<PAGE>
As filed with the Securities and Exchange Commission on July 30, 1996
Reg. No. 333-0385
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NTN COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware The Campus 31-1103425
(State or other jurisdiction of 5966 La Place Court (I.R.S. Employer
incorporation or organization) Carlsbad, California 92008 Identification No.)
</TABLE>
(619) 438-7400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Ronald E. Hogan, 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. [_]
_____________________
CALCULATION OF REGISTRATION FEE
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<CAPTION>
====================================================================================================================
Proposed maximum Proposed maximum Amount of
Title of each class of Amount to be offering price aggregate offering registration
securities to be registered registered(1) per share price fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value.... 400,000 shares $4.8125(2) $1,925,000(2) $ 664(3)
Common Stock, $.005 par value.... 382,500 shares $4.8125(4) $1,840,782(4) $ 635
- --------------------------------------------------------------------------------------------------------------------
Total........................ 782,500 shares $3,765,782 $1,299(5)
=====================================================================================================================
</TABLE>
(Footnotes on next cover page)
<PAGE>
(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 Common Stock as reported on the American Stock Exchange on May 10,
1996.
(3) Previously paid.
(4) 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 sales
prices of Common Stock as reported on the American Stock Exchange on July
24, 1996.
(5) Of such amount, $664 was previously paid.
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>
NTN COMMUNICATIONS, INC.
Cross-Reference Sheet
Pursuant to Item 501(b) of Regulation S-K, showing the location in the
Prospectus of the answers to the items in Part I of Form S-3.
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<CAPTION>
Form S-3 Item Number and Caption Prospectus Caption
- --------------------------------------------------------- -----------------------------------------------
<S> <C>
1.Front of the Registration Statement and Outside Facing Page; Outside Front Cover Page
Front Cover Page of Prospectus
2.Inside Front and Outside Back Cover Pages of Inside Front Cover Page; Back Cover Page
Prospectus
3.Summary Information, Risk Factors and Ratio of Risk Factors; Certain Recent Developments
Earnings to Fixed Charges
4.Use of Proceeds Use of Proceeds
5.Determination of Offering Price Outside Front Cover Page; Price Range of
Common Stock and Dividend Policy
6.Dilution Not Applicable
7.Selling Security Holders Selling Securityholders
8.Plan of Distribution Outside Front Cover Page; Plan of Distribution
9.Description of Securities to Be Registered Outside Front Cover Page; Description of
Securities
10.Interest of Named Experts and Counsel Not Applicable
11. Material Changes Certain Recent Developments
12. Incorporation of Certain Information by Reference Incorporation of Certain Documents by Reference
13.Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act Liabilities
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JULY 30, 1996
PROSPECTUS
NTN COMMUNICATIONS, INC.
782,500 Shares
This Prospectus relates to the offer by certain securityholders named
herein (the "Selling Securityholders") for sale to the public from time to
time of up to 782,500 shares (the "Shares") of common stock, $.005 par
value (the "Common Stock"), of NTN Communications, Inc. See "Selling
Securityholders." Unless otherwise indicated herein, references herein to
the "Company" mean NTN Communications, Inc. and its subsidiaries.
All of the Shares of Common Stock offered hereby are issuable upon the
exercise of certain warrants to purchase Common Stock of the Company (the
"Warrants"). See "Selling Securityholders."
The Company will not receive any proceeds from the sale of the Common
Stock offered hereby, with the exception of the exercise price of such of
the Warrants as may be exercised. See "Use of Proceeds" and "Description
of Securities."
The Common Stock is traded on the American Stock Exchange ("AMEX") under
the symbol "NTN." As of July __, 1996, the last sale price for the Common
Stock as reported on the AMEX was $ . See "Price Range of Common
Stock and Dividend Policy."
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>
================================================================
Price to Proceeds to Selling
Public Securityholders (1)
<S> <C> <C>
Per Share of Common Stock... $(2) $
Total....................... $
================================================================
</TABLE>
(1) All proceeds from the sale of the Shares offered hereby will be
received by the Selling Securityholders. The amount shown is without
deduction for brokerage fees which may be paid by the Selling
Securityholders and for offering expenses, estimated at $40,000
payable by the Company. See "Use of Proceeds."
(2) Based on the last reported sale price of the Common Stock on the AMEX
on July ___, 1996.
The date of this Prospectus is July ___, 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, proxy or information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information 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 or 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 and the Shares offered
hereby is contained in the Registration Statement of which this Prospectus is
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 the Shares, 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; and (d) the Company's Current
Reports on Form 8-K filed with the Commission on July 15, 1996 and July 24,
1996, respectively.
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 Ronald E. Hogan, Chief Financial Officer, NTN
Communications, Inc., The Campus, 5966 La Place Court, Carlsbad, California
92008. Telephone requests may be directed to Mr. Hogan at (619) 438-7400.
2
<PAGE>
RISK FACTORS
The Shares 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 offered
by this Prospectus.
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 $22,914,000 as of December 31, 1995 and March 31,
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 $273,000 for the quarter ended
March 31, 1996, 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 March 31, 1996, the Company had
working capital of $15,463,000. 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.
The Company recently sold substantially all of the assets of its New
World Computing, Inc. subsidiary ("New World"), which is expected to increase
the Company's working capital and liquidity. The Company also is currently
exploring other capital financing possibilities that may include (i)
additional lines of credit, (ii) lease financing of equipment the Company
furnishes to subscribers, (iii) licensing of the Company's technology, (iv)
sale of interests in other subsidiaries, or (v) sale of additional debt or
equity securities. With respect to lease financing, the Company has leased for
three-year terms expiring over the next three years, the Location Systems at a
majority of its United States Locations. The Company has issued licenses and
has received revenue for certain products and services for Australia, South
Africa and Canada, and it will continue to negotiate for additional lease
financing and additional foreign licensing. There can be no assurance that the
Company will succeed in obtaining any needed financing.
PENDING LITIGATION
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 between the
Company, its unaffiliated Canadian licensee and IN, which were filed in Canada
in 1922. No substantive action has been taken in furtherance of either
action.
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
lawsuit seeks unspecified damages and alleges violations of 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 insiders sold stock on
information not generally known to the public. The Company has denied
liability based upon the allegations contained in the complaint, which does
not contain any statement or demand for a specific amount of damages.
Significant discovery has been undertaken and, at this time, the Company
intends to continue to vigorously contest the matter.
3
<PAGE>
On July 3, 1995, a single shareholder filed a separate lawsuit in Texas
containing allegations essentially identical to those raised in the
shareholder lawsuit filed in April 1995. The Company denies the allegations
in the complaint and has filed its own counterclaim against third parties for
indemnification. Upon the Company's motion, this case has been transferred
from Texas to California, where no action has been taken since the date of
transfer.
There can be no assurance that any or all of the preceding actions will
be decided in favor of the Company. The Company believes, based in part on the
advice of outside counsel, that the costs of defending and prosecuting these
actions will not have a material adverse effect on the Company's financial
position or results of operations.
PROPOSED SETTLEMENT
The Company also is currently defending litigation filed by various
shareholders of the Company. The action, originally filed in June 1993 in the
United States District Court for the Southern District of California (San
Diego), is a consolidation of four lawsuits seeking class action status to
recover unspecified 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 has agreed to a proposed settlement of the action
in order to avoid substantial expenses and the inconvenience and distraction
of burdensome and protracted litigation.
Pursuant to the proposed settlement, the Company would establish a
settlement fund consisting of $400,000 plus warrants to purchase 565,000
shares of the Company's Common Stock at a price per share equal to the average
closing price of the Common Stock as reported on the AMEX during the 20
trading days immediately preceding the date the warrants are mailed to
claimants. The warrants will be exercisable for a period of three years, and
during the period from the second anniversary of the date of issuance until
the expiration of the warrants, the holders will have the right (but will not
be obligated) to require the Company to repurchase the warrants (the "Put-
Right") for cash at a price of $3.25 per warrant unless the warrants have
previously been exercised. The Put 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. Upon expiration of
the Put Right, NTN will have no further obligation to repurchase the warrants.
It is contemplated that the shares of Common Stock underlying the warrants (or
the warrants themselves) will be registered under the Securities Act of 1933
and will be freely tradable upon issuance.
Notification of the proposed settlement was mailed to each of the class
members in June 1996 and a hearing on final court approval is scheduled to be
held in September 1996. There can be no assurance that the proposed
settlement will be approved. NTN has the right to withdraw from the proposed
settlement in the event that a certain number of members of the class elect
not to participate in the settlement.
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 is to 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.
4
<PAGE>
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 Hospitality's NTN Network; (2) equipment providers such as
computer and peripheral equipment 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 Interactive Television industry is still in its infancy. Few
companies have developed the technological capabilities to broadcast
Interactive Entertainment to large audiences that can compare to the nature
and scope of programming broadcast on the NTN Network. However, 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. The Company's programming is interactive in nature but is
distinguished from other forms of Interactive programming by its simultaneous
multi-player format and the two-way interactive features. 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 is able to utilize the wide variety
of services available for transmission of entertainment products to the
consumer by forming strategic alliances with service providers to supply the
Company's programs for re-transmission. The Company's programming thus becomes
available to the consumer over a multitude of media platforms and delivery
systems.
Hospitality. Currently, Hospitality has no competitors that furnish live,
multi-player interactive entertainment in a similar scope and nature as
provided by Hospitality. However Hospitality does compete for total
entertainment dollars in the marketplace. Other forms of entertainment
provided in public eating and drinking establishments include music-based
systems and cable and pay-per-view television. Nonetheless, evidence provided
by customers indicates that patrons are inclined to stay longer and consume
more food and drink when Hospitality's interactive games are offered as the
main source of entertainment. Accordingly, Hospitality customers generally
tend to view Hospitality services as a profit generator rather than a cost
center.
Home. In Home's market, the consumer has a plethora of entertainment
options from which to choose, ranging from cable television to telephone based
services to computer on-line providers. Home offers the only live,
5
<PAGE>
multi-player games and services which can broadcast to multiple interactive
platforms in the home today. However, Home competes for a share of the total
home entertainment dollars against broadcast television, pay-per-view and
other content offered on cable television. Home also competes with other
programming available to consumers through on-line services such as AOL and
Prodigy. Cable television, in its various forms, provides consumers the
opportunity to make viewing selections from anywhere between 30 to 100 free
and pay channels, thus limiting the amount of time devoted to any particular
channel. For the most part, cable television is predominantly a passive
medium, and does not offer the viewer the opportunity to participate in its
programming and even less frequently, does it offer programming designed for
active participation. On-line services, such as AOL, can provide literally
thousands of options for content and entertainment, however, such on-line
services have traditionally been confined to that company's subscriber base.
Interaction among viewers is thus limited to the particular program as offered
only on the specific on-line service. The Company, on the other hand, offers
consumers the opportunity to participate and compete against other viewers who
are seeing the identical program over several different technological media,
including interactive television, personal computers and/or the NTN network.
LearnStar. Products and services to education customers utilizing the
LearnStar System were sold beginning in 1995. The Company competes with some
established businesses which offer educational products, however the majority
of existing products in the marketplace are passive, rather than interactive.
Such companies include Jostens' Learning, C.C.C, and the Eduquest Division of
IBM. The competitive advantage of the LearnStar System is that it provides an
easy to use, two-way interactive learning method, is very competitively priced
and requires less equipment than traditional systems. Moreover, the LearnStar
System is adaptable to the particular needs of the individual users and is
designed such that it can be used for local, regional, and national
competitions on a mass basis utilizing existing satellite technology.
Although the market for providing learning services to schools is mature, the
Company believes that the market for advanced educational products which use
computers, interactive software and satellite technology is embryonic.
IWN. The U.S. gaming industry is growing at a rapid pace. In 1994,
Americans wagered over $400 billion on legal commercial gaming compared to
$126 billion in 1982. A 1995 survey showed that 61% of American adults
wagered in one or more types of government-approved gambling last year. In
1994, the total handle for pari-mutuel was $16.6 billion, of which $10.2
billion was horse racing. In comparison, $5.8 billion was spent at the cinema
and $5.7 billion was spent on spectator sports.
One of the reasons for the growth in gaming has been the favorable
regulatory and legislative environment. Many states have accepted gaming as a
means to raise tax revenue and encourage economic development. There are
approximately 200-250 pari-mutuel facilities in the U.S., and seven states
have legalized account-based telephone wagering, including New York and
Connecticut, which allow interstate telephone wagering.
Pari-mutuel wagering is the fourth largest segment in the gaming
industry. Analysts estimate that in 1994 approximately $10.2 billion was
wagered on U.S. thoroughbred horse racing, compared with $9.6 billion in 1993.
While the overall growth of the pari-mutuel handle has been stagnant over
the last five years, particularly when compared to the significant growth in
the overall gaming industry, the shift from on-track wagering to off-track
betting is an important trend. With the total U.S. thoroughbred horse racing
handle in the $10 billion range, off-track betting increased from $2.2 billion
in 1987 to $4.5 billion in 1992 to $6.1 billion in 1994. Off-track betting is
allowed in 20 of the 40 states where pari-mutuel wagering is legal and is an
increasingly important source of revenue for racetracks and state governments.
IWN's HomeStretch(TM) product is intended to leverage the trend to off-track
wagering by allowing fans to place wagers from virtually anywhere to their
account at the racetrack.
IWN will eventually compete for total entertainment dollars in the market
place. Within the gaming and wagering industry, competition for the pari-
mutuel wagering dollar comes from expanded alternative gaming opportunities.
Outside the industry, pari-mutuel wagering competes with all forms of
entertainment vying for consumer spending dollars. Potential competitors in
the interactive pari-mutuel wagering and gaming market include On Demand
Services, Simulcast Racing Network and Gaming and Entertainment Television.
6
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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.
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 -
Litigation."
INFLUENCE OF MANAGEMENT
The Company's officers and directors and their affiliates own, in the
aggregate, approximately 7% of the outstanding Common Stock as of July 15,
1996, and have the right, through the exercise of currently exercisable
options and warrants to purchase 6,066,518 shares of Common Stock, to increase
their percentage ownership to 21%. Therefore, these securityholders, if
acting together, would have the ability to significantly influence the
Company's affairs and operations. See "Description of Securities."
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."
7
<PAGE>
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 July 15, 1996, there were 4,309,797 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 3,059,964 shares are currently
exercisable. An additional 390,933 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's Board of Directors
has approved an amendment to the 1995 Stock Option Plan which would increase
by 2,000,000 shares the aggregate number of shares of Common Stock issuable
under the plan. The amendment is subject to approval by the Company's
stockholders at the annual meeting of the stockholders scheduled for August
16, 1996.
The Company also has outstanding warrants, including the Warrants
described herein, to purchase an aggregate of 4,392,991 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 162,612 shares of preferred stock
which entitle holders thereof, upon surrender of the shares of preferred
stock, to receive 45,548 shares of Common Stock.
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 5,820,400 shares of Common Stock outstanding as of the date
of this Prospectus, and 782,500 shares of Common Stock underlying currently
exercisable warrants, including the Shares offered hereby, 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
8
<PAGE>
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.
CERTAIN RECENT DEVELOPMENTS
As previously reported by the Company, in June 1996, New World, a wholly
owned subsidiary of the Company, sold substantially all of its assets to The
3DO Company ("3DO") in exchange for 3DO's issuance to New World of 1,200,000
shares of 3DO's Common Stock and 3DO's assumption of approximately $1,300,000
of liabilities of New World.
The actual number of shares of 3DO to be received by New World is subject
to downward adjustment under certain circumstances in the event the assets or
liabilities of New World acquired or assumed by 3DO differ from such assets
and liabilities of March 31, 1996. The Company currently expects a downward
adjustment in the actual number of shares to approximately 1,000,000. Of such
shares, New World and the Company have agreed to assign to Jon Van Caneghem,
the former president of New World 135,000 shares (or such greater number as
equal 12 1/2% of all the 3DO shares received by New World. Pursuant to the
terms of the agreement of Purchase and Sale of Assets among New World, 3DO and
the Company, 3DO has agreed to use its best efforts to file a registration
statement under the Securities Act covering the 3DO shares received by New
World and to keep the registration statement effective for at least 90 days.
3DO has further agreed to guarantee that the 3DO shares will have a value to
New World as of the end of the registration period of not less than $10 per
share (plus underwriting discounts and commissions not to exceed 3%).
USE OF PROCEEDS
Other than the exercise price of the Warrants (to the extent they may be
exercised), the Company will not receive any of the proceeds from the sale of
the Shares offered hereby. The Company will pay the costs of this offering,
which are estimated to be $40,000. The holders of the Warrants are not
obligated to exercise the Warrants, and there can be no assurance that the
holders will choose to exercise the Warrants in whole or in part. The gross
proceeds to the Company in the event that the Warrants are exercised in full
would be $3,485,000.
The Company intends to apply any net proceeds it receives from the
exercise of the Warrants to augment its working capital and for general
corporate purposes.
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.
9
<PAGE>
<TABLE>
<CAPTION>
LOW HIGH
--------- ----------
1994
-----
<S> <C> <C>
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 (through July 22, 1996)... 4-/9//16 6-/13//16
</TABLE>
For a recent closing price for the Common Stock as reported on the
AMEX see the cover page of this Prospectus. As of June 30, 1996, there were
4,077 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.
10
<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 Communications, Inc. and 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 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 following selected consolidated statement
of operations data for the three months ended March 31, 1996 and 1995 and
related consolidated balance sheet data as of March 31, 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. Since March 31, 1996,
the Company sold substantially all of the assets of its New World subsidiary.
For this and other reasons, the operating results for the three months ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the full fiscal year. 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 in this Prospectus.
SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months
Years Ended December 31 Ended March 31,
--------------------------------------------------- --------------------
1995 1994 1993 1992 1991 1996 1995
-------- ------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues.............................. $31,771 $24,646 $17,258 $10,702 $5,853 $ 8,275 $ 5,738
Total cost of sales......................... 15,581 9,453 7,514 4,200 2,411 3,740 2,556
------- ------- ------- ------- ------- ------- -------
Gross profit................................ 16,190 15,193 9,744 6,502 3,442 4,535 3,182
Total operating expenses.................... 20,160 14,898 11,198 8,636 5,260 4,540 5,135
Investment income, net...................... 22 412 434 - (576) 70 56
Minority interest........................... - - - - - 208 -
Income taxes................................ - - 281 106 - - -
------- ------- ------- ------- ------- ------- -------
Earnings (loss) before extraordinary item... (3,948) 707 (1,301) (2,240) (2,394) 273 (1,897)
Extraordinary item.......................... - - - - 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
</TABLE>
_______________
(1) As adjusted to reflect a 1-for-20 reverse stock split effected in June
1991.
SELECTED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
<TABLE>
<CAPTION>
December 31 March 31,
-------------------------------------------------- ---------
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 $ 22,337
Total assets................................ 42,813 31,239 27,240 10,171 5,604 39,099
Total current liabilities................... 8,114 4,958 2,933 2,554 2,810 6,874
Long-term debt, less current portion........ 2 8 163 18 91 2
Shareholders' equity........................ 33,451 25,457 23,653 7,432 2,703 31,379
</TABLE>
11
<PAGE>
SELLING SECURITYHOLDERS
SYMPHONY MANAGEMENT INVESTMENT AGREEMENT
In March 1996, the Company issued to Symphony IWN Investment LLC
("Symphony Investment") a Class WF Warrant (the "Symphony Warrant") to
purchase up to 400,000 shares of the Company's Common Stock. See "Terms of
Symphony Warrant" below. The Symphony Warrant was issued in connection with
and as part of an Investment Agreement, dated as of December 31, 1995 (the
"Investment Agreement"), entered into among the Company, IWN, Inc., then a
wholly owned subsidiary of the Company ("IWN"), and Symphony Management
Associates, Inc., an affiliate of Symphony Investment ("Symphony Management").
Pursuant to the terms of the Investment Agreement, Symphony entered into
a Third Amended and Restated Agreement of Limited Partnership (the "Amended
Partnership Agreement") of IWN, L.P. (the "IWN Partnership"), a limited
partnership of which IWN is the general partner, under which Symphony agreed
to provide up to $2,650,000 to the IWN Partnership in accordance with the
funding schedule set forth in the Amended Partnership Agreement. As part of
the transactions contemplated by the Investment Agreement, Symphony also
purchased from the Company 10% of the outstanding shares of common stock of
IWN for an aggregate purchase price of $350,000 and purchased the Symphony
Warrant for a purchase price of $400. In connection with the issuance of the
Symphony Warrant, the Company and Symphony entered into a Registration Rights
Agreement under which the Company agreed to file the Registration Statement of
which this Prospectus is a part in order to register the shares of Common
Stock underlying the Symphony Warrant for resale on behalf of Symphony
Investment. The Registration Rights Agreement also affords Symphony
Investment certain piggyback rights with respect to future registrations by
the Company under the Securities Act.
The Company granted Symphony Investment certain rights under the
Investment Agreement to cause the Company to repurchase its interest in the
IWN Partnership and its shares of common stock of IWN for a prescribed
purchase price determined by reference to, among other things, the aggregate
appreciation, if any, in the value of the shares of Common Stock underlying
the Symphony Warrant. This "put" option may be exercised during the period
commencing April 1, 1997 and ending December 1, 1997. The Company also has
agreed to pay Symphony Investment $295,000 in the event its put option expires
without being exercised.
In connection with the transactions described above, the Company granted
Frank S. Scarpa, the principal owner of Symphony Investment and the principal
stockholder and Chairman and Chief Executive Officer of Symphony Management,
the right to attend meetings of the Company's Board of Directors as a visitor.
The Company also granted Symphony Management the right to cause the Company to
designate a representative of Symphony Management to serve as a director of
the Company for so long as Symphony Investment or its affiliates holds the
Symphony Warrant.
TERMS OF SYMPHONY WARRANT
The Symphony Warrant is exercisable at any time on or before March 11,
2001 at an exercise price of $4.125 per share. The Warrant is currently
exercisable with respect to 306,666 of the underlying shares of Common Stock
and will become exercisable as to the balance of 93,334 shares of Common Stock
covered thereby in increments, with each increment coinciding with, and
conditioned upon, Symphony Investment's funding of certain future capital
contributions to the IWN Partnership as provided in the Partnership Agreement
as follows:
(a) as to an additional 40,000 shares upon Symphony Investment's payment
to the IWN Partnership of $300,000 on or before October 1, 1996;
(b) as to an additional 13,334 shares upon Symphony Investment's payment
to the IWN Partnership of $100,000 on or before January 7, 1997; and
(c) as to the remaining 40,000 shares upon Symphony Investment's payment
to the IWN Partnership of $300,000 on or before April 1, 1997.
12
<PAGE>
In the event Symphony Investment fails to pay when due any of the amounts
described above, the holder of the Symphony Warrant will not have any right to
purchase the incremental shares of Common Stock corresponding to such payment
and such right will terminate. The IWN Partnership may waive Symphony
Investment's obligation to make any of the foregoing payments. The "Shares"
as referred to in the Prospectus include only so many of the 400,000 shares of
Common Stock covered by the Symphony Warrant as to which the Symphony Warrant
is or may become exercisable from time to time.
The Symphony Warrant contains certain antidilution provisions that
require adjustments in the exercise price and the number of shares of Common
Stock purchasable thereunder in the event of a stock dividend, subdivision or
combination of the outstanding shares of Common Stock or in the event of a
recapitalization of the Company and certain similar events. In addition, the
exercise price and number of shares purchasable under the Symphony Warrant are
to be adjusted in the event the Company issues additional shares of Common
Stock for no consideration, or for a consideration per share less than 85% of
the Current Market Price (as defined) of the Common Stock. No such adjustment
will be required in connection with the sale or issuance of Common Stock under
any employee stock option or other employee plan approved by the Company's
Board of Directors. The Symphony Warrant allows for cashless exercises by
means of the Company's withholding of shares of Common Stock otherwise
issuable to the holder, which shares are to be valued for this purpose based
on the market price of the Common Stock.
The Symphony Warrant constitutes a "restricted security" within the
meaning of Rule 144 of the regulations promulgated under the Securities Act.
As such, it generally is not currently transferable. However, the shares of
Common Stock issuable upon exercise of the Symphony Warrant being offered
hereby, when issued upon exercise of the Symphony Warrant and sold pursuant to
this Prospectus, will be freely tradeable without restriction under the
Securities Act.
The terms of the foregoing transactions were determined by arm's-length
negotiations between the Company and Symphony Management. Neither Symphony
Management, Symphony Investment nor their affiliates had or has any material
relationship with the Company or its officers, directors or associates except
as described above.
OTHER SELLING SECURITYHOLDERS
Financial Consultants
On August 8, 1995, the Company issued to David Jordon, Barry Zelin and JW
Charles Securities, Inc., in consideration of financial consulting services
rendered to the Company, Class WCA Warrants ("WCA Warrants") to purchase
30,000, 30,000 and 10,000 shares of Common Stock at an exercise price of
$4.5625 per share. In January 1996, the Company issued to J. Michael Reisert,
also in consideration of financial consulting services, a WCA Warrant to
purchase 75,000 shares of Common Stock at an exercise price of $4.00 per
share.
Associated Ventures Management Corp.
On March 10, 1996, the Company issued to Selig Zises, Joel Magerman and
Tim and Pamela Keenan, in consideration of equipment sale-leaseback financing
arranged by Associated Ventures Management Corp., formerly known as JF
Administrative Corp. ("Associated Ventures"), WCA Warrants to purchase 84,000,
21,000 and 7,500 shares of Common Stock at an exercise price of $4.00 per
share, respectively. The WCA Warrants were issued to Messrs. Zises and
Magerman and Tim and Pamela Keenan pursuant to a consulting agreement dated
June 1, 1995 between the Company and Associated Ventures. Each of these
individuals is a principal or officer of Associated Ventures. Under the terms
of the agreement, the Company agreed to pay Associated Ventures a consulting
fee of $120,000, payable in 12 monthly installments, and to grant Associated
Ventures warrants to purchase 5,000 shares of Common Stock at the then-current
market price for each $100,000 of net proceeds from financing transactions
entered into between the Company and parties introduced by Associated
Ventures.
In December 1995, the Company sold 45% of the common stock of LearnStar,
Inc., a subsidiary of the Company, to Associated Ventures for $2,500,000. Joel
Magerman, the son of Alan P. Magerman, a director and Vice
13
<PAGE>
Chairman of the Company, is the President of Associated Ventures and he and
Selig Zises are its sole stockholders. The $2,500,000 sale price was paid by
means of a non-interest bearing promissory note of Associated Ventures, which
is payable in installments of $100,000 each on or before January 30, April 30,
July 30 and October 30 1996 and a final installment of $2,100,000 on or before
January 30, 1997. The promissory note is secured by the shares of LearnStar,
Inc. purchased by Associated Ventures, but is otherwise nonrecourse to
Associated Ventures. In connection with this transaction, the Company granted
Messrs. Zises and Magerman warrants to purchase 240,000 shares and 60,000
shares, respectively, of Common Stock at an exercise price of $4.44 per share.
Continuum Capital, Inc.
On February 7, 1995, the Company issued to Continuum Capital, Inc.
("Continuum"), a WCA Warrant to purchase 125,000 shares of Common Stock at an
exercise price of $6.125 per share. The WCA Warrant was issued pursuant to a
letter agreement between the Company and Continuum, dated March 8, 1994, as
amended March 20, 1995, under which Continuum agreed to seek to arrange
equipment sale-leaseback financing for the Company. Under the terms of the
letter agreement, the Company agreed to grant Continuum warrants to purchase
50,000 shares of Common Stock at the then-current market price for each
$1,000,000 of lease-financing arranged by Continuum.
In each case, the exercise price of the WCA Warrants described above
equalled the market price of the Company's Common Stock on the date of grant
of the Warrants. All of the WCA Warrants described above are exercisable, in
whole or in part, until the date five years from the date of grant, contain
antidilution provisions that require adjustments in the event of a stock
dividend, subdivision or combination of the outstanding shares of Common
Stock, recapitalization and certain other events, and provide for piggyback
registration rights.
The foregoing WCA Warrants constitute "restricted securities" within the
meaning of Rule 144 of the regulations promulgated under the Securities Act.
As such, they generally are not currently transferable. However, the shares
of Common Stock issuable upon exercise of such WCA Warrants being offered
hereby, when issued upon exercise of the WCA Warrants and sold pursuant to
this Prospectus, will be freely tradeable without restriction under the
Securities Act.
SELLING SECURITYHOLDERS TABLE
The following table sets forth as of May 6, 1996 the number and percent
of shares of Common Stock owned beneficially by each of the Selling
Securityholders, the number of shares of Common Stock offered by each of them
hereby, and the number and percent of shares of Common Stock to be owned by
each of them after the conclusion of this offering. Except as described
above, no Selling Securityholder or its affiliates has any position, office or
other material relationship with the Company.
14
<PAGE>
<TABLE>
<CAPTION>
Before Offering After Offering
---------------------------- ---------------------------
Number of Number of
Shares Number of Shares
Selling Beneficially Shares Being Beneficially
Securityholder Owned Percent(1) Offered(2) Owned Percent
- ----------------------------- ------------- ---------- --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Symphony IWN Investment
LLC(3)....................... 440,000(4) 1.9% 400,000(4) 40,000 *%(1)
David Jordon.................. 85,000(5) * 30,000 55,000 *
Barry Zelin................... 30,000 * 30,000 0 0
JW Charles Securities, Inc.... 10,000 * 10,000 0 0
Continuum Capital, Inc........ 312,500(6) * 125,000 187,500 *
J. Michael Reisert............ 135,000(7) * 30,000 105,000 *
Selig Zises................... 374,000(8) * 84,000 290,000 *
Joel Magerman................. 104,500(9) * 21,000 83,500 *
Tim and Pamela Keenan......... 7,500 * 7,500 0 0
------- ------- ------- ------- -
</TABLE>
(1) Included as outstanding for purposes of this calculation are 23,327,484
shares of Common Stock outstanding as of May 6, 1996 plus, in the case of
a particular selling securityholder, the number of shares of Common Stock
subject to currently exercisable options, warrants and other instruments
(including those which may become exercisable within 60 days after May 6,
1996) held by such securityholder, which are specified by footnote.
Shares issuable as part of or upon exercise of outstanding options,
warrants or instruments other than as described in the preceding sentence
are not deemed to be outstanding for this purpose. An asterisk denotes
beneficial ownership of less than 1%.
(2) All of the shares offered hereby consist of shares of Common Stock
issuable upon exercise of currently exercisable warrants.
(3) Frank S. Scarpa, the principal owner of Symphony Investment, controls
Symphony Investment and, as such, may be deemed to be a beneficial owner
of the shares held of record by it.
(4) Consists of 40,000 outstanding shares of Common Stock and 400,000 shares
of Common Stock underlying the Symphony Warrant as described herein. The
Warrant was exercisable as of May 6, 1996 with respect to 273,333 of the
shares shown and became exercisable as to an additional 33,333 shares on
July 6, 1996. The Warrant will become exercisable with respect to the
balance of the shares shown as beneficially owned as described above.
The "Shares" as referred to in this Prospectus include only so many of
the 400,000 shares of Common Stock covered by the Symphony Warrant as to
which the Symphony Warrant is or may become exercisable from time to
time.
(5) Consists of 30,000 outstanding shares of Common Stock, 25,000 shares of
Common Stock underlying previously granted warrants and 30,000 shares of
Common Stock underlying the Warrant granted to Mr. Jordan as described
herein and being offered hereby.
(6) Consists of 187,500 shares of Common Stock underlying previously granted
warrants and 125,000 shares of Common Stock underlying the WCA Warrant
granted to Continuum as described herein and being offered hereby.
(7) Consists of 30,000 outstanding shares of Common Stock, 75,000 shares of
Common Stock underlying previously granted warrants and 30,000 shares of
Common Stock underlying the WCA Warrant granted to Mr. Reisert as
described herein and being offered hereby.
(8) Consists of 290,000 shares of Common Stock underlying previously granted
warrants and 84,000 shares of Common Stock underlying the WCA Warrant
granted to Mr. Zises as described herein and being offered hereby.
(9) Consists of 6,000 outstanding shares of Common Stock, 77,500 shares of
Common Stock underlying previously granted warrants and 21,000 shares of
Common Stock underlying the WCA Warrant granted to Mr. Magerman described
herein being offered hereby.
15
<PAGE>
PLAN OF DISTRIBUTION
Each of the Selling Securityholders has advised the Company that it may
sell, directly or through brokers, its Shares offered hereby in negotiated
transactions or in one or more transactions on the AMEX, or otherwise, at the
prices prevailing at the time of sale. In connection with such sales, the
Selling Securityholders and any participating broker may be deemed to be
"underwriters" of the Shares so sold within the meaning of the Securities Act,
although the offering of the Shares will not be underwritten by a broker-
dealer firm.
The Company will bear all costs and expenses of the registration of the
Shares under the Securities Act and certain state securities laws, other than
fees of counsel for the Selling Securityholders and any discounts or
commissions payable with respect to sales of such Shares.
The Company has informed the Selling Securityholders that the anti-
manipulation provisions of Rules 10b-6 and 10b-7 under the Exchange Act may
apply to their sales of the Shares and has furnished each of the Selling
Securityholders with a copy of these rules, as well as a copy of certain
interpretations thereof by the Securities and Exchange Commission. The
Company also has advised the Selling Securityholders of the requirement for
delivery of this Prospectus in connection with any sale of the Shares.
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 June 30, 1996, there were 22,455,356 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 May 6, 1996, there were 162,612 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 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
16
<PAGE>
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 common stock.
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. Presently, two 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.
17
<PAGE>
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 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 June 30, 1996 there were 22,455,356 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,
and the Shares offered hereby 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 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
18
<PAGE>
prices for the Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
As of July 15, 1996, there were 4,309,797 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 3,059,964 shares are currently
exercisable. An additional 390,933 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's Board of Directors
has approved an amendment to the 1995 Stock Option Plan which would increase
by 2,000,000 shares the aggregate number of shares of Common Stock issuable
under the plan. The amendment is subject to approval by the Company's
stockholders at the annual meeting of stockholders scheduled for August 16,
1996.
The Company also has outstanding warrants, including the warrants
described herein, to purchase an aggregate of 4,392,991 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
(including the Shares offered hereby) by the holders. The Company also has
162,612 shares of preferred stock outstanding which entitle holders thereof to
receive, upon surrender of the shares of preferred stock, 45,548 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 dilutive effect on the
Company's securityholders.
TRANSFER AGENT AND WARRANT AGENT
The Transfer Agent for the Common Stock 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 offered hereby by the
Selling Securityholder, when sold and paid for, will be duly and validly
issued, fully paid and nonassessable. Such counsel owns 12,671 shares of
Common Stock as of the date of this Prospectus.
19
<PAGE>
EXPERTS
The financial statements and schedules of NTN Communications, Inc. as of
December 31, 1995, and for each of the years in the three-year period ended
December 31, 1995, incorporated by reference herein and elsewhere in the
registration statement 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.
20
<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 or the Selling Securityholders. 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
Certain Recent Developments............ 8
Use of Proceeds........................ 8
Price Range of Common Stock
and Dividend Policy.................. 9
Selected Consolidated Financial Data... 10
Selling Securityholders................ 12
Plan of Distribution................... 14
Description of Securities.............. 14
Legal Matters 17
Experts 17
================================================================================
</TABLE>
================================================================================
782,500 Shares of Common Stock
NTN COMMUNICATIONS, INC.
____________
PROSPECTUS
____________
July 30, 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. All expenses
incurred with respect to the distribution will be paid by the Company.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 1,299
Printing expenses 8,000
Accounting fees and expenses 6,000
Legal fees and expenses 20,000
Fees and expenses for qualification under
state securities laws 1,000
Miscellaneous 3,701
-------
Total $40,000
=======
</TABLE>
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.
All warrants between the Company and the Selling Securityholders provide
that the Company shall indemnify the Selling Securityholders, and the Selling
Securityholders shall indemnify the Company and the officers and directors of
the Company, for certain liabilities, including certain liabilities under the
Securities Act.
The Company has entered into indemnity agreements with certain of its
outside directors. Pursuant to the indemnity agreement, the Company agrees 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 Common Stock Purchase Warrant (WF-01) of NTN Communications, Inc. in
favor of Symphony IWN Investment LLC*
4.3 Investment Agreement, dated as of December 31, 1995, among NTN
Communications, Inc., IWN, Inc. and Symphony Management Associates, Inc.
(filed as exhibit 10.18 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by reference)
4.4 Registration Rights Agreement between NTN Communications, Inc. and
Symphony IWN Investment LLC (filed as exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference)
4.5 Letter agreement, dated March 8, 1994, as amended March 20, 1995, between
NTN Communications, Inc. and Continuum Capital, Inc.
4.6 Consulting agreement, dated July 1, 1995, between NTN
Communications, Inc. and JF Administrative Corp.
4.7 Common Stock Purchase Warrants (WCA-2070, 2084, 2085, 2086 and 2087) of
NTN Communications, Inc. in favor of Continuum Capital, Inc., J. Michael
Reisert, Selig Zises, Joel Magerman and Tim and Pamela Keenan,
respectively.
4.8 Common Stock Purchase Warrants (WC-2074, 2075 and 2076) of NTN
Communications, Inc. in favor of David Jordon, Barry Zelin and JW
Charles Securities, Inc., respectively.
5 Opinion of Troy & Gould Professional Corporation
23.1 Consent of Troy & Gould Professional Corporation (included in Exhibit
5)
23.2 Consent of KPMG Peat Marwick LLP (included on page II-5 hereof)
24 Power of Attorney*
___________________
*Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, 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;
(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.
II-2
<PAGE>
(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.
(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.
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
Amendment No. 1 to 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 July 30, 1996.
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
------------------------------------------
Patrick J. Downs,
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Amendment No. 1
to Registration Statement on Form S-3 has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Patrick J. Downs* Chairman of the Board of Directors July 30, 1996
- ------------------------ and Chief Executive Officer
Patrick J. Downs
/s/Daniel C. Downs* President, Chief Operating Officer July 30, 1996
- ------------------------ and Director
Daniel C. Downs
/s/Ronald E. Hogan Senior Vice President - Finance and July 30, 1996
- ------------------------ Secretary (Principal Financial
Ronald E. Hogan and Accounting Officer)
/s/Donald C. Klosterman* Director July 30, 1996
- ------------------------
Donald C. Klosterman
/s/Alan P. Magerman* Director July 30, 1996
- ------------------------
Alan P. Magerman
/s/A. R. Rozelle* Director July 30, 1996
- ------------------------
A. R. Rozelle
*By /s Ronald E. Hogan
- ------------------------
Ronald E. Hogan,
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
The Board of Directors
NTN Communications, Inc.:
We consent to the use of our reports incorporated 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 17, 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
July 30, 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 Common Stock Purchase Warrant (WF-01) of NTN
Communications, Inc. in favor of Symphony IWN
Investment LLC*
4.3 Investment Agreement, dated as of December 31, 1995,
among NTN Communications, Inc., IWN, Inc. and
Symphony Management Associates, Inc. (filed as
exhibit 10.18 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and
incorporated herein by reference)
4.4 Registration Rights Agreement between NTN
Communications, Inc. and Symphony IWN Investment LLC
(filed as exhibit 10.23 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference)
4.5 Letter agreement, dated March 8, 1994, as amended
March 20, 1995, between NTN Communications, Inc. and
Continuum Capital, Inc.
4.6 Consulting agreement, dated July 1, 1995,
between NTN Communications, Inc. and JF
Administrative Corp.
4.7 Common Stock Purchase Warrants (WCA-2070, 2084,
2085, 2086 and 2087) of NTN Communications, Inc.
in favor of Continuum Capital, Inc., J. Michael
Reisert, Selig Zises, Joel Magerman and Tim and
Pamela Keenan, respectively.
4.8 Common Stock Purchase Warrants (WC-2074, 2075 and
2076) of NTN Communications, Inc. in favor of
David Jordon, Barry Zelin and JW Charles Securities,
Inc., respectively.
5 Opinion of Troy & Gould Professional Corporation
23.1 Consent of Troy & Gould Professional Corporation
(included in Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP (included in
Exhibit 5)
24 Power of Attorney*
</TABLE>
____________________
*Previously filed
II-6
<PAGE>
EXHIBIT 4.5
- --------------------------------------------------------------------------------
CONTINUUM CAPITAL, INC.
- --------------------------------------------------------------------------------
780 Third Avenue
New York, New York 10017
Telephone (212) 418-6060
Telefax (212) 418-6068
Ronald Gottesman
Managing Director
March 8, 1994
Mr. Ronald Hogan
Senior Vice President and Chief Financial Officer
NTN Communications, Inc.
2121 Palomar Airport Road
Carlsbad, California 92009
Dear Mr. Hogan:
This letter sets forth the terms and conditions of the engagement by NTN
Communications, Inc. ("NTN") of Continuum Capital, Inc. ("Consultant") pursuant
to which Consultant will consult with and assist NTN with respect to certain
financial matters and NTN will provide certain consideration to Consultant, all
as more particularly set forth below.
SERVICES PROVIDED BY CONSULTANT
- -------------------------------
During the Term of Engagement (as hereinafter defined), Consultant agrees
to consult with & advise NTN and use its best efforts in attempting to arrange
financing for the Company and/or its subsidiary companies. Such financing may
take the form of any one or more of equity placements, debt placements, or other
appropriate financial transactions which result in NTN receiving funds to be
used in connection with its business activities on a basis which is acceptable
to NTN. Consultant will advise NTN regarding selection of, as well as
arrangements with, investment bankers, broker-dealers, other financial
institutions or other investors through which such types of financing might be
obtained for NTN, and will also use reasonable efforts to attempt to locate
investors to provide such types of financing on terms acceptable to NTN,
provided, however, that NTN understands that any recommendations Consultant may
make concerning financing matters shall not be construed as an assurance that,
if such recommendations are implemented by NTN, such recommendations will prove
to be successful.
<PAGE>
NTN shall pay Consultant an initial consulting fee of $120,000 with the
first payment of $10,000 due upon signing this agreement and the balance due in
monthly installments of $10,000 due on the first basis of each such month. NTN
shall also reimburse Consultant, for the reasonable out-of-pocket expenses
incurred by it with NTN's prior approval in the course of providing such
services. As additional consideration for Consultants services NTN shall issue
to Consultant warrants to purchase up to 50,000 shares of NTN's common stock at
$7.50 per share. As consideration for arranging subsequent financings,
Consultant or its designees, will receive, for each tranche of $100,000 in net
proceeds generated, additional warrants to purchase 5000 shares of NTN at a
price per share equivalent to the prevailing market price of NTN shares at the
time of such subsequent financing.
TERMS OF ENGAGEMENT
- -------------------
The words "Term of Engagement" means the period commencing on March 1, 1994
and ending on February 28, 1995, provided that the Term of Engagement shall
continue thereafter as long as Consultant or financial sources introduced by
Consultant are providing financing for NTN. Should Consultant, or financial
sources introduced by Consultant, no longer be providing financing, either
Consultant or NTN may give written notice to the other of its election to
terminate this letter agreement, in which case the Term of Engagement shall
terminate ninety days after such notice is given.
INDEMNIFICATION
- ---------------
NTN agrees to defend, indemnify and hold harmless Consultant and each of
the partners of Consultant and each of the stockholders, officers, employees and
directors of each corporate partner of Consultant (collectively, "Indemnitees"),
against any claim, suit, action, judgment, damages or other liability imposed
upon or incurred by any of them where any of the foregoing arise, directly or
indirectly, from or in connection with any of the Consultant's activities
hereunder. The foregoing shall not be construed to require NTN to defend, hold
harmless or indemnify any Indemnitee in respect of any matters arising from the
gross negligence or willful misconduct of that Indemnitee.
MISCELLANEOUS
- -------------
This letter agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and may not be amended
except by written consent of the other party. This letter agreement shall be
governed by and construed in accordance with the laws of the state of New York
applicable for contracts under, and to be performed therein, without giving
effect to the principles of conflicts of interest.
<PAGE>
under, and to be performed therein, without giving effect to the principles of
conflicts of interest.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed duly given to NTN when
delivered in person to an officer of NTN or to Consultant when delivered in
person to an officer of the Consultant, or on the third business day after being
mailed by registered or certified mail return receipt requested, postage
prepaid or on the date delivered if transmitted by courier service providing
confirmation of delivery or on the date transmitted by facsimile transmission at
the addresses set forth above (or to such other address as shall have furnished
by like notice).
Please execute a counterpart of this letter in the designated space below,
and return the same to the undersigned, at which time it shall become a binding
agreement between us. We look forward to a mutually beneficial relationship.
Sincerely,
Continuum Capital, Inc.
By: Ronald Gottesman
By: /s/ Ronald Gottesman
--------------------
Managing Director
ACCEPTED AND AGREED:
NTN COMMUNICATIONS, INC.
By: /s/ R. E. Hogan
--------------------
Authorized Signatory
<PAGE>
[LOGO]
March 20, 1995
Mark Zborowski
Managing Director
Continuum Capital, Inc.
780 Third Avenue
New York, New York 10017
Re: NTN Communications, Inc.
------------------------
Dear Mr. Zborowski:
This letter, upon completed execution, shall amend the Agreement between
Continuum Capital, Inc. and NTN Communications, Inc. of March 8, 1994. More
specifically, the parties hereby agree that with respect to termination
subsequent to February 28, 1995, a notice of termination of the Term of
Engagement shall be effective immediately when given, rather than effective only
after ninety (90) days following such notice being given.
All other terms and provisions of the Agreement between the parties of March 8,
1994, shall remain in full force and effect, except as expressly set forth to
the contrary in this letter amendment.
If the above accurately reflects our understanding of the amendment to the prior
Agreement between the parties, please date and sign where indicated below, and
return an originally executed copy to this office. A copy of this letter is
enclosed for your files as well.
Very truly yours,
/s/ Ronald E. Hogan
Ronald Hogan Accepted and Agreed to:
Senior Vice President and C.F.O. Continuum Capital, Inc.
RH/fmg
Enclosure
By /s/ MARK ZBOROWSKI
____________________________
Mark Zborowski
Managing Director
Date:_________________________
[LOGO OF NTN COMMUNICATIONS, INC.]
Communications, Inc.
2121 Palomar Airport Road - Suite 205 - Carlsbad, California 92009
(619) 438-7400 - Fax (619) 438-3505
<PAGE>
EXHIBIT 4.6
[LOGO]
July 1, 1995
Mr. Joel Magerman,
Executive Vice President
JF ADMINISTRATIVE CORP.
477 Madison Avenue
New York, NY 10022
Dear Joel:
This letter sets forth the terms and conditions of the engagement by NTN
Communications, Inc. ("NTN") of JF Administrative Corp., a Delaware corporation
("Consultant") pursuant to which Consultant will consult with and assist NTN
with respect to certain financial matters and NTN will provide certain
considerations to Consultant, all as more particularly set forth below.
Services Provided By Consultant
- -------------------------------
During the Term of Engagement (as hereinafter defined), Consultant agrees
to consult with and advise NTN and use its best efforts in attempting to arrange
financing for NTN and/or its subsidiary companies. Such financing may take the
form of any one or more of equity placements, debt placements, or other
appropriate financial transactions which result in NTN receiving funds to be
used in connection with its business activities on a basis that is acceptable to
NTN. Consultant will advise NTN regarding selection of, as well as arrangements
with, investment bankers, broker-dealers, other financial institutions or other
investors through which such types of financing might be obtained for NTN, and
will also use reasonable efforts to attempt to locate investors to provide such
types of financing on terms acceptable to NTN, provided, however, that NTN
understands that any recommendations Consultant may make concerning financing
matters shall not be construed as an assurance that, if such recommendations are
implemented by NTN, such recommendations will prove to be successful.
[LOGO OF NTN COMMUNICATIONS, INC.]
The Campus
5966 La Place Court
Carlsbad, California 92008-8830
(619) 438-7400 - Fax (619) 438-7470
<PAGE>
[LOGO]
Mr. Joel Magerman
July 1, 1995
Page 2
NTN shall pay Consultant an initial consulting fee of $120,000 with the
first payment of $10,000 due upon signing of this agreement and the balance due
in monthly installments of $10,000 due on the first day of each month. NTN shall
also reimburse Consultant for the reasonable out-of-pocket expenses incurred by
it with NTN's prior approval in the course of providing such services. As
consideration for arranging financing, Consultant or its designees, will
receive, for each tranche of $100,000 in net proceeds generated, warrants to
purchase 5,000 shares of NTN at a price per share equivalent to the prevailing
market price of NTN shares at the time of such subsequent financing.
Term of Engagement
- ------------------
The words "Term of Engagement" mean the period commencing on July 1, 1995
and ending on June 30, 1996, provided that the Term of Engagement shall continue
thereafter as long as Consultant or financial sources introduced by Consultant
are providing financing for NTN. After December 31, 1995, should Consultant, or
financial sources introduced by Consultant, no longer be providing financing,
either Consultant or NTN may give written notice to the other of its election to
terminate this letter agreement, in which case the Term of Engagement shall
terminate immediately upon notice being given.
Indemnification
- ---------------
NTN agrees to defend, indemnify and hold harmless Consultant and each of
the officers, directors and shareholders of Consultant (collectively,
"Indemnitees"), against any claim, suit, action, judgment, damages or other
liability imposed upon or incurred by any of them where any of the foregoing
arise, directly or indirectly, from or in connection with any of Consultant's
activities hereunder. The foregoing shall not be construed to require NTN to
defend, hold harmless or indemnify any Indemnitee in respect of any matters
arising from the gross negligence or willful misconduct of that Indemnitee.
<PAGE>
[LOGO]
Mr. Joel Magerman
July 1, 1995
Page 3
Miscellaneous
- -------------
This letter agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be amended except
by written consent of the other party. This letter agreement shall be governed
by and construed in accordance with the laws of the state of New York applicable
for contracts under, and to be performed therein, without giving effect to
the principles of conflicts of interest.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be deemed duly given to NTN when delivered in
person to an officer of NTN or to Consultant when delivered in person to an
officer of the Consultant, or on the third business day after being mailed by
registered or certified mail, return receipt requested, postage prepaid or on
the date transmitted by facsimile transmission at the addresses set forth above
(or to such other address as shall have furnished by like notice).
Please execute a counterpart of this letter in the designated space below,
and return the same to the undersigned, at which time it shall become a binding
agreement between us. We look forward to a mutually beneficial relationship.
Sincerely,
NTN COMMUNICATIONS, INC.
By: /s/ RONALD E. HOGAN
----------------------------
Ronald E. Hogan,
Senior Vice President
Chief Financial Officer
ACCEPTED AND AGREED:
JF ADMINISTRATIVE CORP.
By: /s/ JOEL MAGERMAN
-----------------------------
Joel Magerman
Executive Vice President
<PAGE>
EXHIBIT 4.7
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WCA-2070 125,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER FEBRUARY 7, 1995, AND VOID AFTER FEBRUARY 6, 2000.
Warrant Price: $6.125 per share.
1. THIS IS TO CERTIFY that, for value received, CONTINUUM CAPITAL, INC. or
its registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after FEBRUARY 7, 1995, and on or
before FEBRUARY 6, 2000 (the "Warrant Period"), up to 125,000 shares of the
$.005 par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
FEBRUARY 7, 1995, but prior to FEBRUARY 6, 2000, whether or not this Warrant has
yet been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant
to subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified
Party") in respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is brought
against an Indemnified Party and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party against which a claim is to be made
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, provided, however, that if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.
DATED: February 7, 1995 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WCA-2084 75,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER JANUARY 18, 1996, AND VOID AFTER JANUARY 17, 2001.
Warrant Price: $4.00 per share.
1. THIS IS TO CERTIFY that, for value received, MICHAEL REISERT or its
registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after JANUARY 18, 1996, and on or
before JANUARY 17, 2001 (the "Warrant Period"), up to 75,000 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
JANUARY 18, 1996, but prior to JANUARY 17, 2001, whether or not this Warrant has
yet been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant
to subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified
Party") in respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is brought
against an Indemnified Party and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party against which a claim is to be made
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, provided, however, that if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.
DATED: JANUARY 18, 1996 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WCA-2085 84,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER MARCH 19, 1996, AND VOID AFTER MARCH 18, 2001.
Warrant Price: $4.00 per share.
1. THIS IS TO CERTIFY that, for value received, SELIG SIZES or its
registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after MARCH 19, 1996, and on or
before MARCH 18, 2001 (the "Warrant Period"), up to 84,000 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
MARCH 19, 1996, but prior to MARCH 18, 2001, whether or not this Warrant has yet
been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant
to subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified
Party") in respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is brought
against an Indemnified Party and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party against which a claim is to be made
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, provided, however, that if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.
DATED: APRIL 17, 1996 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WCA-2086 21,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER MARCH 19, 1996, AND VOID AFTER MARCH 18, 2001.
Warrant Price: $4.00 per share.
1. THIS IS TO CERTIFY that, for value received, JOEL MAGERMAN or its
registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after MARCH 19, 1996, and on or
before MARCH 18, 2001 (the "Warrant Period"), up to 21,000 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
MARCH 19, 1996, but prior to MARCH 18, 2001, whether or not this Warrant has yet
been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant
to subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified
Party") in respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is brought
against an Indemnified Party and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party against which a claim is to be made
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, provided, however, that if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.
DATED: APRIL 17, 1996 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WCA-2087 7,500
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER MARCH 19, 1996, AND VOID AFTER MARCH 18, 2001.
Warrant Price: $4.00 per share.
1. THIS IS TO CERTIFY that, for value received, TIMOTHY & PAMELA KEENAN or
its registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after MARCH 19, 1996, and on or
before MARCH 18, 2001 (the "Warrant Period"), up to 7,500 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
MARCH 19, 1996, but prior to MARCH 18, 2001, whether or not this Warrant has yet
been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant
to subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to indemnification
pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified Party") in
respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is
brought against an Indemnified Party and it notifies an Indemnifying Party of
the commencement thereof, the Indemnifying Party against which a claim is to be
made will be entitled to participate therein, and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party, provided, however, that if the defendants in any such
action include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officers, and the corporate seal hereunto affixed.
DATED: APRIL 17, 1996 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
EXHIBIT 4.8
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WC-2074 30,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER AUGUST 8, 1995, AND VOID AFTER AUGUST 7, 2000.
Warrant Price: $4.5625 per share.
1. THIS IS TO CERTIFY that, for value received, DAVID JORDON or its
registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after AUGUST 8, 1995, and on or
before AUGUST 7, 1995 (the "Warrant Period"), up to 30,000 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
AUGUST 8, 1995, but prior to AUGUST 7, 1995, whether or not this Warrant has yet
been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant to
subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to indemnification
pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified Party") in
respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is
brought against an Indemnified Party and it notifies an Indemnifying Party of
the commencement thereof, the Indemnifying Party against which a claim is to be
made will be entitled to participate therein, and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party, provided, however, that if the defendants in any such
action include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.
DATED: OCTOBER 18, 1995 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WC-2075 30,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER AUGUST 8, 1995, AND VOID AFTER AUGUST 7, 1995.
Warrant Price: $4.5625 per share.
1. THIS IS TO CERTIFY that, for value received, BARRY ZELIN or its
registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after AUGUST 8, 1995, and on or
before AUGUST 7, 2000 (the "Warrant Period"), up to 30,000 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
AUGUST 8, 1995, but prior to AUGUST 7, 2000, whether or not this Warrant has yet
been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant to
subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified
Party") in respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is brought
against an Indemnified Party and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party against which a claim is to be made
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, provided, however, that if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers, and the corporate seal hereunto affixed.
DATED: OCTOBER 18, 1995 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
Warrant to Purchase
WC-2076 10,000
Shares
NTN COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT CERTIFICATE FOR THE PURCHASE OF SHARES OF
THE $.005 PAR VALUE COMMON STOCK OF NTN COMMUNICATIONS, INC.
EXERCISABLE ONLY AFTER AUGUST 8, 1995, AND VOID AFTER AUGUST 7, 2000.
Warrant Price: $4.5625 per share.
1. THIS IS TO CERTIFY that, for value received, JW CHARLES SECURITIES, INC.
or its registered assigns (either or both of whom are referred to herein as the
"Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, at anytime from and after AUGUST 8, 1995, and on or
before AUGUST 7, 2000 (the "Warrant Period"), up to 10,000 shares of the $.005
par value common stock ("Common Stock") of NTN Communications, Inc. (the
"Company"), and to receive certificate(s) for the Common Stock so purchased.
This warrant may be exercised in whole or in part. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the warrant price (the "Warrant Price"), either in cash or by certified check or
bank cashier's check, payable to the order of the Company, together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A. Fractional
shares of the Company's Common Stock will not be issued upon the exercise of
this Warrant.
2. The Company agrees at all times to reserve and hold available out of the
aggregate of its authorized but unissued Common Stock the number of shares of
its Common Stock issuable upon the exercise of this and all other Warrants of
like tenor then outstanding. The Company further covenants and agrees that all
shares of Common Stock that may be delivered upon the
1.
<PAGE>
exercise of this Warrant will, upon delivery, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
This Warrant and the Common Stock issuable upon the exercise hereof may not
be sold, transferred, pledged or hypothecated unless the Company shall have been
supplied with evidence reasonably satisfactory to it that such transfer is not
in violation of the Securities Act of 1933, as amended (the "Act") and any
applicable state laws. Subject to the satisfaction of the aforesaid condition,
this Warrant shall be transferable by the Holder.
If this Warrant is transferred, in whole or in part, upon surrender of this
Warrant to the Company, the Company shall deliver to each transferee a Warrant
evidencing the rights of such transferee to purchase the number of shares of
Common Stock that such transferee is entitled to purchase pursuant to such
transfer.
The Company may place a legend on this Warrant or any replacement Warrant
and on each certificate representing shares issuable upon exercise of this
Warrant as to which the Company has not been supplied evidence that the transfer
of such security would not be in violation of the Act and any applicable state
laws.
Only the registered Holder may enforce the provisions of this Warrant
against the Company. A transferee of the original registered Holder becomes a
registered Holder only upon notice to the Company substantially in the form set
forth in Exhibit B hereto.
3. This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company, nor to any other rights whatsoever
except the rights herein set forth, and no dividend shall be payable or accrue
by reason of this Warrant or the interest represented hereby, or the shares
purchasable hereunder, until or unless, and except to the extent that, this
Warrant is exercised.
This Warrant is exchangeable upon its surrender by the Holder to the
Company for new Warrants of like tenor and date representing in the aggregate
the right to purchase the number of shares purchasable hereunder, each of such
new Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.
At such time as the Common Stock is listed on any registered national
securities exchange, the Company shall, upon issuance of any shares for which
this Warrant is exercisable,
2.
<PAGE>
at its expense, promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended, for so long as and to
the extent that such requirements apply to the Company.
4. The Warrant Price and the number of shares purchasable upon the exercise
of this Warrant are subject to adjustment from time to time upon the occurrence
of any of the events specified in this Section 4.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of shares of Common Stock purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of shares of Common Stock or
other securities of the Company that he would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Warrant Price
shall be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of shares
of Common Stock purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of shares
of Common Stock so purchasable immediately thereafter.
(c) For the purpose of this Section 4, the term shares of Common Stock
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Warrant, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
change in par value, or from par value to no par value, or from no par value to
par value.
3.
<PAGE>
(d) If during the Warrant Period the Company consolidates with or merges
into another corporation or transfers all or substantially all of its assets the
Holder shall thereafter be entitled upon exercise hereof to purchase, with
respect to each share of Common Stock purchasable hereunder immediately prior to
the date upon which such consolidation or merger becomes effective, the
securities or property to which a holder of shares of Common Stock is entitled
upon such consolidation or merger, without any change in, or payment in addition
to the Warrant Price in effect immediately prior to such merger or
consolidation, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to ensure that all of the provisions
of this Warrant shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company shall not effect any such consolidation,
merger or asset transfer unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom shall assume by
written agreement executed and mailed to the registered Holder at his address
shown on the books and records of the Company, the obligation to deliver to such
Holder any such securities or property as in accordance with the foregoing
provisions such Holder shall be entitled to purchase.
(e) Upon the happening of any event requiring an adjustment of the
Warrant Price, the Company shall forthwith give written notice thereof to the
registered Holder of this Warrant, stating the adjusted Warrant Price and the
adjusted number of shares of Common Stock or other securities or property
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Board of Directors of the Company shall determine the
adjusted Warrant Price and the securities or property purchasable upon exercise.
If any voluntary or involuntary dissolution, liquidation, or winding up of the
Company is proposed, the Company shall give at least 20 days prior written
notice of such proposal to the registered Holder hereof stating the date on
which such event is to take place and the date (which shall be at least 20 days
after giving of such notice) as of which the holders of shares of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such dissolution, liquidation or winding up.
This Warrant and all rights hereunder shall terminate as of the date on which
such dissolution, liquidation, or winding up takes place. The notices pursuant
to this paragraph shall be given by first class mail, postage prepaid, addressed
to the registered
4.
<PAGE>
Holder of this Warrant at his address appearing in the records of the Company.
(f) Irrespective of any adjustments pursuant to this Section 4 to the
Warrant Price or to the number of shares or other securities or other property
obtainable upon exercise of this Warrant, this Warrant may continue to state the
Warrant Price and the number of shares obtainable upon exercise, as the same
price and number of shares stated herein.
5. (a) In the event that the Company proposes, at any time subsequent to
AUGUST 8, 1995, but prior to AUGUST 7, 2000, whether or not this Warrant has yet
been exercised in whole or in part, to file a registration statement on a
general form of registration under the Act relating to securities issued or to
be issued by it, then it shall give written notice of such proposal to the
record owners of the Warrants and any shares of Common Stock issued upon the
exercise thereof. If, within 15 days after the giving of such notice, the record
owners of any of the Warrants or shares of Common Stock issued or issuable upon
their exercise shall request in writing that all or any of the shares of Common
Stock issued or issuable upon exercise of the Warrants be included in such
proposed registration, the Company will, at its own expense (except as set forth
below), also register such shares of Common Stock as shall have been so
requested in writing; provided, however, that
(i) the Company shall not be required to include any of such shares
of Common Stock if, by reason of such inclusion, the Company shall be
required to prepare and file a registration statement on a form promulgated
by the Securities and Exchange Commission different from that which the
Company otherwise would use;
(ii) such owners shall cooperate with the Company in the preparation
of such registration statement to the extent required to furnish
information concerning such owners therein; and
(iii) if any underwriter or managing agent is purchasing or
arranging for the sale of the securities then being offered by the Company
under such registration statement, then such owners (A) shall agree to have
the securities being so registered sold to or by such underwriter or
managing agent on terms substantially equivalent to the terms upon which
the Company is selling the securities so registered, or (B) shall delay the
sale of such securities for the 90 day period commencing with the effective
date of the registration statement.
5.
<PAGE>
(b) In connection with the filing of a registration statement pursuant to
subsection 5(a), the Company shall:
(i) notify such owners as to the filing thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
(ii) notify such owners, promptly after it shall have received
notice thereof, of the time when the registration statement becomes
effective or any supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such owners any necessary
amendment or supplement to such registration statement or prospectus as may
be necessary to comply with Section 10(a)(3) of the Act or advisable in
connection with the proposed distribution of the securities by such owners;
(iv) take all reasonable steps to qualify the shares of Common Stock
being so registered for sale under the securities or blue sky laws in such
states, but only in such states, as the Company would qualify the sales of
its securities absent any registration of the shares of Common Stock issued
or issuable hereunder;
(v) notify such registered owners of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order; and
(vi) undertake to keep said registration statement and prospectus
effective until the earlier of (A) six months from the effective date
thereof (provided, that if the Holders are required to delay the sale of
the securities pursuant to Section 5(a)(iii)(B) hereof, then such period
shall be extended by the amount of such delay), or (B) the date the shares
of Common Stock are sold or become available for public sale without
restriction under the Act.
(c) The record owners of the shares of Common Stock being registered
under this Section 5 agree to pay all of the underwriting discounts and
commissions, registration fees and their own counsel fees with respect to the
securities owned by them and being registered. The Company agrees that the
costs and expenses which it is obligated to pay in connection with a
registration statement to be filed pursuant to subsection 5(a) hereof include,
but are not limited to, the fees and expenses of counsel for the Company, the
fees and expenses of
6.
<PAGE>
its accountants and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in a reasonable
number of states, including fees and disbursements of counsel for the Company,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to such registered owners.
6. In connection with the obligation of the Company to register shares of
Common Stock pursuant to the provisions of Section 5 hereof, the Company and
each Holder agree as follows:
(a) The Company hereby agrees to indemnify and hold harmless each Holder
and each person who controls each Holder within the meaning of Section 15 of the
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or actions to which each Holder or they or any of them may become
subject under the Act, the Exchange Act or otherwise and to reimburse the
persons indemnified above for any legal or other expenses (including the cost of
any investigation and preparation) reasonably incurred by them in connection
with any litigation or proceeding or threatened litigation or proceeding,
whether or not resulting in any liabilities, but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement with respect to the shares of Common Stock (or
incorporated therein by reference) or any amendment or supplement thereto (such
registration statement, together with any such amendments or supplements, is
referred to herein as the "Registration Statement"), or the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (ii) the employment
of the Company of any device, scheme or artifice to defraud, or the engaging by
the Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the sale pursuant to the
Registration Statement of any of the securities registered thereby; provided,
however, that the indemnity agreement contained in this paragraph (a) shall not
extend to any indemnified person in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon,
7.
<PAGE>
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company by such person specifically for
use in connection with the preparation of the Registration Statement. The
Company agrees to pay any legal and other expenses for which it is liable under
this paragraph (a) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(b) Each Holder agrees to indemnify and hold harmless the Company, its
directors, its officers who shall have signed the registration statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Holder but in each case to the extent, and
only to the extent, that any statement in or omission from or alleged omission
from the registration statement, any preliminary prospectus, the prospectus or
any amendment or supplement thereto was made in reliance upon information
furnished in writing to the Company by such Holder specifically for use in
connection with the preparation of the registration statement, any preliminary
prospectus or the prospectus or any such amendment or supplement thereto. Each
Holder agrees to pay any legal and other expenses for which it is liable under
this paragraph (b) from time to time (but not more frequently than monthly)
within 30 days after its receipt of a bill therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing paragraphs (a) or (b) (an "Indemnified
Party") in respect of which indemnity may be sought against a person granting
indemnification (an "Indemnifying Party") pursuant to such subsections, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the commencement thereof; but the omission so to notify the Indemnifying Party
of any such action shall not release the Indemnifying Party from any liability
it may have to such Indemnified Party otherwise than on account of the indemnity
agreement contained in paragraphs (a) or (b). In case any such action is brought
against an Indemnified Party and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party against which a claim is to be made
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party, provided, however, that if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other Indemni-
8.
<PAGE>
fied Parties which conflict with those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
agreement for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party within a reasonable
time after notice of commencement of the action or (iii) the Indemnifying Party
has authorized the employment of such counsel for the Indemnified Party at the
expense of the Indemnifying Party. An Indemnifying Party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in paragraph (a) is
unavailable to a Holder in accordance with its terms, the Company and each
Holder shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by said indemnity agreement incurred by each Holder
based on the relative fault of the Company on the one hand, and each Holder on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages and liabilities. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, such statement or omission relates to
information supplied by the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, or liabilities
referred to above in this paragraph shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending against or appearing as a third party witness in any
such action or claim. Notwithstanding the provisions of this paragraph, if a
Holder is found to be guilty of
9.
<PAGE>
fraudulent misrepresentation within the meaning of Section 11(f) of the Act, it
shall not be entitled to contribution from the Company unless the Company is
also found to be guilty of such fraudulent misrepresentation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officers, and the corporate seal hereunto affixed.
DATED: OCTOBER 18, 1995 NTN COMMUNICATIONS, INC.
By: /s/ Ronald E. Hogan
____________________________
Ronald E. Hogan
Senior Vice President-Finance
[seal]
10.
<PAGE>
SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights To Purchase
Common Stock Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for ________ shares (the
"Stock") of the Common Stock of NTN COMMUNICATIONS, INC. (the "Company")
pursuant to and in accordance with the terms and conditions of the attached
Warrant and hereby makes payment of $___________ therefor, and requests that a
certificate for such shares be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below. If such number of
shares is not all of the shares purchasable pursuant to the attached Warrant,
the undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Act"). I
also understand that the Company has not registered the Stock under the Act or
the California Corporate Securities Law of 1968, as amended (the "Law"), in
reliance upon exemptions from such registration, and that such reliance is based
in part upon my representations.
I understand that because the Stock has not been registered under the Act
or qualified under the Law, I must hold such Stock indefinitely unless such
Stock is subsequently registered and qualified under such statutes or is exempt
from such registration and qualification. Before I make any transfer or
disposition of any shares of the Stock, I agree to give to the Company written
notice of my intention to do so and to describe briefly the manner of such
proposed transfer or disposition. I shall make no such transfer or disposition
unless (a) such transfer or disposition can be made without registration under
the Act and qualification under the Law by reason of specific exemptions from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Act and has been declared effective with respect to
such disposition, and an Application to Qualify Securities has been filed
pursuant to the Law and an appropriate permit or order respecting such
Application shall have been issued.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the following legend:
A-1
<PAGE>
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom
under said Act."
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company an opinion of counsel (reasonably
satisfactory to the Company) to the effect that such legend may be removed.
Date:________________ Signed:________________________
Address: _____________________
_____________________
_____________________
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF A REGISTERED NATIONAL
SECURITIES EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK) OR TRUST COMPANY,
AND THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WARRANT IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
A-2
<PAGE>
ASSIGNMENT
(To be Executed by the Registered Holder to Effect Transfer of the Within
Warrant)
For Value Received _______________ hereby sells, assigns and transfers to
____________________ this warrant and the rights represented hereby to purchase
Common Stock in accordance with the terms and conditions hereof, and does hereby
irrevocably constitute and appoint _____________________________________ as
attorney to transfer this warrant on the books of the Company with full power of
substitution.
Dated:________________ Signed:_______________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
_________________________ _________-_________-_________
_________________________
_________________________
_________________________
Zip
<PAGE>
EXHIBIT 5
---------
[Letterhead of Troy & Gould]
July 30, 1996 NTN 1.1
NTN Communications, Inc.
The Campus
5966 La Place Court
Carlsbad, California 92008
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
At your request, we have examined the Registration Statement on Form S-
3, as amended (the "Registration Statement"), of NTN Communications, Inc.
(the "Company") which has been prepared for filing with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating
to 782,500 shares of Common Stock of the Company (the "Shares") that may be
resold by the selling securityholder identified in the Registration
Statement. The Shares are issuable upon exercise of the warrants
(collectively, the "Warrants") described in the Registration Statement. All
capitalized terms not defined herein shall have the definitions ascribed to
them in the Registration Statement.
We are familiar with corporate proceedings heretofore taken by the
Company in connection with the sale of the Shares. In addition, we have
examined such records of the Company as in our judgment were necessary or
appropriate to enable us to render the opinions expressed herein.
Based upon the foregoing, it is our opinion that the Shares have been
duly and validly authorized and, when sold and issued as provided in the
Warrants, will be fully paid and nonassessable.
We consent to the use of our name under the caption "Legal Matters" in
the Prospectus and the Registration Statement, and to the filing of this
opinion as an exhibit to the Registration Statement. By giving you this
opinion and consent, we do not admit that we are experts with respect to any
part of the Registration Statement or Prospectus within the meaning of the
term "expert" as used in Section 11 of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder, nor do we
admit that we are in the category of persons whose consent is required under
Section 7 of said Act.
Very truly yours,
/s/ TROY & GOULD
TROY & GOULD
Professional Corporation
5-1
