<PAGE>
As filed with the Securities and Exchange Commission on May 15, 1996
Reg. No. ______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NTN COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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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.)
(619)438-7400
</TABLE>
(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 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 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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=====================================================================================================================
Proposed Proposed Maximum
Title of Each Class of Securities Amount To Maximum Aggregate Offering Amount of
To Be Registered Be Registered Offering Price Price(1) Registration Fee
Per Share(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value....... 400,000 shares $4.8125 $1,925,000 $664
=====================================================================================================================
</TABLE>
(1) 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 Registrant's Common Stock as reported on the American Stock
Exchange on May 10, 1996.
____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
SUBJECT TO COMPLETION, MAY 15, 1996
<PAGE>
PROSPECTUS
NTN COMMUNICATIONS, INC.
400,000 Shares
This Prospectus relates to the offer by the securityholder named herein
(the "Selling Securityholder") for sale to the public from time to time of up
to 400,000 shares of common stock, $.005 par value (the "Common Stock"), of
NTN Communications, Inc. See "Selling Securityholder." Unless otherwise
indicated herein, references herein to the "Company" mean NTN Communications,
Inc. and its subsidiaries.
The shares of Common Stock offered hereby are issuable upon the exercise
of a Class WF Warrant (the "Warrant") to purchase Common Stock of the Company
at a purchase price of $4.125 per share. The Warrant may be exercised at any
time, or from time to time, during the period ending March 11, 2001. The
Warrant is currently exercisable with respect to 273,333 of the shares covered
thereby and will become exercisable with respect to the balance of the shares
in increments, with each increment coinciding with and conditioned upon future
funding to be provided by the Selling Securityholder in a transaction related
to the original grant of the Warrant. See "Selling Securityholder."
References herein to the "Shares" mean such of the 400,000 shares of Common
Stock covered by the Warrant as to which the Warrant is or may become
exercisable.
Other than the exercise price of the Warrant (to the extent it may be
exercised), the Company will not receive any proceeds from the sale of the
Shares offered hereby. 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 May 9, 1996, the last sale price for the
Common Stock as reported on the AMEX was $5.75. There is no established
market for the Warrant. 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.
__________________________
The date of this Prospectus is May , 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 as of December 31, 1995 and 1994, and for each of the years in
the three-year period ended December 31, 1995; and (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.
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 as of December 31, 1995. 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. 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. The Company may continue to
require additional working capital for operational expenses, new software and
product development, marketing of services and purchase of hardware components
relating to its services. There can be no assurance that the Company's
currently available resources will be sufficient to allow the Company to
support its operations until such time, if any, as its internally generated
cash flow is able to consistently sustain the Company.
The Company is exploring alternative 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 subsidiaries, or (v) sale of additional
debt or equity securities. With respect to lease financing, the Company has
leased for three-year terms expiring in various amounts 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. The Company will continue to
negotiate for additional lease financing and additional foreign licensing.
PENDING LITIGATION
The Company is currently defending litigation filed by various shareholders
of the Company. The case, 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. Although the Company has vigorously
defended this litigation and believes based, in part, upon the opinion of
outside counsel, in the merits of its defense, the Company has entered into
substantive negotiations to resolve this matter out of court to avoid costly
and protracted litigation in the best interests of its shareholders. A
preliminary framework for such a resolution has been reached; however, any
proposed settlement between the parties will be subject to notification to
each of the class members and final court approval.
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.
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.
3.
<PAGE>
The Company also is defending or prosecuting various previously reported
lawsuits in federal courts in both the United States and Canada involving
Interactive Network, Inc. ("IN"). All litigation between the Company and IN
has been suspended pending substantive negotiations regarding a global
resolution of all disputes between the parties.
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 and that any adverse outcome of the
litigation involving IN also will not result in a material adverse effect on
the Company's financial position or results of operation, or the Company's
position in the interactive industry.
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. 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.
4.
<PAGE>
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 competes in the hospitality and home markets for a share of the
total home entertainment dollars against broadcast television, pay-per-view
and other content offered on cable television. In the home market, the Company
also competes with other programming available to consumers through on-line
services such as AOL and Prodigy.
5.
<PAGE>
The video game and entertainment software industry is very
competitive. Competitive factors include access to licenses, brand name
recognition, product features and quality, access to distribution channels and
price. The Compoany's New World subsidiary competes with other developers
of PC and video game entertainment software. Competitors vary in size from
small companies with limited resources to very large companies such as
Microsoft, Broderbund Software and Electronic Arts.
Most of the industry leaders produce CD-ROM titles and most have greater
financial and marketing capabilities than New World.
With the entrance of motion picture, cable and TV companies, competition in
the Interactive Entertainment and multimedia industries will likely intensify
in the future. There can be no assurance that the Company will be able to
compete successfully in the various markets in which it is engaged.
POTENTIAL FOR TECHNOLOGICAL OBSOLESCENCE
The computer industry and related businesses have been marked by rapid and
significant technological development and change. There can be no assurance
that ongoing technological developments will not render the Company's
interactive technology and services obsolete, or that the Company will have
the resources to respond to such technological change.
UNCERTAIN PROPRIETARY PROTECTION
The Company has two patent applications pending for its proprietary
interactive technology. In addition, the Company relies on a combination of
trademark and unfair competition laws, trade secrets and confidentiality
procedures and agreements to protect rights it considers proprietary. The
Company has copyrights for all of its programming, and the Company has
registered the trademark QB1 and has registered trademarks for a significant
number of its other services. However, no assurance can be given that such
patents will issue, or if issued, the scope of the protection afforded by such
patents. The Company currently is involved in litigation concerning the
enforceability, scope and validity of proprietary rights. See "Risk Factors -
Pending Litigation."
New World regards all of its software as proprietary and attempts to protect
it. New World has no patents, and existing copyright laws afford only limited
practical protection for the New World's software. New World has entered into
license agreements with foreign entities for the translation of its software
into foreign languages and distribution in foreign countries. The laws of
some foreign countries do not protect proprietary rights to the same extent as
do the laws of the
6.
<PAGE>
United States. In addition, New World has registered trademarks on "New
World," "Might & Magic" and "King's Bounty." However, no assurance can be
given as to the scope of protection afforded by such trademarks, or that New
World would be able to effectively enforce such trademarks.
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 May 6, 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."
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 May 6, 1996, there were 4,465,330 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 2,716,330 shares are currently exercisable. An
additional 239,400 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
7.
<PAGE>
exercised) are reserved for issuance upon the exercise of options available
for future grant under the Company's 1995 Stock Option Plan. In addition, the
Company has outstanding warrants, including the Warrant described herein, to
purchase an aggregate of 4,489,491 shares of Common Stock at exercise prices
ranging from $2.00 to $8.00 per share, all of which warrants are currently
exercisable. Substantially all of such warrants are subject to currently
effective registration statements covering the resale of the warrants and 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. Such 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 6,220,400 shares of Common Stock outstanding as of the date of
this Prospectus, 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 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
In 1995, the Company purchased shares of LearnStar, Inc. owned by ACT III
Communications to increase its ownership in LearnStar, Inc. to 100%. In
December 1995, the Company sold a 45% interest in LearnStar, Inc. to
Associated Ventures Management Inc., an unaffiliated company, for $2,500,000.
In December 1995, the Company sold a 10% interest in IWN, Inc. to Symphony
LLC, an unaffiliated company for $350,000. Symphony LLC also became a limited
partner in IWN L.P., an unconsolidated limited partnership in which IWN, Inc.
is the general partner, by agreeing to contribute up to $2,650,000 to the
partnership.
USE OF PROCEEDS
Other than the exercise price of the Warrant (to the extent it 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 $_______. The holder of the Warrant is not
obligated to exercise the Warrant, and there can be no assurance that the
holder will choose to exercise the Warrant in whole or in part. The gross
proceeds to the Company in the event that the Warrant is exercised in full
would be $1,650,000.
8.
<PAGE>
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.
<TABLE>
<CAPTION>
LOW HIGH
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<S> <C> <C>
1994
- ----------------------------------------------
First Quarter....................... $ 6 $ 10-1/8
Second Quarter...................... 4-5/8 7-1/2
Third Quarter....................... 6-3/8 8-1/2
Fourth Quarter...................... 5-3/4 7-7/8
1995
- ----------------------------------------------
First Quarter....................... $ 5-5/8 $ 8-1/4
Second Quarter...................... 4-7/16 5-13/16
Third Quarter....................... 4-3/8 6-1/8
Fourth Quarter...................... 4-1/8 5-3/16
1996
- ----------------------------------------------
First Quarter....................... $ 3-1/8 $ 4-9/16
Second Quarter (through May 6, 1996) 3-7/8 6-3/8
</TABLE>
For a recent closing price for the Common Stock as reported on the AMEX
see the cover page of this Prospectus. As of May 6, 1996, there were 3,999
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.
9.
<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.
SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenue .............................. $31,771 $24,646 $17,258 $10,702 $ 5,853
Total cost of sales......................... 15,581 9,453 7,514 4,200 2,411
------- ------- ------- ------- -------
Gross profit................................ 16,190 15,193 9,744 6,502 3,442
Total operating expenses.................... 20,160 14,898 11,198 8,636 5,260
Investment income (expense), net............ 22 412 434 - (576)
Income taxes................................ - - 281 106 -
------- ------- ------- ------- -------
Earnings (loss) before extraordinary item... (3,948) 707 (1,301) (2,240) (2,394)
Extraordinary item.......................... - - - - 3,889
Net earnings (loss)......................... (3,948) $ 707 $(1,301) $(2,240) $ 1,495
------- ------- ------- ------- -------
Earnings (loss) per share before
extraordinary item(1)..................... $(.19) $.03 $(.08) $(.20) $(.38)
Net earnings (loss) per share............... $(.19) $.03 $(.08) $(.20) $.24
------- ------- ------- ------- -------
Weighted average equivalent shares
outstanding(1)............................ 20,301 21,124 17,135 11,344 6,263
</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
--------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total current assets........................ $26,530 $18,844 $23,102 $ 9,004 $ 5,119
Total assets................................ 42,813 31,239 27,240 10,171 5,604
Total current liabilities................... 8,114 4,958 2,933 2,554 2,810
Long-term debt, less current portion........ 2 8 163 18 91
Shareholders' equity........................ 33,451 25,457 23,653 7,432 2,703
</TABLE>
10.
<PAGE>
SELLING SECURITYHOLDER
INVESTMENT AGREEMENT
In March 1996, the Company issued to Symphony IWN Investment LLC
("Symphony Investment") a Class WF Warrant to purchase up to 400,000 shares of
the Company's Common Stock. See "Terms of the Warrant" below. The 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 Warrant for a purchase price of $400. In connection with the
issuance of the 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 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 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 owns the
Warrant.
TERMS OF THE WARRANT
The 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 273,333 of the underlying shares of Common Stock and will become
exercisable as to the balance of 126,667 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 33,333 shares upon Symphony Investment's payment
to the IWN Partnership of $250,000 on or before July 2, 1996;
(b) 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;
(c) 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
(d) 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.
11.
<PAGE>
In the event Symphony Investment fails to pay when due any of the amounts
described above, the holder of the 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. References herein to the
"Shares" means much of the 400,000 shares of Common Stock covered by the
Warrant as to which the Warrant is or may become exercisable.
The 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
confirmation 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 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 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 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 Warrant being offered hereby, when issued upon
exercise of the Warrant and sold pursuant to this Prospectus, will be
currently transferable 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 affiliates except
as described above.
SELLING SECURITYHOLDER TABLE
The following table sets forth as of May 6, 1996 the number and percent
of shares of Common Stock owned by the Selling Securityholder, the number of
shares of Common Stock offered by it, and the number and percent of shares of
Common Stock to be held by it after the conclusion of this offering.
<TABLE>
<CAPTION>
Before Offering After Offering
---------------------------- --------------------------
Number of Number of
Shares Number of Shares
Selling Beneficially Shares Beneficially
Securityholder Owned Percent(1) Being Offered Owned Percent
-------------- ------------ ---------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Symphony IWN Investment LLC(2)... 400,000(3) 1.7% 400,000(3) 0 0%
</TABLE>
-----------------
(1) Based on 23,327,484 shares of Common Stock outstanding as of May 6, 1996
and the 400,000 shares of common stock issuable upon exercise of the
warrant.
(2) 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.
(3) The Warrant is exercisable as of May 6, 1996 with respect to 273,333
of the shares shown. The Warrant will become exercisable with respect
to the balance of the shares shown as beneficially owned as described
above.
12.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholder has advised the Company that it may exercise the
Warrant from time to time and sell, directly or through brokers, such Shares
as may be issued upon the exercise of the Warrant 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
Securityholder 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 Securityholder and any discounts or
commissions payable with respect to sales of such Shares.
The Company has informed the Selling Securityholder that the anti-
manipulation provisions of Rules 10b-6 and 10b-7 under the Exchange Act may
apply to its sales of the Shares and has furnished the Selling Securityholder
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 Securityholder 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 May 6, 1996, there were 23,327,484 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 antidilution provisions. The holders of the Series A
Preferred Stock do not have any voting, preemptive, subscription or redemption
rights.
13.
<PAGE>
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 divides 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.
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
14.
<PAGE>
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 May 6, 1996 there were 23,327,484 shares of Common Stock outstanding. Of
such shares of Common Stock, approximately 6,220,400 shares, including the
Shares offered hereby, are "restricted securities" within the meaning of Rule
144 of the regulations promulgated under the Securities Act. All or
substantially all of such shares, including 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 effectively. 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
prices for the Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
As of May 6, 1996, there were 4,465,330 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 2,716,330 shares are currently exercisable. An
additional 239,400 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
15.
<PAGE>
exercised) are reserved for issuance upon the exercise of options available
for future grant under the Company's 1995 Stock Option Plan. In addition, the
Company has outstanding warrants, including the Warrant described herein, to
purchase an aggregate of 4,489,491 shares of Common Stock at exercise prices
ranging from $2.00 to $8.00 per share, 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. Such 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.
EXPERTS
The consolidated financial statements and schedule of NTN Communications,
Inc. as of December 31, 1995 and 1994, and for each of the years in the three-
year period ended December 31, 1995, have been incorporated by reference
herein 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 consolidated financial statements refers to a change in the method of
accounting for investments in debt and equity securities in 1994.
16.
<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 Securityholder. 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
Page
----
Available Information...............
Incorporation of Certain............
Documents by Reference..............
Risk Factors........................
Certain Recent Developments.........
Use of Proceeds.....................
Price Range of Common Stock.........
and Dividend Policy.................
Selected Consolidated Financial Data
Selling Securityholder..............
Plan of Distribution................
Description of Securities...........
Legal Matters.......................
Experts.............................
================================================================================
================================================================================
400,000 Shares of Common Stock
NTN COMMUNICATIONS, INC.
____________
PROSPECTUS
____________
May 15, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company estimates that expenses in connection with the distribution
described in this Registration Statement will be as follows. All expenses
incurred with respect to the distribution will be paid by the Company.
SEC registration fee......................... $ 638
Printing expenses............................ 1,000
Accounting fees and expenses.................
Legal fees and expenses...................... 10,000
Fees and expenses for qualification under
state securities laws...................... 1,000
Miscellaneous................................
-------
Total....................................... $
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and Bylaws permit the Company
to indemnify officers and directors of the Company to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law. Section
145 of the Delaware General Corporation Law makes provision for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances,
for liabilities (including reimbursements of expenses incurred) arising under
the Securities Act.
The Registration Rights Agreement between the Company and the Selling
Securityholder provides that the Company shall indemnify the Selling
Securityholder, and the Selling Securityholder 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 (Reg. 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)
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 (included on page II-4)
___________________
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.
(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
II-2
<PAGE>
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
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 May 15, 1996.
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
---------------------------
Patrick J. Downs,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Patrick J. Downs and Ronald E. Hogan,
and each of them, his true and lawful attorneys-in-fact and agents, each with
power of substitution, for him in any and all capacities, to sign this
Registration Statement and any amendments hereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as he might do or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or his or
their substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ------ ----
/s/ Patrick J. Downs Chairman of the Board of Directors May 15, 1996
- ---------------------------- and Chief Executive Officer
Patrick J. Downs
/s/ Daniel C. Downs President, Chief Operating Officer May 15, 1996
- ---------------------------- and Director
Daniel C. Downs
/s/ Ronald E. Hogan Senior Vice President - Finance and May 15, 1996
- ---------------------------- Secretary (Principal Financial
Ronald E. Hogan and Accounting Officer)
/s/ Donald C. Klosterman Director May 15, 1996
- ----------------------------
Donald C. Klosterman
/s/ Alan P. Magerman Director May 15, 1996
- ----------------------------
Alan P. Magerman
/s/ A. R. Rozelle Director May 15, 1996
- ----------------------------
A. R. Rozelle
II-4
<PAGE>
The Board of Directors
NTN Communications, Inc.:
We consent to the use of our report 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 12, 1996 refers to a change in the method of
accounting for investments in debt and equity securities in 1994.
KPMG Peat Marwick LLP
San Diego, California
May 13, 1996
II-5
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description Number
- ------- ------------------------------------------------------------------------------ ----------
<C> <S> <C>
4.1 Specimen Common Stock certificate (previously filed as an exhibit to the
Company's Registration Statement on Form 8-A (Reg. 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)
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 (included on page II-4)
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description Number
- ------- ------------------------------------------------------------------------------ ----------
<C> <S> <C>
4.1 Specimen Common Stock certificate (previously filed as an exhibit to the
Company's Registration Statement on Form 8-A (Reg. 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)
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 (included on page II-4)
</TABLE>
<PAGE>
EXHIBIT 4.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN SECTION 7 OF THE INVESTMENT AGREEMENT, DATED AS OF
DECEMBER 31, 1995, AMONG NTN COMMUNICATIONS, INC., IWN, INC. AND SYMPHONY
MANAGEMENT ASSOCIATES, INC., AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID
OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF SAID
AGREEMENT MAY BE INSPECTED AT THE OFFICES OF NTN COMMUNICATIONS, INC.
Warrant to Purchase
WF-01 400,000
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 11, 1996, AND VOID AFTER MARCH 11, 2001.
Exercise Price: $4.125 (Four and 125/1000 Dollars) per share.
1. Warrant; Warrant Shares; Vesting and Exercisability.
----------------------------------------------------
(a) THIS IS TO CERTIFY that, for value received, Symphony IWN
Investment LLC ("LLC") or its registered assigns (any or all 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 11,
1996 (the "Commencement Date"), and on or before 5 P.M., Eastern Standard Time,
March 11, 2001 (the "Expiration Date"), 400,000 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. In the event,
however that this Warrant would expire on a day that is not a Business Day, then
the term of this Warrant automatically shall be extended to 5:00 P.M., Eastern
Standard Time, on the next succeeding Business Day.
1.
<PAGE>
(b) This Warrant shall be vested in full and immediately exercisable
as to 200,000 of the shares of Common Stock purchasable hereunder upon the
Commencement Date. This Warrant shall become exercisable as to the balance of
200,000 of the shares of Common Stock purchasable hereunder in increments, each
increment to coincide with and be conditioned upon payment in full by LLC of its
additional capital contributions pursuant to and on the dates specified in the
Third Amended and Restated Agreement of Limited Partnership, dated and effective
as of December 31, 1995 (the "Restated Agreement"), of IWN, L.P. (the
"Partnership") as follows:
(i) as to 73,333 such shares upon LLC's payment to the
Partnership of $550,000 on or before April 2, 1996;
(ii) as to 33,333 such shares upon LLC's payment to the
Partnership of $250,000 on or before July 2, 1996;
(iii) as to 40,000 such shares upon LLC's payment to the
Partnership of $300,000 on or before October 1, 1996;
(iv) as to 13,334 such shares upon LLC's payment to the
Partnership of $100,000 on or before January 7, 1997; and
(v) as to the remaining 40,000 such shares upon LLC's payment to
the Partnership of $300,000 on or before April 1, 1997;
in each case, unless LLC's obligation to pay such amount has been expressly
waived by the Partnership. The Holder shall have no right to purchase hereunder
any incremental shares of Common Stock as to which this Warrant shall not have
become exercisable as aforesaid or as provided in Section 6(i). In the event
LLC fails for any reason to make any of the aforesaid payments on the dates
specified (unless such payment has been waived as aforesaid), the Holder shall
not have any right hereunder to purchase the incremental shares of Common Stock
corresponding to such payment as set forth above and all such right shall
immediately terminate and shall not be carried over to any other incremental
shares of Common Stock which may be or become purchasable hereunder.
2. Exercise of Warrant.
-------------------
(a) This Warrant may be exercised by the Holder of this Warrant at any
time during the term hereof in whole at any time, or in part from time to time
as to any shares as to which this Warrant shall be or shall have become
exercisable as aforesaid (but not for fractional shares), by presentation and
surrender of this Warrant to the Company, together with
2.
<PAGE>
the annexed Exercise Form duly completed and executed and either (i) a check
payable to the order of the Company in an aggregate amount equal to the Current
Exercise Price multiplied by the number of shares of Common Stock being
purchased ("Aggregate Exercise Price") or (ii) a written notice to the Company
that the Holder is exercising the Warrant (or a portion thereof) by authorizing
the Company to withhold from issuance a number of shares of Common Stock
issuable upon such exercise of this Warrant which, when multiplied by the
Current Market Price of the Common Stock, is equal to the Aggregate Exercise
Price (and such withheld shares shall no longer be issuable under this Warrant).
If the Aggregate Exercise Price includes fractional cents, the Aggregate
Exercise Price shall be rounded up to the next higher cent. Upon the Company's
receipt of this Warrant, the completed and signed Exercise Form and the
requisite payment of the Aggregate Exercise Price, the Company shall issue and
deliver (or cause to be delivered) to the exercising Holder stock certificates
aggregating the number of shares of Common Stock purchased. In the event of a
partial exercise of this Warrant, the Company shall issue and deliver to the
Holder a new Warrant at the same time such stock certificates are delivered,
which new Warrant shall entitle the Holder to purchase the balance of the
Current Exercise Quantity (as hereafter defined) not purchased in that partial
exercise and shall otherwise be upon the same terms and provisions as this
Warrant.
(b) In the event the Holder of this Warrant desires that any or all of
the stock certificates to be issued upon the exercise hereof be registered in a
name or names other than that of the Holder of this Warrant, the Holder must so
request in writing at the time of exercise, and pay to the Company funds
sufficient to pay all stock transfer taxes (if any) payable in connection with
the transfer and delivery of such stock certificates in connection therewith.
All such requests shall be subject to the provisions of the Warrant regarding
transfer hereof.
(c) Upon the due exercise by the Holder of this Warrant, whether in
whole or in part, the Holder (or any other Person to whom a stock certificate is
to be so issued) shall be deemed for all purposes to have become the Holder of
record of the shares of Common Stock for which this Warrant has been so
exercised, effective immediately prior to the close of business on the date this
Warrant, the completed and signed Exercise Form and the requisite payment of the
Aggregate Exercise Price are duly delivered to the Company, irrespective of the
date of actual delivery of certificates representing such shares of Common Stock
so issued.
(d) For purposes of this Warrant, "Exercise Price" shall mean $4.125
per share.
3.
<PAGE>
3. Reservation of Shares.
---------------------
(a) 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 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.
(b) This Warrant may be exchanged, without expense to the Holder, for
two or more Warrants entitling such Holder to purchase the same aggregate
Exercise Quantity at the same current Exercise Price per share and otherwise
having the same terms and provisions as this Warrant. The Holder may request
such an exchange by surrender of this Warrant to the Company, together with a
written exchange request specifying the desired number of Warrants and
allocation of the Exercise Quantity and Common Stock purchasable under the
existing Warrant. Within ten Business Days after the Company's receipt of this
Warrant and such an exchange request, the Company will issue and deliver such
new Warrants to that Holder in the amounts and with the allocation duly
requested.
(c) The Company may conclusively treat the Person registered as the
Holder of this Warrant as the true, lawful and absolute owner and Holder of this
Warrant for all purposes. However, if this Warrant has been duly endorsed in
blank to the Holder, the Company in its discretion may conclusively treat the
actual Holder of this Warrant (if known to the Company and known to be the
beneficial owner thereof, rather than a secured party in possession) as the
true, lawful and absolute owner and Holder of this Warrant for all purposes,
notwithstanding the fact that the Warrant may be registered in the name of
another Person. Any Holder waives and relinquishes its rights under this
Warrant by such Holder's endorsement (in blank or to another) and delivery of
this Warrant. The Company shall not be bound by any notice or other
communication asserting any change in ownership of this Warrant other than
through a request to register a transfer in accordance with the provisions of
this Warrant.
(d) In the event of the loss, theft or destruction of this Warrant,
the Company shall execute and deliver an identical new Warrant to the Holder in
substitution therefor upon the Company's receipt of evidence reasonably
satisfactory to the Company of such event (with the affidavit of Holder being
sufficient evidence). In the event of the loss, theft, mutilation of or other
damage to this Warrant, the Company shall execute and deliver an identical new
Warrant to the
4.
<PAGE>
Holder in substitution therefor upon the Company's receipt of the mutilated or
damaged Warrant and of reasonably satisfactory indemnification (in case of loss
or theft) of the Company.
4. Surrender of Warrant, Expenses, Etc.
-----------------------------------
(a) Whether in connection with the exercise, exchange, registration of
transfer or replacement of the Warrant, surrender of this Warrant shall be made
to the Company during normal business hours on a Business Day at the executive
offices of the Company located at 5966 La Place Court, Carlsbad, California
92008 or to such other office or duly authorized representative of the Company
as from time to time may be designated by the Company by written notice given to
the Holder.
(b) The Company shall pay all costs and expenses incurred in
connection with the creation, exercise, exchange, transfer or replacement of
this Warrant, including the costs of preparation, execution and delivery of
stock certificates, and shall pay all taxes (other than any taxes measured by
the income of any Person other than the Company and other than securities
transfer taxes, which shall be paid by the Holder) and other charges imposed by
law payable in connection with the foregoing.
(c) Upon the surrender of this Warrant in accordance with the terms
hereof in connection with any exercise, exchange, transfer or replacement, this
Warrant shall be promptly canceled by the Company.
5. Exercise.
--------
(a) The Warrant shall be exercisable from time to time at the Current
Exercise Price. The term "Current Exercise Price" as used herein shall mean the
Exercise Price, as the same may be adjusted from time to time as herein
provided, in effect at any given time. In determining the Current Exercise
Price, the result shall be expressed to the nearest $0.01, but any such lesser
amount shall be carried forward (rounded to the nearest $.0001) and shall be
considered at the time of and together with the next subsequent adjustment
which, together with any adjustments to be carried forward, shall amount to
$0.01 per share or more. In no event shall the Current Exercise Price be less
than $.01 per share.
(b) The term "Current Exercise Quantity" as used herein shall mean the
Exercise Quantity, as the same may be adjusted from time to time as hereinafter
provided, in effect at any given time.
5.
<PAGE>
6. Adjustments. The Exercise Quantity is subject to adjustment from time
-----------
to time upon the occurrence of any of the following events specified in this
Section 6.
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution on the Common Stock in the form of other securities
or property, except for dividends in cash or property payable from earnings of
the Company, (ii) subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or (iv) issue by reclassification of its shares of Common Stock
other securities of the Company, the Current Exercise Quantity 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 or
property 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) For the purpose of this Section 6, 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.
(c) Except as otherwise specifically provided in this Section 6, no
adjustment to the Exercise Price or Current Exercise Quantity shall be made in
respect of any dividends or distributions on the Common Stock.
(d) Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted as herein provided, the Current Exercise
payable upon exercise of this Warrant shall be adjusted by multiplying such
Current Exercise 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 so purchasable immediately
thereafter.
(e) To the extent not covered by the other paragraphs of this Section
6 and subject to the exceptions referred to in paragraph (g), in case the
Company shall at any time or from time to time after the Commencement Date issue
any additional shares of its Common Stock or any Common Stock Equivalents
("Additional Common Stock") for no consideration
6.
<PAGE>
or a consideration per share less than the Current Market Price immediately
prior to the issuance of such Additional Common Stock, and thereafter
successively upon each other such issuance (any such issuance, (including the
first one) referred to herein as a "Dilutive Issuance"), forthwith be increased
to an Exercise Quantity calculated as follows:
(1) Upon each Dilutive Issuance, a deemed exercise price per share
(the "Deemed Warrant Price") shall be determined as provided in the following
subparagraph (2). Thereafter, the Holder of this Warrant shall be entitled to
purchase, at the Exercise Price, the number of shares of Common Stock obtained
by multiplying the Exercise Price by the number of shares of Common Stock
purchasable under this Warrant immediately prior to the Dilutive Issuance and
dividing the product thereof by the Deemed Warrant Price. The Deemed Warrant
Price shall have no purpose other than for the calculation of the Current
Exercise Quantity as provided herein.
(2) Successively upon each Dilutive Issuance, a Deemed Warrant Price
shall be determined, such Deemed Warrant Price to be a price equal to the price
determined by multiplying the Exercise Price, in the case of the First Dilutive
Issuance resulting in an adjustment in the Exercise Quantity, or the last
determined Deemed Warrant Price, in the case of the second and all successive
Dilutive Issuances resulting in an adjustment in the Exercise Quantity, by a
fraction, of which
(A) the numerator shall be equal to the sum of (x) the number of
shares of Common Stock outstanding on the Commencement Date or, if applicable,
the date of the most recent adjustment of the Exercise Quantity (including as
outstanding all shares of Common Stock issuable upon exercise of this Warrant)
plus (y) the number of shares of the Company's Common Stock which the aggregate
amount of the consideration, if any, received by the Company for all issuances
of Common Stock since the applicable date would purchase at the then Current
Market Price, and
(B) the denominator shall be the total number of shares of Common
Stock outstanding immediately after the Dilutive Issuance (including as
outstanding all shares of Common Stock issuable upon exercise of this Warrant);
provided, however, that such adjustment shall be made only if such adjustment
results in an increase in the Current Exercise Quantity.
(f) For purposes of any adjustment as provided above in this Section
6, the following provisions shall also be applicable:
7.
<PAGE>
(1) in case of the issuance of Additional Common Stock for cash, the
consideration received by the Company therefor shall be deemed to be the net
cash proceeds received by the Company for such Additional Common Stock after
deducting any underwriter or placement agent discounts or commissions paid or
incurred by the Company for any underwriting or placement of such Additional
Common Stock; and
(2) in case of the issuance (otherwise than upon conversion of
obligations or shares of stock of the Company) of Additional Common Stock for a
consideration a part of which shall be other than cash, the amount of the
consideration so received or to be received by the Company shall be deemed to be
the value of such consideration at the time of its receipt by the Company as
determined in good faith by the Board of Directors of the Company, except that
where the non-cash consideration consists of the cancellation, surrender or
exchange of outstanding obligations of the Company (or where such obligations
are otherwise converted into shares of Common Stock), the value of the non-cash
consideration shall be deemed to be the amount, including principal and any
accrued interest, as of the time of the Company's receipt, of the obligations
canceled, surrendered, satisfied, exchanged or converted. If the Company
receives consideration, part or all of which consists of publicly traded
securities (i.e., in lieu of cash), the value of such non-cash consideration
----
shall be the aggregate market value of such securities (based on the latest
reported trades) as of the close of the day immediately preceding the date of
their receipt by the Company.
(g) Notwithstanding any other provision of this Warrant, no adjustment
of the Current Exercise Quantity or Exercise Price shall be made as a result of
or in connection with:
(1) the issuance of Common Stock upon exercise of this Warrant or
of any Rights outstanding on the Commencement Date; or
(2) the sale or issuance of Common Stock of the Company upon the
exercise of Rights granted after the Commencement Date under any employee stock
option or other employee plan approved by the Company's Board of Directors; or
(3) the sale or issuance of Additional Common Stock after the
Commencement Date at a price per share which represents no more than a 15%
discount from the Current Market Price.
(h) Whenever the Current Exercise Price is adjusted as provided in
this Section 6, the Company will promptly mail to the Holder a certificate of
the Company's independent
8.
<PAGE>
public accountants setting forth the Current Exercise Quantity as so adjusted,
the computation of such adjustment and a brief statement of facts accounting for
such adjustment.
(i) Notwithstanding the provisions of Section 1(b) regarding the
exercisability of this Warrant or any other provision of this Warrant to the
contrary, if the Company shall at any time consolidate with or merge into
another corporation where the Company is not the continuing corporation after
such merger or consolidation, this Warrant shall, effective immediately prior to
the consummation of such consolidation or merger, be and become exercisable in
full as to all of the shares of Common Stock purchasable herein and the Holder
shall thereupon be entitled to receive, upon the exercise of this Warrant in
whole or in part, the securities or other property to which a holder of the
number of shares of Common Stock then deliverable upon the exercise hereof would
have been entitled upon such consolidation or merger (subject to subsequent
adjustments under this Section 6), and the Company shall take such steps in
connection with such consolidation or merger as may be necessary to assure the
Holder that the provisions of this Warrant shall thereafter be applicable in
relation to any securities or property thereafter deliverable upon the exercise
of this Warrant, including but not limited to, obtaining a written
acknowledgement from the continuing corporation of its obligation to supply such
securities or property upon such exercise. A sale, transfer or lease of all or
substantially all of the assets of the Company to another person shall be deemed
a consolidation or merger for the foregoing purposes.
(j) The Company shall not be required to issue fractional Shares on
the exercise of the Warrant. If any fraction of a share of Common Stock would,
except for the provisions of this paragraph (j), be issuable on the exercise of
the Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to the then Current Market Price multiplied by such fraction. For
the purpose of this Agreement, the term "Current Market Price" shall mean (i) if
the Common Stock is traded in the over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
the average per share closing bid prices of the Common Stock on the 60
consecutive trading days immediately preceding the date in question, as reported
by NASDAQ or an equivalent generally accepted reporting service, or (ii) if the
Common Stock is traded on a national securities exchange, the average for the 60
consecutive trading days immediately preceding the date in question of the daily
per share closing prices of the Common Stock on the principal stock exchange on
which it is listed, as the case may be. The closing price referred to in clause
(ii) above shall be the last reported sales price or in case no such reported
sale takes place on such day, the average of the
9.
<PAGE>
reported closing bid and asked prices, in either case on the national securities
exchange on which the Common Stock is then listed.
7. Purchase, Sale and Terms of the Securities.
------------------------------------------
(a) The Company has authorized the issuance and sale of this Warrant
to LLC for the purchase of up to an aggregate of 400,000 shares of the Company's
Common Stock.
(b) The Company has authorized and has reserved and covenants to
continue to reserve, free of preemptive rights and other preferential rights, a
sufficient number of its previously authorized but unissued shares of Common
Stock to satisfy the rights of exercise of this Warrant. The Company covenants
and agrees that all shares of Common Stock which may be issued upon the exercise
of this Warrant shall upon payment therefor as herein provided, be fully paid
and non-assessable and free from all taxes, liens and charges with respect to
issuance. If the Current Exercise Price is at any time less than the par value
of the Common Stock or if this Warrant at any time is exercisable by its
delivery alone and without payment of any additional consideration, the Company
also covenants and agrees to cause to be taken such action (whether by lowering
the par value of the Common Stock, the conversion of the Common Stock from par
value to no par value, or otherwise) as will permit the exercise of this
Warrant, without any additional payment by the Holder thereof (other than
payment of the Current Exercise Price, if any, and applicable transfer taxes, if
any), and the issuance of the Common Stock, which Common Stock, upon issuance,
will be fully paid and non-assessable.
(c) The Company has complied and will comply with all applicable
federal and state securities laws in connection with the issuance and sale of
this Warrant. Neither the Company nor anyone acting on its behalf has offered
or will offer to sell this Warrant or other securities to, or solicit offers
with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of this Warrant under the registration provisions of the Securities Act.
(d) The Company has all necessary corporate power and has taken all
corporate action required to make all the provisions of this Warrant and any
other agreements and instruments executed in connection herewith and therewith
the valid and enforceable obligations they purport to be; this Warrant has been
duly executed and delivered by the Company and is the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
10.
<PAGE>
moratorium and similar laws. Sufficient shares of authorized but unissued
Common Stock have been reserved by appropriate corporate action in connection
with the prospective exercise of this Warrant. This Warrant and the shares of
Common Stock purchasable hereunder are not subject to preemptive or similar
statutory or contractual rights.
(e) No authorization, consent, approval license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the offer, issuance, sale, execution or
delivery by the Company, or for the performance by it of its obligations under,
this Warrant except such, if any, as may be required under any applicable
federal or state securities laws.
(f) The Holder has certain rights to request the Company to include
the shares of Common Stock purchasable hereunder held by it in a registration
statement of the Company under the Securities Act of 1933, as amended, pursuant
to the Registration Agreement.
8. Notices to Holder.
-----------------
(a) In case at any time the Company shall take any action which would
require an adjustment in the Exercise Price or the Current Exercise Quantity
pursuant to this Warrant, the Company shall give written notice of such action
and such adjustment within 30 days after such action.
(b) In case at any time:
(1) the Company shall authorize the granting to the holders of
its Common Stock of any dividends or distributions on Common Stock as set forth
in Section 6(a); or
(2) there shall be any capital reorganization or reclassification
of the Common Stock (other than a decrease in par value or from par value to no
par value of the Common Stock), or any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the company is
required, or any sale transfer or lease of all or substantially all of the
assets of the Company; or
(3) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(4) there shall be a merger or consolidation of the Company with
or into another corporation where the Company is not the continuing corporation
after such merger or consolidation;
11.
<PAGE>
then, in any one or more of said cases, the Company shall give written notice to
the Holder, at the same time and in the same manner as the Company gives notice
to the holders of its Common Stock, of the date on which such action,
reorganization, reclassification, sale, transfer, lease, consolidation, merger,
dissolution, liquidation or winding-up shall take place, as the case may be.
Such notice shall also specify the date, if any is to be fixed, as of which the
holders of the Common Stock of record shall be entitled to exchange their Common
Stock for securities or other property deliverable upon any such reorganization,
reclassification, sale, transfer, lease, consolidation, merger, dissolution,
liquidation or winding-up, as the case may be.
(c) All such notices shall also set forth in reasonable detail such
facts as shall indicate the effect of any such action (to the extent such effect
may be known at the date of such notice) on the Current Exercise Price, the
Current Exercise Quantity and the kind and amount of the shares and other
securities and property deliverable upon exercise of the Warrants.
9. Adjustments to Number of Shares Issuable Hereunder. The number of
--------------------------------------------------
shares of Common Stock called for on the face of this Warrant is the number of
shares of Common Stock which can be purchased under this Warrant on the
Commencement Date at the Exercise Price. Without limiting any other provision
of this Warrant, notwithstanding the number of shares of Common Stock so called
for on the face of this Warrant, the aggregate number of shares of Common Stock
that can be acquired upon an exercise of this Warrant in whole or in part shall
be adjusted from time to time pursuant to this Warrant.
10. Rights and Obligations of the Warrant Holder, Etc. This Warrant shall
-------------------------------------------------
not entitle the Holder to any rights of a stockholder in the Company. The
rights of the Holder of this Warrant are limited to those rights expressly
granted in this Warrant, and in no event shall any provisions of this Warrant
give, or be deemed to give, the Holder any right to exercise control over the
affairs or management of the Company or any of its subsidiaries.
11. Transfer Restrictions; Restrictive Stock Legend.
-----------------------------------------------
(a) 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 and any applicable state
laws. Subject to the satisfaction of the aforesaid condition, this Warrant
shall be transferable by the Holder.
12.
<PAGE>
(1) This Warrant and the Common Stock issuable upon exercise of this
Warrant have not been registered under securities laws. Accordingly, unless
there is an effective registration statement and qualification respecting the
Common Stock under securities laws at the time of exercise of this Warrant, any
stock certificate issued pursuant to the exercise of this Warrant shall bear the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SHARES
MAY BE OFFERED, SOLD, OR TRANSFERRED ONLY IN COMPLIANCE WITH THE
REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES
LAWS.
12. Notice. Except as otherwise expressly provided in this Warrant, any
------
notice, request, demand or other communication permitted or required to be given
under this Warrant shall be in writing, shall be signed by the party giving it,
shall be sent by one of the following means to the addressee at the address set
forth below (or at such other address as shall be designated hereunder by notice
to the other parties and persons receiving copies, effective upon actual
receipt) and shall be deemed conclusively to have been given: (i) on the first
Business Day following the day duly sent by telecopy or timely deposited with
Federal Express (or other equivalent national overnight courier) or United
States Express Mail, with the cost of transmission or delivery prepaid; (ii) on
the fifth Business Day following the day duly sent by certified or registered
United States mail, postage prepaid and return receipt requested; or (iii) when
otherwise actually delivered to the addressee. The addresses of the parties are
as follows:
(a) If to the Holder, at the address in the register maintained
pursuant to this Warrant:
With a copy to:
Symphony IWN Investment LLC
c/o Symphony Management Associates, Inc.
900 Bestgate Road, Suite 400
Annapolis, MD 21401
Attn: Richard J. Donnelly
Telecopier No.: 410-573-5205
13.
<PAGE>
With a copy to:
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
Attn: William R. Sasso, Esq.
Telecopier No.: 215-564-8120
(b) If to the Company, at the following address:
NTN Communications, Inc.
5966 La Place Court
Carlsbad, CA 920086
Attention: Chief Executive Officer
Telecopier No.: 619-929-5289
With a copy to:
Troy & Gould Professional Corporation
1801 Century Park East, 16th Floor
Los Angeles, California 90067
Attn: William D. Gould, Esquire
Telecopier No.: 310-201-4746
or at such addresses as may be provided to the Company or to the Holder in
writing from time to time.
13. Enforcement. The Holder of this Warrant, in its sole discretion, may
-----------
proceed to exercise or enforce any right, power, privilege, remedy or interest
that the Holder of this Warrant may have under this Warrant or applicable law
without notice except as otherwise expressly provided herein, without pursuing,
exhausting or otherwise exercising or enforcing any other right, power,
privilege, remedy or interest that the Holder of this Warrant may have against
or in respect of the Company, or any other person or thing, and without regard
to any act or omission of the Holder of this Warrant or any other person. The
Holder of this Warrant may institute separate proceedings with respect to this
Warrant and any Warrant Securities in such order and at such tires as the Holder
of this Warrant may elect in its sole and absolute discretion.
14. Interpretation, Headings, Severability, Etc.
-------------------------------------------
(a) The parties acknowledge and agree that: each party and its counsel
have reviewed and negotiated the terms and provisions of this Warrant and have
contributed to its revisions; the normal rule of construction to the effect that
any ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Warrant; and its terms and provisions shall be
construed fairly as to all parties hereto and not in favor of or against any
party,
14.
<PAGE>
regardless of which party was generally responsible for the preparation of this
Warrant.
(b) The section and other headings contained in this Warrant are for
reference purposes only and shall not affect the meaning or interpretation of
this Warrant.
(c) In the event that any term or provision of this Warrant shall be
finally determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, that determination shall not impair or otherwise affect the validity,
legality or enforceability (i) by or before that authority of the remaining
terms and provisions of this Warrant, which shall be enforced as if the
unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Warrant.
15. Survival of Representations, Warranties and Covenants, Etc. Each of
----------------------------------------------------------
the representations, warranties and covenants and other agreements of the
Company contained in this Warrant shall be absolute and, except as otherwise
expressly provided, unconditional; shall survive the execution and delivery of
this Warrant and any partial exercise of it, shall remain and continue in full
force and effect without regard to any full, partial or non-exercise of any of
the Holder's rights, powers, privileges, remedies and interests hereunder, shall
not be subject to any defense, counterclaim, set-off, right of recoupment,
abatement, reduction or other agreement or determination that the Company may
have against the Holder or any other person, shall not be diminished or
qualified by the dissolution, reorganization, insolvency, bankruptcy,
custodianship or receivership of the Company, and shall remain and continue in
full force and effect until all of the Common Stock under this Warrant have been
purchased or the term of this Warrant has expired, whichever occurs first, and
thereafter with respect to events occurring prior thereto.
16. Successors and Assigns. Whenever in this Warrant reference is made to
----------------------
any party, such reference shall be deemed to include the successors, permitted
assigns, heirs and legal representatives of such party, and shall be binding
upon any direct or indirect successor or assignee of the Company (whether by
merger, consolidation, acquisition of substantially all of the Company's assets
or otherwise) and shall inure to the benefit of the successors and permitted
assigns of the Holder of this Warrant.
17. No Waiver By Action, Etc. Any waiver or consent respecting any term
------------------------
or provision of this Warrant shall be effective only in the specific instance
and for the specific purpose for which given and shall not be deemed, regardless
of frequency given, to be a further or continuing waiver or
15.
<PAGE>
consent. The failure or delay of a party at any time or times to require
performance of, or to exercise its rights with respect to, any term or provision
of this Warrant in no manner (except as otherwise expressly provided herein)
shall affect its right at a later time to enforce any such provision. No notice
to or demand on the Company in any case shall entitle such party to any other or
further notice or demand in the same, similar or other circumstances. Any and
all rights, powers, privileges, remedies and other interests of the Holder or
Holders hereof under this Warrant are cumulative and not alternatives, and they
are in addition to and shall not limit (except as otherwise expressly provided
herein) any other right, power, privilege, remedy or other interest of the
Holder or Holders under this Warrant, the other agreements or applicable law.
18. Waiver, Modification and Amendment. Each and every modification and
----------------------------------
amendment of this Warrant, and each and every waiver of and consent to any
departure from any term or provision hereof (except as otherwise provided
herein), shall be in writing and signed by (i) the Company and (ii) the then
current Holder of this Warrant.
19. Entire Agreement. This Warrant contains the entire agreement of the
----------------
parties and supersedes all other representations, warranties, agreements and
understandings, oral or otherwise, among the parties hereto with respect to the
matters contained herein and therein with the exception of the representations,
warranties, covenants and agreements contained in the Investment Agreement which
are hereby affirmed by the Company with respect to the Holder.
20. Definitions.
-----------
(a) As used in this Warrant, the following capitalized terms shall
have the meanings respectively assigned to them below, which meanings shall be
applicable equally to the singular and plural forms of the terms so defined.
Capitalized terms used and not defined below shall have the meanings
respectively assigned to them in this Warrant.
"Business Day" shall mean any day during which the Company is open for
business, other than any Saturday, Sunday or other applicable legal holiday.
"Common Equity" shall mean the total equity interest in the Company
represented by the Common Stock of the Company and shall include Common Equity
resulting from any reorganization, reclassification of capital stock or
recapitalization of the Company or similar event.
16.
<PAGE>
"Common Stock Equivalents" shall mean all options, warrants,
securities and other rights to acquire or otherwise receive from the issuer
shares of Common Stock (without regard to whether such options, warrants,
securities and other rights are then exchangeable, exercisable or convertible in
full, in part or all).
"Convertible Security" shall mean any security which is convertible
into or exchangeable for shares of Common Stock, Common Equity or any Common
Stock Equivalent.
"Person" means an individual, corporation, partnership, estate,
limited liability company, association, cooperative, joint venture, trust,
unincorporated organization, or a government or any agency, branch or political
subdivision thereof.
"Registration Agreement" shall mean the Registration Rights Agreement
dated the date hereof between the Company and Holder.
"Rights" shall mean options, warrants, subscriptions, calls and rights
to acquire Common Stock or Convertible Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, and any successor
provisions thereto.
21. GOVERNING LAW; WAIVER OF JURY TRIAL.
-----------------------------------
(A) THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE IN DELAWARE,
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF DELAWARE
(WITHOUT GIVING EFFECT TO CONFLICT OF LAWS).
(B) THE COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE COMPANY AT ITS
ADDRESS DESIGNATED FOR NOTICE UNDER THIS WARRANT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON THE EARLIER OF (I) THE COMPANY'S RECEIPT THEREOF AND
(II) FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES
17.
<PAGE>
MAIL. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized representative and its corporate seal to be impressed
hereupon and attested to by its Secretary or an Assistant Secretary.
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
---------------------------
Attest: /s/ Ronald E. Hogan
------------------------
18.
<PAGE>
COMMON STOCK WARRANT
--------------------
EXERCISE FORM
(Cash)
NTN Communications, Inc.
5966 La Place Court
Carlsbad, California 92008
Attention: Chief Executive Officer
The undersigned Holder of the within Warrant hereby irrevocably elects to
exercise the within Warrant to the extent of [__________] shares of Common
Stock, $.005 par value per share, of NTN Communications, Inc. (all at the price
and on the terms and conditions specified in the attached Warrant). The
undersigned herewith encloses the Warrant and a check (payable to the order of
NTN Communications, Inc.) in the amount of $[______________________] in payment
of the purchase price thereof.
Dated: _______________________________________________
(Name of Registered Holder - Please Print)
By:____________________________________________
(Signature of Registered Holder or of Duly
Authorized Signatory)
Title:_________________________________________
A-1
<PAGE>
COMMON STOCK WARRANT
--------------------
ASSIGNMENT FORM
For Value Received, the undersigned Holder of within Warrant hereby
sells, assigns and transfers unto the transferee whose name and address are set
forth below all of the rights of the undersigned under the within Warrant (to
the extent of the portion of the within Warrant being transferred hereby, which
portion is __________________).
Name of Transferee:______________________________________
State of Organization (if applicable):____________________________
Federal Tax Identification or
Social Security Number:________________________________
Address:__________________________________________________________
If such portion of the Warrant being transferred shall not consist of all
of the within Warrant, then the undersigned hereby requests that, as provided in
the within Warrant, a new warrant of like tenor respecting the balance of the
Exercise Quantity not being transferred pursuant hereto be issued in the name of
and delivered to the undersigned. The undersigned does hereby irrevocably
constitute and appoint ______________ attorney to register the foregoing
transfer on the books of NTN Communications, Inc. maintained for that purpose,
with full power of substitution in the premises.
Dated: ____________________________________________
(Name of Registered Holder - Please Print)
By:_________________________________________
(Signature of Registered Holder or of Duly
Authorized Signatory)
Title:______________________________________
A-2
<PAGE>
SIGNATURE GUARANTEED:
(Name of Guarantor)
By:
Title:
NOTICE: The name and signature of the Holder as contained in this Assignment
Form must correspond exactly to the name as written upon the face of
the within Warrant. The signature of the Holder must be guaranteed by
a commercial bank or trust company in the United States or a member
firm of the New York Stock Exchange.
A-3
<PAGE>
EXHIBIT 5
---------
[Letterhead of Troy & Gould]
May 10, 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 (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 400,000 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 warrant (the
"Warrant") 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
Warrant, 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
