate that
limit the ability of securityholders to increase the size of the Board of
Directors without the vote of at least 80% of the total voting power of all
outstanding voting securities, together with provisions in the Certificate that
limit the ability of securityholders to remove directors and that permit the
remaining directors to fill any vacancies on the Board, will have the effect of
making it more difficult for securityholders to change the composition of the
Board of Directors. As a result, at least two annual meetings of securityholders
may be required for the securityholders to change a majority of the directors,
whether or not a change in the Board of Directors would be beneficial to the
Company and its securityholders and whether or not a majority of the Company's
securityholders believes that such a change would be desirable.
Certain Securityholder Action
The Certificate requires that securityholder action be taken at an
annual meeting or special meeting of securityholders called pursuant to a
resolution adopted by a majority of the Board of Directors and prohibits
securityholder action by written consent.
Section 203 of the Delaware General Corporation Law
The Company is governed by the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Subject to certain exceptions
summarized below, Section 203 prohibits any Interested Securityholder from
engaging in a "business combination" with a Delaware corporation for three years
following the date such person became an Interested Securityholder. Interested
Securityholder, as defined, includes (i) any person who is the beneficial owner
of 15% or more of the outstanding voting stock of the corporation and (ii) any
person who is an affiliate or associate of the corporation and who held 15% or
more of the outstanding voting stock of the corporation at any time within three
years before the date on which such person's status as an
12.
<PAGE>
Interested Securityholder is determined. Subject to certain exceptions, a
"business combination" includes, among other things: (i) any merger or
consolidation involving the corporation; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition of assets having an aggregate
market value equal to 10% or more of either the aggregate market value of all
assets of the corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation; (iii) any
transaction that results in the issuance or transfer by the corporation of any
stock of the corporation to the Interested Securityholder, except pursuant to a
transaction that effects a pro rata distribution to all securityholders of the
corporation; (iv) any transaction involving the corporation that has the effect
of increasing the proportionate share of the stock of any class or series, or
securities convertible into the stock of any class or series, of the corporation
that is owned directly or indirectly by the Interested Securityholder; and (v)
any receipt by the Interested Securityholder of the benefit (except
proportionately as a securityholder) of any loans, advances, guarantees, pledges
or other financial benefits provided by or through the corporation.
Section 203 does not apply to a business combination if: (i) before a
person became an Interested Securityholder, the board of directors of the
corporation approved the transaction in which the Interested Securityholder
became an Interested Securityholder or the business combination; (ii) upon
consummation of the transaction that resulted in the person becoming an
Interested Securityholder, the Interested Securityholder owned at least 85% of
the voting stock of the corporation outstanding at the time the transaction
commences (other than certain excluded shares); or (iii) following a transaction
in which the person became an Interested Securityholder, the business
combination is (a) approved by the board of directors of the corporation and (b)
authorized at a regular or special meeting of securityholders (and not by
written consent) by the affirmative vote of the holders of at least 66-2/3% of
the outstanding voting stock of the corporation not owned by the Interested
Securityholder.
SHARES ELIGIBLE FOR FUTURE PUBLIC SALE
On October 1, 1996 there were 23,130,000 shares of Common Stock
outstanding. Approximately 5,820,400 of such shares of Common Stock and 782,500
shares of Common Stock underlying the Company's outstanding warrants, are
"restricted securities" within the meaning of Rule 144 of the regulations
promulgated under the Securities Act. All or substantially all of such shares
are covered by currently effective registration statements and can be offered
and sold publicly by the beneficial owners at any time so long as the
registration statements remain effective. Moreover, in general under Rule 144 as
currently in effect, a person (or persons whose shares are aggregated),
including a person who may be deemed to be an "affiliate" of the Company as that
term is defined under the Securities Act, is entitled to sell within any three-
month period a number of shares that does not exceed the greater of (i) one
percent of the then-outstanding shares of Common Stock, or (ii) the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding such sale. If the shares in question were acquired from the Company in
transactions not involving a public offering, then they may not be sold under
Rule 144 until they have been outstanding for at least two years. Sales under
Rule 144 are also subject to certain requirements as to the manner of sale,
notice and the availability of current public information about the Company.
However, a person who is not deemed to have been an affiliate of the Company
during the 90 days preceding a sale by such person is entitled to sell shares
that have been outstanding for at least three years without regard to the
volume, manner of sale or notice requirements.
No predictions can be made with respect to the effect, if any, that
sales of Common Stock in the market or the availability of shares of Common
Stock for sale pursuant to currently effective registration statements or under
Rule 144 will have on the market price of Common Stock prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock may
be sold in the public market may adversely affect prevailing market prices for
the Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities.
As of October 1, 1996, there were 4,777,230 shares of Common Stock
reserved for issuance upon the exercise of stock options outstanding under the
Company's stock option plans at exercise prices ranging from $2.25 to $8.25 per
share, of which options to purchase 3,591,858 shares are currently exercisable.
An additional 2,312,193 shares of Common Stock (plus any shares of Common Stock
covered by stock options currently outstanding under the Company's 1985
Incentive Stock Option Plan and 1985 Nonqualified Stock Option Plan
13.
<PAGE>
which are subsequently terminated or expire without being exercised) are
reserved for issuance upon the exercise of options available for future grant
under the Company's 1995 Stock Option Plan.
The Company also has outstanding warrants, including the Settlement
Warrants, to purchase an aggregate of 4,608,315 shares of Common Stock at
exercise prices ranging from $2.00 to $8.00 per share, substantially all of
which warrants are currently exercisable. The Company also currently has
effective registration statements covering the resale of substantially all of
such warrants and the shares issuable upon exercise of such warrants by the
holders. The Company also has 161,112 shares of preferred stock outstanding
which entitle holders thereof to receive, upon surrender of the shares of
preferred stock, 45,127 shares of Common Stock.
The foregoing options, warrants and preferred stock could adversely
affect the Company's ability to obtain future financing. Such options and
warrants are likely to be exercised and such preferred stock is likely to be
converted into shares of Common Stock, if at all, only at a time when the
exercise price or conversion price, as the case may be, is less than the market
price of the Common Stock. For the life of such options, warrants and preferred
stock, the holders are given the opportunity to profit from a rise in the market
price of the Common Stock without assuming the risk of ownership. Moreover, the
holders of those options, warrants and preferred stock can be expected to
exercise or surrender them, as the case may be, at a time when the Company would
be able to obtain additional capital through a new offering of securities on
terms more favorable than those provided by such options, warrants or preferred
stock. To the extent the trading price of the Common Stock at the time of
exercise of any such options or warrants exceeds the exercise price, such
exercise will also have a dilative effect on the Company's securityholders.
TRANSFER AGENT AND WARRANT AGENT
The Transfer Agent for the Common Stock and Warrant Agent for the
Settlement Warrants is American Stock Transfer & Trust Company, New York, New
York.
LEGAL MATTERS
Troy & Gould Professional Corporation, Los Angeles, California, has
rendered an opinion to the effect that the shares of Common Stock offered
hereby, when issued and paid for as provided in the Settlement Warrants, will be
duly and validly issued, fully paid and nonassessable. Such counsel owned 12,671
shares of Common Stock as of the date of this Prospectus.
EXPERTS
The financial statements and financial statement schedule of NTN
Communications, Inc. as of December 31, 1995 and 1994, and for each of the years
in the three-year period ended December 31, 1995, have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP covering the
December 31, 1995 financial statements refers to a change in the method of
accounting for investments in debt and equity securities in 1994.
14.
<PAGE>
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES TO ANY PERSON IN ANY STATE
OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
_______________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information.................. 2
Incorporation of Certain
Documents by Reference............... 2
Risk Factors........................... 3
Recent Developments.................... 7
Use of Proceeds........................ 7
Price Range of Common Stock
and Dividend Policy.................. 8
Selected Consolidated Financial Data... 9
Plan of Distribution................... 10
Description of Securities.............. 10
Legal Matters.......................... 14
Experts................................ 14
</TABLE>
================================================================================
================================================================================
COMMON STOCK
NTN COMMUNICATIONS, INC.
565,000 SHARES
____________
PROSPECTUS
____________
October 15, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company estimates that expenses in connection with the distribution
described in this Registration Statement will be as follows:
<TABLE>
<S> <C>
SEC registration fee $
Printing expenses 0
Accounting fees and expenses 0
Legal fees and expenses 20,000
Fees and expenses for qualification under state securities laws *
Miscellaneous *
------
Total $ *
======
</TABLE>
_______________
* To be filed by Amendment.
ITEM 15. 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. Section 145 of the
Delaware General Corporation Law makes provision for the indemnification of
officers, directors and other corporate agents in terms sufficiently broad to
indemnify such persons, under certain circumstances, for liabilities (including
reimbursements of expenses incurred) arising under the Securities Act.
The Company has entered into indemnity agreements with certain of its
outside directors. Pursuant to such indemnity agreements, the Company has agreed
to indemnify each outside director who is a party to the indemnity agreement
under certain circumstances in which such outside director or the Company is
named as a party to a proceeding (as that term is defined).
II-1
<PAGE>
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference as 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 Form of Warrant Agreement between NTN Communications, Inc. and American
Stock Transfer & Trust Company, including Specimen Warrant Certificate
5.1 Opinion of Troy & Gould Professional Corporation*
23.1 Consent of Troy & Gould Professional Corporation (included in Exhibit
5.1)*
23.2 Consent of KPMG Peat Marwick LLP (included at page II-5 hereof)
24 Power of Attorney
- ------------------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned 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;
(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; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that (i) and (ii) do not apply if the registration
statement is on Form S-3, and the information required to be included
in a post-effective amendment is contained in periodic reports filed
by the registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 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 which remain unsold
at the termination of the offering.
(b) The undersigned Company hereby undertakes:
That for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section
15(d) of the Exchange Act) that is incorporated by reference in the
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.
II-2
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act 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
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 and will be governed by the final adjudication of such
issue.
(d) The undersigned Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
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.
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-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Carlsbad, State of California, on October 14,
1996.
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
--------------------------------
Patrick J. Downs,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Patrick J. Downs and Gerald Sokol, Jr., and each
of them, their true and lawful attorneys-in-fact and agents, each with power to
act alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents 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 or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Patrick J. Downs Chairman of the Board of Directors October 14, 1996
- ------------------------ and Chief Executive Officer
Patrick J. Downs
/s/ Daniel C. Downs President, Chief Operating Officer October 14, 1996
- ------------------------ and Director
Daniel C. Downs
/s/ Gerald Sokol, Jr. Senior Vice President - October 14, 1996
- ------------------------ Finance (Principal Financial
Gerald Sokol, Jr. and Accounting Officer)
/s/ Donald C. Klosterman Director October 14, 1996
- ------------------------
Donald C. Klosterman
/s/ Alan P. Magerman Director October 14, 1996
- ------------------------
Alan P. Magerman
/s/ Pete Rozelle Director October 14, 1996
- ------------------------
Pete Rozelle
/s/ Edward C. Frazier Director October 14, 1996
- ------------------------
Edward C. Frazier
/s/ Robert M. Bennett Director October 14, 1996
- ------------------------
Robert M. Bennett
</TABLE>
II-4
<PAGE>
EXHIBIT 23.2
------------
The Board of Directors
NTN Communications, Inc.:
We consent to the use of our reports incorporated herein by reference and
to the references to our firm under the headings "Selected Consolidated
Financial Data" and "Experts" in the Prospectus.
Our report dated April 12, 1996, 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
October 15, 1996
II-5
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description Number
- ------- ----------- ------
<S> <C> <C>
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 Form of Warrant Agreement between NTN Communications, Inc. and
American Stock Transfer & Trust Company, including Specimen Warrant
Certificate
5.1 Opinion of Troy & Gould Professional Corporation*
23.1 Consent of Troy & Gould Professional Corporation (included in Exhibit 5.1)*
23.2 Consent of KPMG Peat Marwick LLP (included at Page II-5)
24 Power of Attorney
- --------------------------
</TABLE>
* To be filed by amendment.
<PAGE>
EXHIBIT 4.2
-----------
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement") dated this 9th day of October,
1996, between NTN COMMUNICATIONS, INC., a Delaware corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation, as Warrant
Agent.
W I T N E S S E T H:
-------------------
WHEREAS, in connection with a settlement of a purported consolidated
class action lawsuit against the Company, the Company will issue up to 565,000
redeemable common stock purchase warrants (the "Warrants") to purchase an
aggregate of up to 565,000 shares of Common Stock; and
WHEREAS, the Company desires to provide for the form and provisions of
the Warrants, the terms upon which they shall be issued and exercised and the
respective rights and obligations of the Company, the Warrant Agent and the
holders of the Warrants, and the issuance of certificates representing the
Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on the Company's
behalf, and the Warrant Agent is willing to so act, in connection with the
issuance, acquisition, transfer, redemption and exchange of certificates
representing the Warrants and the transfer of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall
-----------
have the meanings indicated, unless the context shall otherwise require:
(a) "Commission" shall mean the Securities and Exchange
Commission.
(b) "Common Stock" shall mean the Common Stock, par value
$.005 per share, of the Company.
(c) "Corporate Office" shall mean the office of the Warrant
Agent at 40 Wall Street, New York, New York 10005, or such other address at
which the Warrant Agent's principal business in New York, New York, shall be
administered at any particular time.
(d) "Exercise Date" shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (i) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, and (ii)
payment in cash or by certified check made payable to the Warrant Agent for the
account of the Company, of the amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(e) "Initial Warrant Exercise Date" shall mean __________,
1996.
1
<PAGE>
(f) "Initial Warrant Redemption Date" shall mean the date 24
months after the Initial Warrant Exercise Date.
(g) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 9, _________ and ______/100th Dollars
($_______), and further subject to the Company's right, in its sole discretion,
to decrease the Purchase Price for a period of not less than 10 business days on
not less than 10 days' prior written notice to the Registered Holders and
Warrant Agent.
(h) "Redemption" shall have the meaning set forth in Section
10(c).
(i) "Redemption Date" shall have the meaning set forth in
Section 10(b).
(j) "Redemption Price" shall have the meaning set forth in
Section 10(c).
(k) "Registered Holder" shall mean the person in whose name
any certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 7.
(l) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(m) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary power to
elect a majority of the Board of Directors of such corporation (regardless of
whether or not at the time stock of any class or classes of such corporation
shall have or may have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by the Company or by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.
(n) "Transfer Agent" shall mean American Stock Transfer &
Trust Company or its successor.
(o) "Warrant Agent" shall mean American Stock Transfer & Trust
Company or its successor authorized herein.
(p) "Warrant Certificate" shall mean a certificate
representing each of the Warrants substantially in the form annexed hereto as
Exhibit A.
(q) "Warrant Exercise Expiration Date" shall mean the earlier
of (i) 5:00 P.M. (New York time), on _____________, 1999, or, if such date shall
in the State of New York be a holiday or a day on which banks are authorized to
close, then 5:00 P.M. (New York time) on the next following day which in the
State of New York is not a holiday or a day on which banks are authorized to
close, subject to the Company's right, prior to the Warrant Exercise Expiration
Date, in its sole discretion, to extend such Warrant Exercise Expiration Date on
20 days' prior written notice to the Registered Holders, or (ii) the Redemption
Date.
(r) "Warrant Redemption Expiration Date" shall mean 5:00 p.m.
(New York time) on the first date following the Initial Warrant Exercise Date as
of which the closing sale price of the Common Stock on the American Stock
Exchange, or on such other principal exchange on which Common Stock is traded at
any particular time (or if the Common Stock is no longer traded on a securities
exchange, the high closing bid price for the Common Stock in the over-the-
counter market as reported by NASDAQ), has exceeded the sum of (i) the Purchase
Price plus (ii) $3.25
2
<PAGE>
(subject to equitable adjustment to reflect stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences) for any seven trading
days, whether or not consecutive.
SECTION 2. Appointment of Warrant Agent.
----------------------------
The Company hereby appoints the Warrant Agent to act as agent for the
Company with respect to the Warrants, and the Warrant Agent hereby accepts such
appointment and agrees to perform the same in accordance with the terms and
conditions set forth in this Agreement.
SECTION 3. Warrants and Issuance of Warrant Certificates.
---------------------------------------------
(a) Each Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase at the Purchase
Price therefor from the Initial Warrant Exercise Date until the Warrant Exercise
Expiration Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 9.
(b) Upon execution of this Agreement, Warrant Certificates
representing 565,000 Warrants to purchase up to an aggregate of 565,000 shares
of Common Stock (subject to modification and adjustment as provided in Section
9) shall be executed by the Company and delivered to the Warrant Agent.
(c) From time to time up to the Warrant Exercise Expiration Date,
the Warrant Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the persons entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) Warrant Certificates issued upon
any transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 8, and (iv) at the option of the Company, Warrant
Certificates in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price or the number of shares
of Common Stock purchasable upon exercise of the Warrants made pursuant to
Section 9 hereof.
SECTION 4. Form and Execution of Warrant Certificates.
------------------------------------------
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be dated the date of issuance
thereof (whether upon initial reissuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates).
(b) Warrant Certificates shall be executed on behalf of the Company
by the Chairman of the Board, President or any Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
by manual signatures or by facsimile signatures printed thereon, and shall have
imprinted thereon a facsimile of the Company's seal. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of
3
<PAGE>
the Warrant Certificates or before countersignature by the Warrant Agent and
delivery thereof, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be such
officer of the Company.
SECTION 5. Exercise.
--------
(a) Warrants in denominations of one or whole number multiples
thereof can be exercised commencing at any time on or after the Initial Warrant
Exercise Date, but not after the Warrant Exercise Expiration Date, upon the
terms and subject to the conditions set forth herein and in the applicable
Warrant Certificate. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date, provided that
the Warrant Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder thereof or his attorney duly
authorized in writing, together with payment in cash or by certified check made
payable to the Warrant Agent for the account of the Company, of an amount in
lawful money of the United States of America equal to the applicable Purchase
Price, together with any and all applicable taxes due in connection with the
exercise thereof, has been received in good funds by the Warrant Agent. The
person entitled to receive the securities deliverable upon such exercise shall
be treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. As soon as practicable on or after the Exercise
Date, the Warrant Agent on behalf of the Company shall cause to be issued to the
person or persons entitled to receive the same a Common Stock certificate or
certificates for the shares of Common Stock deliverable upon such exercise, and
the Warrant Agent shall deliver the same to the person or persons entitled
thereto. Upon the exercise of any Warrant, the Warrant Agent shall promptly
notify the Company in writing of such fact and of the number of securities
delivered upon such exercise and shall cause all payments of an amount in cash
or by certified check made payable to the order of the Company, equal to the
Purchase Price, to be deposited promptly in the Company's bank account. In
addition, if such Warrants shall not have been exercised in full, the Warrant
Agent shall deliver to such person a new countersigned Warrant for the number of
shares as to which such Warrant shall not have been exercised. Notwithstanding
the foregoing, the Company shall not be obligated to deliver any securities
pursuant to the exercise of a Warrant unless a registration statement under the
Securities Act with respect to such securities is effective. Warrants may not be
exercised, or securities issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(b) The Company shall not be obligated to issue any fractional
share interests or fractional warrant interests upon the exercise of any Warrant
or Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fraction equal to or greater than one-half shall be
rounded up to the next full share or Warrant, as the case may be, and any
fraction less than one-half shall be eliminated.
SECTION 6. Reservation of Shares; Listing; Payment of Taxes; etc.
-----------------------------------------------------
(a) The Company covenants that it will at all times up to the
Warrant Exercise Expiration Date reserve and keep available out of its
authorized Common Stock, solely for the purpose of issue upon exercise of all
outstanding Warrants, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery thereof, be duly and validly issued and
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, and that upon
issuance such shares shall be listed on each securities exchange, if any, on
which the other shares of outstanding Common Stock are then listed.
4
<PAGE>
(b) The Company covenants that it has filed a registration
statement under the federal securities laws with respect to the shares issuable
upon exercise of the Warrants, such registration statement has become effective
and it will use its best efforts to keep such registration statement current
while any of the Warrants are outstanding and, if required by law, deliver a
prospectus which complies with Section 10(a)(3) of the Securities Act to the
Registered Holder exercising any such Warrant (except, if in the opinion of
counsel to the Company, such registration is not required under the Act or if
the Company receives a letter from the staff of the Commission stating that it
would not take any enforcement action if such registration is not effected). The
Company will use its best efforts to obtain appropriate approvals or
registrations under state securities laws. With regard to any such securities,
however, the Warrants may not be exercised by, or shares of Common Stock issued
to, any Registered Holder in any state in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of the Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates representing shares
of Common Stock or other securities required upon exercise of the Warrants, and
the Company will comply with all such requisitions.
SECTION 7. Exchange and Registration of Transfer.
-------------------------------------
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and the Company
shall execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its Corporate Office books in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate to such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription or
exercise form, as the case may be, on the reverse thereof shall be duly endorsed
or be accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing.
(d) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates. However, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
5
<PAGE>
(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly cancelled by the Warrant Agent.
(f) Prior to due presentment for registration of transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate as the absolute owner thereof of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a duly authorized officer of the Company or
the Warrant Agent) for all purposes and shall not be affected by any notice to
the contrary.
(g) The Warrant Agent shall not be required to effect any
registration of transfer or exchange which would result in the issuance of a
Warrant Certificate for a fraction of a Warrant.
SECTION 8. Loss or Mutilation.
------------------
Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory to them, and (in case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and the Warrant
Agent shall countersign and deliver in lieu thereof a new Warrant Certificate
representing an equal aggregate number of Warrants. Applicants for a substitute
Warrant Certificate shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Warrant Agent may prescribe.
SECTION 9. Adjustment of Purchase Price and Number of Shares of Common
-----------------------------------------------------------
Stock Deliverable.
- -----------------
(a) (i) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof up to the Warrant
Exercise Expiration Date, issue any shares of Common Stock as a stock dividend
to the holders of Common Stock, or subdivide or combine the outstanding shares
of Common Stock into a greater or lesser number of shares (any such issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price for the
Warrants (whether or not the same shall be issued and outstanding) in effect
immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the nearest cent) determined by
dividing (i) the sum of (a) the total number of shares of Common Stock issued
and outstanding immediately prior to such Change of Shares, multiplied by the
Purchase Price in effect immediately prior to such Change of Shares, and (b) the
consideration, if any, received by the Company upon such issuance, subdivision
or combination by (ii) the total number of shares of Common Stock issued and
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price immediately prior to such computation,
except in the case of a combination of outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance with this
Section 9, shares of Common Stock issuable by way of dividend or other
distribution shall be deemed to have been issued immediately after the opening
of business on the day following the record date for the determination of
stockholders entitled to receive such dividend or other distribution and shall
be deemed to have been issued without consideration.
(ii) Upon each adjustment of the Purchase Price pursuant to
this Section 9, the number of shares of Common Stock purchasable upon the
exercise of each Warrant shall be the number derived by multiplying the number
of shares of Common Stock purchasable immediately
6
<PAGE>
prior to such adjustment by the Purchase Price in effect prior to such
adjustment and dividing the product so obtained by the applicable adjusted
Purchase Price.
(b) In the event, at any time or from time to time after the date
hereof up to the Warrant Exercise Expiration Date, of any reclassification or
change of outstanding shares of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a Subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants (other than a change
in par value, or from par value to no par value, or from no par value to par
value or as a result of subdivision or combination)) or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially in its entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the Corporate Office of the Warrant Agent
a statement signed by its President or a Vice President and by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary evidencing
such provision. Such provisions shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Section 9(a). The provisions of this Section 9(b) shall similarly apply
to successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(c) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 3(c) hereof, continue to express the Purchase Price per
share and the number of shares purchasable thereunder as the Purchase Price per
share and the number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.
(d) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
promptly file each certificate with the Warrant Agent and cause a brief summary
to be sent by ordinary first-class mail to each Registered Holder at his last
address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof. The affidavit of an officer of the Warrant
Agent or the Secretary or an Assistant Secretary of the Company that such notice
has been mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated herein.
(e) No adjustment of the Purchase Price shall be made as a result
of or connection with the issuance of shares of Common Stock if the amount of
said adjustment shall be
7
<PAGE>
less than $.10; provided, however, that in such case, any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment that shall
amount, together with any adjustment so carried forward, to at least $.10. In
addition, Registered Holders shall not be entitled to cash dividends made by the
Company prior to the exercise of any Warrant or Warrants held by them.
SECTION 10. Redemption.
----------
(a) Subject to the provisions of Section 10(d), at any time or from
time to time on or after the Initial Warrant Redemption Date and up to the
Warrant Redemption Expiration Date, each Registered Holder may, at such
Registered Holder's option, cause the Company to redeem (a "Redemption"), out of
funds legally available therefor, up to all of the Warrants held by such
Registered Holder. The price (the "Redemption Price") to be paid by the Company
for any Warrants redeemed by the Company pursuant to this Section 10 shall be
$3.25 per Warrant (subject to equitable adjustment to reflect stock splits,
stock dividends, stock combinations, recapitalizations and like occurrences).
(b) Each Registered Holder of Warrants may exercise his right to
have Warrants redeemed pursuant to this Section 10 by surrendering for such
purpose to the Warrant Agent, at its Corporate Office, a Warrant Certificate or
Certificates representing the Warrants to be redeemed, accompanied by a written
notice stating that such Registered Holder elects to have redeemed all or a
specified whole number of such Warrants in accordance with this Section 10 and,
if less than the full number of Warrants evidenced by the surrendered Warrant
Certificate or Certificates are being redeemed, specifying the name or names in
which such Registered Holder wishes the Warrant Certificate or Certificates for
the balance of such Warrants to be issued. In case such notice shall specify a
name or names other than that of such Registered Holder, such notice shall be
accompanied by payment of all transfer taxes and other charges payable upon the
issuance of Warrants in such other name or names. As promptly as practicable,
and in any event within 30 days after the surrender of such Warrant Certificate
or Certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes, the Company shall deliver or cause to
be delivered to the Warrant Agent (i) the Redemption Price of the Warrants being
so redeemed and (ii) if less than the full number of Warrants evidenced by the
surrendered Warrant Certificate or Certificates are being redeemed, a new
Warrant Certificate or Certificates, of like tenor, for the number of Warrants
evidenced by such surrendered Warrant Certificate or Certificates less the
number of such Warrants redeemed. Such Redemption shall be deemed to have been
made at 5:00 p.m. (New York time) on the date (the "Redemption Date") of giving
of such notice and of such surrender of the Warrant Certificate or Certificates
representing the Warrants to be redeemed, so that the rights of the Registered
Holder thereof shall cease after such time, except for the right thereafter to
receive the Redemption Price in accordance herewith.
(c) If on any Redemption Date, less than all of the Warrants
requested to be redeemed by the Registered Holders thereof may be legally
redeemed by the Company, the Redemption shall be effected in compliance with the
requirements of the principal national securities exchange or over-the-counter
market, if any, on which the Warrants are listed or, if the Warrants are not
listed on a securities exchange or traded over-the-counter, pro rata among such
Registered Holders based upon the respective Redemption Price which would
otherwise be payable on or with respect to such Warrants if they were redeemed
in full.
(d) Notwithstanding any other provision of this Agreement, the
right of the Registered Holders to have the Warrants redeemed as provided herein
shall expire on the Warrant Redemption Expiration Date. The Company will notify
the Warrant Agent promptly following the
8
<PAGE>
occurrence of the Warrant Redemption Expiration Date and cause such notice to be
sent by ordinary first-class mail to each Registered Holder at his last address
as it shall appear on the registry books of the Warrant Agent. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity thereof or of the Warrant Redemption Expiration Date.
SECTION 11. Concerning the Warrant Agent.
----------------------------
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of the Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed in making the same. It shall not (i) be liable for any recital
or statement of fact contained herein or for any action taken, suffered or
omitted by it in reliance on any Warrant Certificate or other document or
instrument believed to be in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
negligence, willful misconduct or bad faith.
(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficient if evidenced by an instrument
signed by the Chairman of the Board of Directors, President or any Vice
President (unless other evidence in respect thereof is more specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and reasonable counsel fees, for anything done or
omitted by the Warrant Agent in the execution of its duties and powers hereunder
except losses, expenses and liabilities arising as a result of the Warrant
Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent may resign its duties and be discharged from
all other duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence, willful misconduct or bad faith),
after giving 60 days' prior written notice to the Company. At least 30 days
prior to the date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to the Registered
Holder of each
9
<PAGE>
Warrant Certificate at the Company's expense. Within a reasonable period of time
following such resignation the Company shall appoint in writing a new Warrant
Agent. If the Company shall fail to make such appointment within a period of 30
days after having been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant Certificate may apply
to any court of competent jurisdiction in the State of California for the
appointment of a new Warrant Agent. Any new Warrant Agent, either appointed by
the Company or by such a court, shall be a bank or trust company having capital
and surplus, as shown by its last published report to its stockholders, of not
less than $10,000,000 or a stock transfer company doing business in New York,
New York or the State of California. After acceptance in writing of such
appointment by the new Warrant Agent is received by the Company, such New
Warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new Warrant
Agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new Warrant Agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new Warrant Agent shall be a successor Warrant Agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding paragraph. Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.
(h) The Warrant Agent, its Subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two years from
the date of exercise any Warrant Certificate received by it upon such exercise.
SECTION 12. Modification of Agreement.
-------------------------
The Warrant Agent and the Company may by supplement agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained, or (ii) that they may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Warrant Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less than a
majority of the Warrants then outstanding; provided further, that no change in
the number or nature of the Warrants shall be made without the consent in
writing of the Registered Holders representing not less than a majority of the
Warrants then outstanding, other than such changes as are presently specifically
prescribed by this Agreement as originally executed.
10
<PAGE>
SECTION 13. Notices.
-------
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered against
receipt or when deposited in the United States mails, first-class postage
prepaid, if to the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registry books maintained by the Warrant Agent; if
to the Company, at 5966 La Place Court, Carlsbad, California 92008, Attention:
Chief Financial Officer, or at such other address as may have been furnished to
the Warrant Agent in writing by the Company; and if to the Warrant Agent, at its
Corporate Office.
SECTION 14. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California without giving effect to conflicts of laws.
SECTION 15. Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation.
SECTION 16. No Rights as Stockholders.
-------------------------
A Warrant does not entitle the Registered Holder thereof to any of the
rights of a stockholder of the Company, including, without limitation, the right
to receive dividends or other distributions, exercise any preemptive rights or
to vote or to consent or to receive notice as a stockholder in respect of the
meetings of stockholders or the election of directors of the Company or any
other matter.
SECTION 17. Counterparts.
------------
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be fully executed as of the first date first above written.
[SEAL]
NTN COMMUNICATIONS, INC. AMERICAN STOCK TRANSFER & TRUST COMPANY
As Warrant Agent
By: By:
--------------------- ---------------------------------
Name: Name:
Title: Title:
By:
---------------------
Secretary
12
<PAGE>
EXHIBIT A
---------
_____________, 1996 VOID AFTER ________________, 1999
__________ WARRANTS
REDEEMABLE COMMON STOCK PURCHASE WARRANT CERTIFICATE
NTN COMMUNICATIONS, INC.
CUSIP________
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Common Stock Purchase Warrants (the "Warrants") specified above.
Each Warrant initially entitles the Registered Holder to purchase, subject to
the terms and conditions set forth in this Warrant Certificate and the Warrant
Agreement (as hereinafter defined), one fully paid and nonassessable share of
Common Stock, $.005 par value per share, of NTN Communications, Inc., a Delaware
corporation (the "Company"), at any time on or after _______, 1996 (the "Initial
Warrant Exercise Date"), and prior to the Warrant Exercise Expiration Date (as
hereinafter defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the corporate office of American Stock Transfer & Trust Company, ___________,
____________, New York, ________, as Warrant Agent, or its successor (the
"Warrant Agent"), accompanied by payment of ______ and ______ /100th Dollars
($_____), in lawful money of the United States of America in cash or by
certified check made payable to the Warrant Agent for the account of the
Company.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated __________,
1996, by and between the Company and the Warrant Agent. Capitalized terms used
but not defined herein have the meanings ascribed to them in the Warrant
Agreement.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Warrant Exercise Expiration Date" shall mean the earlier of
(i) 5:00 P.M. (New York time) on _________, 1999, or, if such date shall in the
State of New York be a holiday or a
A-1
<PAGE>
day on which the banks are authorized to close, then 5:00 P.M. (New York time)
on the next following day which in the State of New York is not a holiday or a
day on which banks are authorized to close, subject to the Company's right,
prior to the Warrant Exercise Expiration Date, in its sole discretion, to extend
such Warrant Exercise Expiration Date on 20 days' prior written notice to the
Registered Holders, or (ii) the Redemption Date.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the Corporate Office of the Warrant Agent, for a new
Warrant Certificate or Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as such Registered Holder at the time of such surrender
shall be entitled to receive. Upon due presentment and payment of any tax or
other charge imposed in connection therewith or incident thereto, for
registration or surrender of this Warrant Certificate at such office, a new
Warrant Certificate of Certificates representing an equal aggregate number of
Warrants will be issued to the transferee for exchange therefor, subject to the
limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or other
distributions, exercise any preemptive rights or to vote or to consent or to
receive notice as a stockholder in respect of the meetings of stockholder or the
election of directors of the Company or any other matter.
Subject to the provisions of the Warrant Agreement, this Warrant may
be redeemed at the option of the Registered Holder, at a redemption price (the
"Redemption Price") of $3.25 per Warrant (subject to equitable adjustments to
reflect stock splits, stock dividends, stock combinations, recapitalizations,
and like occurrences) at any time commencing on or after the Initial Warrant
Redemption Date and up to the Warrant Redemption Expiration Date. On and after
the Redemption Date, the Registered Holder shall have no rights with respect to
this Warrant except the right to receive upon surrender of this Warrant
Certificate the Redemption Price as provided in the Warrant Agreement.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as may be provided
in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
conflicts of laws.
A-2
<PAGE>
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: , 1996 NTN COMMUNICATIONS, INC.
---------------
By:
-------------------------
Name:
Title:
By:
-------------------------
Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent
By:
-------------------------------------
Authorized Officer
[SEAL]
A-3
<PAGE>
SUBSCRIPTION FORM
-----------------
To Be Executed by the Registered Holder
in order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to
exercise ________ Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
_______________________
_______________________
_______________________
(please print or type name and address)
to be delivered to
_______________________
_______________________
_______________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of and delivered to, the Registered Holder at
the address stated below.
Dated: X
------------------ -------------------------------
-------------------------------
-------------------------------
Address
-------------------------------
Social Security or Taxpayer
Identification Number
<PAGE>
ASSIGNMENT
----------
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, , hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
_______________________
_______________________
_______________________
(please print or type name and address)
__________________ of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints _________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated: X
------------------ --------------------------------
Signature Guarantee
--------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR CHANGE WHATSOEVER AND MUST BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (A BANK, STOCK BROKER, SAVINGS AND LOAN
ASSOCIATION OR CREDIT UNION WITH MEMBERSHIP IN AN APPROVED SIGNATURE PURSUANT TO
RULE 14AD-15 OF THE SECURITIES EXCHANGE ACT OF 1934.
