<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-K/A
AMENDMENT NO. 1
TO
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
Commission file number 1-11464
NTN COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1103425
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5966 La Place Court, Carlsbad, California 92008
(Address of Principal Executive Offices) (Zip Code)
(619) 438-7400
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.005 par value - registered on the American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---------- ----------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 10, 1997, computed by reference to the closing sale price
of such stock on the American Stock Exchange, was approximately $97,000,000.
(All directors and executive officers are considered affiliates.)
At April 10, 1997, Registrant had 23,265,000 shares of Common Stock, $.005 par
value, issued and outstanding.
Documents incorporated by reference into this report: None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the directors
and executive officers of NTN Communications, Inc. (the "Company"):
<TABLE>
<CAPTION>
Name Age Position(s) Held
---- --- ----------------
<S> <C> <C>
Edward Frazier(1) Chairman of the Board of Directors
Gerald Sokol, Jr. President and Chief Operating Officer,
Chief Financial Officer, Director
Robert M. Bennett (1) Director
Patrick J. Downs(2) Director
Daniel C. Downs(2) Director
Donald C. Klosterman Director
Alan P. Magerman Director
Jerry V. Petrie Executive Vice President - Marketing
Colleen Anderson President, IWN, Inc.
</TABLE>
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(1) Member of Executive Committee, Audit Committee, and Compensation Committee.
(2) Patrick J. Downs and Daniel C. Downs are brothers.
The following biographical information is furnished with respect to the
directors and executive officers:
GERALD SOKOL, JR. joined the Company in July 1996 as Chief Financial
Officer. In November 1996 he became Chief Operating Officer and in February 1997
he was promoted to President. In April 1997, he was appointed to the Board of
Directors. Prior to joining the Company, Mr. Sokol was Vice President of Finance
and Treasurer of TeleCommunications, Inc. since 1987.
ROBERT M. BENNETT has been a director since August 1996. From 1989 to the
present, Mr. Bennett has been the President of Trans Atlantic Entertainment.
Prior to 1989, Mr. Bennett was the President of Metromedia Broadcasting, a
division of Metromedia, Inc.
EDWARD FRAZIER has been a director since August 1996 and Chairman of the
Board since March 1997. From 1989 until 1996, Mr. Frazier was the President and
Chief Executive Officer of Liberty Sports. In August 1996, Mr. Frazier founded
Frazier/King Media, a media property holding company and consulting firm.
PATRICK J. DOWNS has been a director since April 1985. Mr. Downs was
Chairman of the Board of Directors of the Company from April 1994 until March
1997. Mr. Downs also served as President and Chief Executive Officer of the
Company (or its predecessor) from 1983 until March 1997.
DANIEL C. DOWNS has been a director since April 1985. Mr. Downs was
President and Chief Operating Officer of the Company from April 1994 until March
1997, prior to which time Mr. Downs served as Executive Vice President and Chief
Operating Officer of the Company (or its predecessor) since 1983. Until March
1997, Mr. Downs also served as a director and as Chairman of the Board of the
Company's IWN, Inc. subsidiary.
DONALD C. KLOSTERMAN has been a director of the Company (or its predecessor)
since 1983. He currently serves as the President of Pacific Casino Management,
Inglewood, California. Mr. Klosterman served as Chairman of the Board of the
Company from 1985 until April 1994. From 1982 until March 1997, he also has
acted as a consultant to the Company. Mr. Klosterman is a director of Aldila
Shaft Manufacturer.
ALAN P. MAGERMAN has served a director of the Company since November 1991.
From 1991 to 1995, Mr. Magerman was the founder and Chairman of the Board of
Odyssey Sports Inc., a privately held company engaged in the development and
distribution of golf clubs. Mr. Magerman also is a director of The Oracle
Group, a private
2.
<PAGE>
financial and business consulting firm, and a director of Vision Development
Centers, which provides vision care services.
JERRY V. PETRIE has served as Executive Vice President and Director of
Marketing since September 1993 and is responsible for the creation of
advertiser-themed programs and marketing strategies for NTN Network advertisers.
He joined the Company in 1986. From 1986 to 1993, he served as President of NTN
Sports, Inc., the exclusive license holder of NTN Communications, Inc. in
Canada.
COLLEEN ANDERSON has served as President and Chief Executive Officer of IWN,
Inc. since October 1994. From 1987 until 1993, she was President of Services
Division of Comdata Corporation, a public company, responsible for providing
electronic funds transfer (EFT) and on-line transaction processing services to
the gaming industry. In 1984, Ms. Anderson founded Cashchek International,
Inc., a competitor of Comdata, and served as its President until 1986, when
Cashchek was sold to American Express. From 1986 until joining Comdata
Corporation, she continued to serve as President of Cashchek.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and officers and
any persons holding more than 10% of the Company's Common Stock are required to
report their ownership of the Company's Common Stock and any changes in that
ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established, and the Company is required to report any
failure to file by these dates. During 1996, all of these filing requirements
were satisfied by its directors, officers and 10% stockholders, except as
follows:
Patrick J. Downs, the Company's former Chairman of the Board and Chief
Executive Officer, failed to report under Section 16 a gift by him of 5,156
shares of the Company's Common Stock in July 1996. Jon Van Caneghem, the former
President of the Company's New World Computing, Inc. subsidiary, failed to
report a private sale by him to the Company in January 1996 of 25,000 shares of
Common Stock and a subsequent public sale in June 1996 of 34,000 shares of
Common Stock. Finally, Donald C. Klosterman, a director of the Company, failed
to report a change in beneficial ownership of 70,000 shares of Common Stock when
his former wife was assigned these shares in April 1996 as part of a marital
dissolution. In each case, the officer or director involved failed to notify the
person at the Company responsible for assisting officers and directors in
meeting their Section 16 reporting obligations.
In making these statements, the Company has relied upon a review of Forms 3,
4 and 5 and amendments thereto furnished to the Company pursuant to Rule 16a-3
under the Exchange Act during fiscal 1996 and the written representations of its
directors and officers.
3.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows the compensation paid or
accrued as of each of the last three fiscal years to the Chief Executive Officer
of the Company and to the four most highly compensated executive officers of the
Company who were serving as executive officers at the end of fiscal year 1996
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------- ------------
Securities
Other Annual Underlying
Name and Principal Position Year Salary(1) Bonus Compensation Options
- ------------------------------------ ---- ------------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C>
Gerald Sokol, Jr.(3)................ 1996 $ 87,423 $ -- -- 875,000
Chief Financial Officer and
Chief Operating Officer
Patrick J. Downs(4)................. 1996 192,885 $930,879(2) 200,000
Chief Executive Officer 1995 192,044 -- -- 200,000
1994 169,950 -- -- 200,000
Daniel C. Downs(4).................. 1996 $192,885 $ -- 629,141(2) 200,000
President 1995 192,044 -- -- 200,000
1994 169,950 -- -- 200,000
Gerald P. McLaughlin(4)............. 1996 $186,100 $ -- 492,690(2) 25,000
Senior Vice President - Systems 1995 184,333 -- -- 75,000
1994 163,126 -- -- 75,000
Ronald E. Hogan(4).................. 1996 $151,617 $ -- 445,384(2) 20,000
Senior Vice President - 1995 150,177 -- 50,000
Administrative 1994 132,900 -- 75,000
</TABLE>
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(1) Includes amounts, if any, deferred under the Company's 401(k) Plan and
Deferred Compensation Plan.
(2) The Company has entered into separate agreements with each of these Named
Executive Officers setting out the terms on which their prior employment and
other agreements with the Company were settled. Under the agreements, the
Company agrees to continue to pay the former Named Executive Officers their
prior annual salaries for the remaining terms of their prior employment
agreements, which expire on or before December 31, 1999. These payments,
along with payments for accrued vacation and certain other amounts which the
Company has paid or agreed to pay to the former Named Executive Officers
will be reported as appropriate in future reports of the Company relating to
the periods for which such payments are made. Each of the former Named
Executive Officers was indebted to the Company for prior loans extended to
them by the Company in the amounts shown in the table. As part of the
foregoing agreements with the former Named Executive Officers, the Company
cancelled such indebtedness as of December 31, 1996.
(3) Mr. Sokol joined the Company in July 1996.
(4) In March 1997, the Company announced a reorganization of its executive
management personnel in which Patrick J. Downs resigned as Chief Executive
Officer and Chairman of the Board of the Company, and Daniel C. Downs
resigned as the Company's President. Both men continue to serve on NTN's
Board of Directors. In connection with the reorganization, Ronald E. Hogan
resigned as Senior Vice President and Gerald P. McLaughlin, formerly
Executive Vice President of the Company, was terminated. As referred to in
note (2), the Company has entered into separate agreements with each of the
former officers setting out the terms on which their existing contracts with
the Company were settled.
4.
<PAGE>
STOCK OPTION GRANTS
The following table contains information concerning grants of stock options
during fiscal 1996 with respect to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants For Option Term(1)
- ---------------------------------------------------------------------------------------- -------------------------
% of Total
Number of Shares Options Granted
Underlying to Employees Exercise Expiration
Name Options Granted In Fiscal Year Price Date 5% 10%
- ----------------------- ---------------- --------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gerald Sokol, Jr....... 78,740(2) 2.8% $5.08 07/16/06 $ 251,557 $ 637,496
221,260(3) 7.9% 5.00 08/16/06 695,746 1,763,157
400,000(4) 14.3% 5.00 08/16/06 1,257,789 3,187,485
175,000(5) 6.2% 3.50 11/04/06 385,198 976,167
Patrick J. Downs....... 200,000(6) 7.2% 3.50 11/04/06 440,226 1,115,620
Daniel C. Downs........ 200,000(6) 7.2% 3.50 11/04/06 440,226 1,115,620
Gerald P. McLaughlin... 25,000(7) 0.9% 3.50 11/04/06 55,028 139,452
Ronald E. Hogan........ 20,000(8) 0.7% 3.50 11/04/06 44,023 111,562
</TABLE>
- ------------------------
(1) The 5% and 10% assumed rates of appreciation are prescribed by the rules and
regulations of the Securities and Exchange Commission and do not represent
management's estimate or projection of future value of the Common Stock.
(2) Represents options granted under the Company's 1995 Option Plan which are
exercisable 25% immediately and 25% each of the first, second and third
anniversaries of the date of the grant.
(3) Represents options granted under the Company's 1995 Option Plan which are
exercisable 36.4% immediately and 21.2% each on the first, second and third
anniversaries of the date of the grant.
(4) Represents options granted under the Company's Special Option Plan which
will be exercisable only if the closing price of the Company's common stock
is at least $11 for more than 10 consecutive days prior to August 15, 1998.
(5) Represents options granted under the Company's 1995 Option Plan which will
become exercisable on December 31, 1997 if the Company meets its operating
budget.
(6) Represents options granted under the Company's 1995 Option Plan which are
exercisable upon issuance.
(7) Represents options granted under the Company's 1995 Option Plan which became
exercisable in March 1997.
(8) Represents options granted under the Company's 1995 Option Plan which were
cancelled in March 1997.
5.
<PAGE>
STOCK OPTION EXERCISES AND OPTION VALUES
The following table contains information concerning stock options
unexercised at the end of fiscal 1996 with respect to the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options At In-the-Money Options
Shares Acquired Value Fiscal Year-End at Fiscal Year-End (1)
Name On Exercise Realized ----------------------------- --------------------------
---- --------------- -------- Exercisable Unexercisable Exercisable Unexercisable
----------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald Sokol, Jr....... -- -- 100,000 775,000 * *
Patrick J. Downs....... -- -- 616,667 133,333(2) $283,542 *
Daniel C. Downs........ -- -- 666,667 133,333(3) 191,667 *
Gerald P. McLaughlin... 1,070 $ 869 175,000 75,000(4) * *
Ronald E. Hogan........ 15,577 $12,656 379,667 33,333(5) 198,229 *
</TABLE>
- ------------
(1) Represents the amount by which the aggregate market price on December 31,
1996 of the shares of the Company's Common Stock subject to such options
exceeded the respective exercise prices of such options. An asterisk
denotes that the respective exercise prices of the options shown exceeded
the market price of the underlying shares of Common Stock at December 31,
1996.
(2) Effective December 31, 1996, Patrick J. Downs surrendered to the Company for
cancellation incentive and non-qualified options to purchase 634,000 shares
of Common Stock of the Company.
(3) Effective December 31, 1996, Daniel C. Downs surrendered to the Company for
cancellation incentive and non-qualified options to purchase 684,000 shares
of Common Stock of the Company.
(4) Effective December 31, 1996, Gerald P. McLaughlin surrendered to the Company
for cancellation incentive and non-qualified options to purchase 200,000
shares of Common Stock of the Company. At the same time, the Company vested
certain options held by Mr. McLaughlin to purchase 100,000 shares and issued
to Mr. McLaughlin a fully vested option to purchase 150,000 shares of Common
Stock of the Company.
(5) Effective December 31, 1996, Ronald E. Hogan surrendered to the Company for
cancellation incentive and non-qualified options to purchase 245,000 shares
of Common Stock of the Company.
DIRECTOR COMPENSATION
Directors currently receive no cash compensation for their services as
directors, with the exception of non-employee directors, who each receive $5,000
per annum. Directors also may be granted options or warrants to purchase common
stock from time to time for services in their capacity as directors. Upon
joining the Board in August 1996, Messrs. Bennett and Frazier were granted
options to purchase 100,000 shares each at an exercise price of $5.00 per share.
CONSULTING ARRANGEMENTS
In March 1997, in connection with their resignation or termination, Patrick
J. Downs, Daniel C. Downs, Ronald E. Hogan, and Gerald P. McLaughlin entered
into three-year consulting agreements with the Company. In consideration for
their services, each of the consultants will receive from the Company extensions
of the expiration dates for certain options and warrants held by the consultants
and, with respect to Patrick J. Downs and Daniel C. Downs, the Company waived
provisions of their respective stock options, which required the exercise of
certain options within a specified period of time following termination.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In March 1997, the Company agreed with Patrick J. Downs, Daniel C. Downs,
Gerald P. McLaughlin, and Ronald E. Hogan that each officer would resign or be
terminated. Pursuant to Resignation and General Release
6.
<PAGE>
Agreements between each resigning officer and the Company, the Company has
agreed to pay to Patrick J. Downs, Daniel C. Downs, Gerald P. McLaughlin, and
Ronald E. Hogan in monthly installments over three years, the sum of $746,160,
$746,160, $812,887, and $583,492, respectively, and paid each resigning officer
for all deferred compensation and accrued vacation accumulated by each officer
through December 31, 1996. Also, the Company cancelled indebtedness of Patrick
J. Downs, Daniel C. Downs, Gerald P. McLaughlin, and Ronald E. Hogan owed to the
Company in the amounts of $930,879, $629,141, $492,690, and $445,384
respectively. The resigning officers will continue to receive medical benefits
and life insurance paid for by the Company and, for 36 months, Patrick J. Downs,
Daniel C. Downs and Gerald P. McLaughlin will continue to receive a monthly car
allowance.
In connection with the management reorganization, the Company,also paid Alan
P. Magerman, a Director of the Company an aggregate of $225,000 and purchased
certain warrants to purchase common stock held by Mr. Magerman for a purchase
price of $81,250.
7.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 29, 1997 the number and
percentage ownership of Common Stock by (i) all persons known to the Company to
own beneficially more than 5% of the outstanding shares of Common Stock based
upon reports filed by each such person with the Securities and Exchange
Commission ("Commission"), (ii) each director of the Company, (iii) each of the
Named Executive Officers, and (iv) all of the executive officers and directors
of the Company as a group. Except as otherwise indicated, and subject to
applicable community property and similar laws, each of the persons named has
sole voting and investment power with respect to the shares of Common Stock
shown. An asterisk denotes beneficial ownership of less than 1%.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name (and Address of 5% Holder) Beneficially Owned Common Stock(1)
- ---------------------------------------------- ---------------------- ---------------
<S> <C> <C>
Gerald Sokol, Jr.............................. 100,000(2) *
Daniel C. Downs(3)............................ 845,461(4) 3.5%
Patrick J. Downs(3)........................... 754,486(5) 3.1%
Donald C. Klosterman.......................... 687,749(6) 2.9%
Alan P. Magerman.............................. 645,000(7) 2.7%
Edward Frazier................................ 100,000 *
Robert M. Bennett............................. 100,000 *
Ronald E. Hogan(3)............................ 558,714(8) 2.3%
Gerald P. McLaughlin(3)....................... 247,462(9) 1.1%
All executive officers and directors of the
Company as a group (nine persons)............ 4,038,872(10) 14.8%
</TABLE>
- ---------------
(1) Included as outstanding for purposes of this calculation are 23,314,000
shares of Common Stock (the amount outstanding as of April 28, 1997) plus,
in the case of each particular holder, the shares of Common Stock subject
to currently exercisable options, warrants, or other instruments exercisable
for or convertible into shares of Common Stock (including such instruments
exercisable within 60 days after April 29, 1997) held by that person, which
instruments are specified by footnote. Shares issuable as part or upon
exercise of outstanding options, warrants, or other instruments other than
as described in the preceding sentence are not deemed to be outstanding for
purposes of this calculation.
(2) Represents shares subject to currently exercisable options held by Mr.
Sokol.
(3) Patrick J. Downs, Daniel C. Downs, Ronald E. Hogan, and Gerald P. McLaughlin
resigned or were terminated in March 1997.
(4) Includes 250,000 shares subject to currently exercisable warrants and
416,667 shares subject to currently exercisable options held by Mr. Downs.
(5) Includes 250,000 shares subject to currently exercisable warrants and
366,667 shares subject to currently exercisable options held by Mr. Downs.
(6) Includes 200,000 shares subject to currently exercisable warrants and
150,000 shares subject to currently exercisable options held by Mr.
Klosterman.
(7) Includes 245,000 shares subject to currently exercisable warrants granted to
The Oracle Group, a corporation wholly-owned by members of Mr. Magerman's
family, which were subsequently assigned to Phyllis Magerman, Mr. Magerman's
wife, and 400,000 shares subject to currently exercisable options held by
Mr. Magerman.
8.
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(8) Includes 200,000 shares subject to currently exercisable warrants and
179,667 shares subject to currently exercisable options held by Mr. Hogan.
(9) Includes 200,000 shares subject to currently exercisable options owned by
Mr. McLaughlin.
(10) Includes 1,145,000 shares subject to currently exercisable warrants and
1,713,101 shares subject to currently exercisable options held by executive
officers and directors, including those described in notes (2) through (9)
above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LOANS TO OFFICERS AND DIRECTORS
As of the beginning of fiscal 1996, the Company had outstanding loans to a
director and certain of its officers, including an aggregate of $174,927
principal amount of loans made during fiscal 1996. The loans represent
withholding amounts paid by the Company on behalf of the director and officers
to taxing authorities in order to obtain a tax deduction for federal and state
income tax purposes relating to compensation to these officers and directors for
prior years. The loans were evidenced by individual promissory notes in favor
of the Company which bore interest at annual rates of between 6% and 8%, were
unsecured and were due on demand.
In April 1996, the Company restructured the loans to the director and
officers as described in the preceding paragraph. Pursuant to the
restructuring, each director and officer executed a three-year promissory note
in favor of the Company in a principal amount equal to the aggregate outstanding
principal balance and accrued interest on the prior loans as follows: Donald C.
Klosterman - $1,179,043; Patrick J. Downs - $680,429; Daniel C. Downs -$629,141;
Gerald P. McLaughlin - $492,691; Ronald E. Hogan - $445,384; and Robert
Klosterman - $237,383. The terms of the notes were as follows: 10% of the
principal amount was due at the end of 12 months from the date of the note; an
additional 30% of the principal amount was due at the end of 24 months; and the
balance of the principal amount (i.e., 60%) was due at the end of 36 months. The
notes were prepayable at any time without penalty and bear interest at the rate
of 6% per annum, which was payable annually in arrears.
The maker of each note had the option to satisfy amounts outstanding under
his note by relinquishing to the Company for cancellation either (i) shares of
the Company's Common Stock (valued for this purpose at the closing market price
on the date of transfer), or (ii) warrants to purchase the Company's Common
Stock (valued for this purpose at the fair market value on the date of transfer
as determined in good faith by the Board of Directors of the Company). To the
extent the maker of a note surrendered to the Company shares of Common Stock in
satisfaction of all or part of his note or interest thereon, the executive was
to be granted a 10-year nontransferable option (an incentive stock option to the
extent permissible) to purchase the same number of shares of Common Stock as
were surrendered, which would be immediately exercisable at an exercise price
equal to the value at which the Common Stock was surrendered to the Company in
satisfaction of the note obligation, subject to shareholder approval if required
by law or stock exchange rules.
If an executive was terminated by the Company for any reason other than for
"cause" at any time within the three-year term of his note (or in the case of
Donald C. Klosterman, if the stockholders failed to reelect him to the Board of
Directors), the balance of the note and any interest accrued thereon were to be
canceled. "Cause" for this purpose was defined as personal dishonesty or
willful misconduct which materially and adversely affects the Company.
In March 1997, Patrick J. Downs, Daniel C. Downs, Ronald E. Hogan, and
Gerald P. McLaughlin resigned or were terminated. Pursuant to Resignation and
General Release Agreements effective December 31, 1996 between the Company and
each resigning officer, the Company canceled the obligations of Patrick J.
Downs, Daniel C. Downs, Ronald E. Hogan and Gerald P. McLaughlin under the
foregoing notes, the principal and accrued interest of which totaled $930,879,
$629,141, $445,384 and $492,690, respectively. See "Executive Compensation -
Employment Agreements and Termination of Employment and Change in Control
Arrangements."
9.
<PAGE>
In January and March 1996, the Company loaned certain directors and
executive offices amounts necessary to enable them to satisfy margin calls on
their individual margin accounts in which they hold Common Stock of the Company
in order to avoid them having to sell the Common Stock to satisfy the margin
calls. The loans were made to Donald C. Klosterman, Alan. P. Magerman, Patrick
J. Downs, and Ronald E. Hogan in the amounts of $129,500, $35,000, $106,000 and
$90,500, respectively. The loans were evidenced by promissory notes, which were
secured by a pledge of shares of Common Stock owned by the maker of the note,
and bore interest at the rate of 10% per annum. The principal amount and all
accrued interest of the notes were paid on December 31, 1996.
INDEMNITY AGREEMENTS
In connection with their appointment to the Board of Directors in August
1996, the Company entered into indemnity agreements with each of Edward Frazier
and Robert M. Bennett. The indemnity agreements provide that the Company will
indemnify Messrs. Frazier and Bennett under certain circumstances against
certain liabilities and expenses they may incur in their capacities as directors
of the Company. The Company believes that the respective indemnity agreements
are reasonable and fair, and are in its best interests to retain experienced
outside directors.
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as a part of this report:
1, 2. Consolidated Financial Statements and Schedule.
The consolidated financial statements and schedule of the Company and its
consolidated subsidiaries are set forth in the "Index to Consolidated Financial
Statements" on page F-0.
3. Exhibits. The following exhibits are filed as a part of this report:
10.1 Certificate of Incorporation of the Company.(1)
10.2 By-laws of the Company.(2)
10.3 1985 Incentive Stock Option Plan, as amended.(2)
10.4* 1985 Nonqualified Stock Option Plan, as amended.(4)
10.5* Letter of Employment dated July 22, 1996 between NTN Communications, Inc.
and Gerald Sokol, Jr.
10.6 License Agreement with NTN Canada.(4)
10.7 National Football League License Agreement.(4)
10.8 The Campus Limited Liability Company Agreement.(7)
10.9 Lease of Office with The Campus L.L.C.(7)
10.10 Investment Agreement, dated as of December 31, 1995, among NTN
Communications, Inc., IWN, Inc. and Symphony Management Associates, Inc.,
without exhibits.(8)
10.11 Third Amended and Restated Agreement of Limited Partnership of IWN, L.P.,
dated as of December 31, 1995.(8)
10.12 First Amendment to the Third Amended and Restated Agreement of Limited
Partnership of IWN, L.P., dated as of March 11, 1996.(8)
10.13 Stock Purchase Agreement, dated as of December 31, 1995, between NTN
Communications Inc., IWN, Inc. and Symphony Management Associates, Inc.(8)
10.14 Stockholders Agreement, dated as of December 31, 1995, between NTN
Communications Inc., and Symphony Management Associates, Inc.(8)
10.15 Registration Rights Agreement, dated as of December 31, 1995, between NTN
Communications Inc., and Symphony Management Associates, Inc.(8)
10.
<PAGE>
10.16 Guaranty, dated as of December 31, 1995, from Symphony Management
Associates, Inc. in favor of IWN, Inc. and IWN, L.P.(8)
10.17 Amended and Restated Technology and Trademark License Agreement, dated
as of December 31, 1995, between NTN Communication, Inc. and IWN,
Inc.(8)
10.18 Amended and Restated Technology and Trademark Sub-license Agreement,
dated as of December 31, 1995, between IWN, Inc. and IWN, L.P.(8)
10.19 Worldwide Technology and Trademark Agreement, dated as of December 31,
1995, between IWN, Inc. and IWN, L.P.(8)
10.20 Non-competition Agreement, dated as of December 31, 1995, between IWN,
Inc. and IWN, L.P.(8)
10.21 Non-competition Agreement, dated as of December 31, 1995, between IWN,
L.P. in favor of NTN Communications, Inc. and IWN, Inc.(8)
10.22 Composite copy of Investment Agreements, dated as of April 24, 1995,
between NTN Communications, Inc. and the investors named therein.(8)
10.23 Composite copy of Investment Agreements, dated as of September 29, 1995,
between NTN Communications, Inc. and the investors named therein.(8)
10.24 Composite copy of Investment Agreements, dated as of October 4, 1995,
between NTN Communications, Inc. and the investors named therein.(8)
10.25 Stock Purchase Agreement by and between NTN Communications, Inc. and
Associated Ventures Management, Inc., dated as of December 22, 1995.(8)
10.26 Non Recourse Secured Promissory Note issued by the Company to Associated
Ventures Management, Inc., dated December 22, 1995.(8)
10.27* Management Agreement between NTN Communications, Inc. and Associated
Ventures Management, Inc., dated December 22, 1995.(8)
10.28* Resignation and General Release Agreement, dated December 31, 1996
between NTN Communications, Inc. and Patrick J. Downs.(9)
10.29* Resignation and General Release Agreement, dated December 31, 1996
between NTN Communications, Inc. and Daniel C. Downs.(9)
10.30* Resignation and General Release Agreement, dated December 31, 1996
between NTN Communications, Inc. and Ronald E. Hogan
10.31* Resignation and General Release Agreement, dated December 31, 1996
between NTN Communications, Inc. and Gerald P. McLaughlin.(9)
10.32* Resignation and General Release Agreement, dated December 31, 1996
between NTN Communications, Inc. and Michael J. Downs.(9)
10.33* Resignation and General Release Agreement, dated December 31, 1996
between NTN Communications, Inc. and Robert Klosterman.(9)
10.34* Letter agreement, dated March 4, 1997, between NTN and Alan Magerman.(9)
10.35* Consulting Agreement, dated as of December 31, 1996, between NTN
Communications Inc. and Patrick J. Downs.(9)
10.36* Consulting Agreement, dated as of December 31, 1996, between NTN
Communications Inc. and Daniel C. Downs.(9)
10.37* Consulting Agreement, dated as of December 31, 1996, between NTN
Communications Inc. and Ronald E. Hogan.(9)
10.38* Consulting Agreement, dated as of December 31, 1996, between NTN
Communications Inc. and Gerald P. McLaughlin.(9)
10.39* Consulting Agreement, dated as of March 14, 1997, between NTN
Communications Inc. and Donald Klosterman.(9)
10.40* General Release, dated as of December 31, 1996, between NTN
Communications Inc. and Patrick J. Downs.(9)
10.41* General Release, dated as of December 31, 1996, between NTN
Communications Inc. and Daniel C. Downs.(9)
10.42* General Release, dated as of December 31, 1996, between NTN
Communications Inc. and Ronald E. Hogan.(9)
11.
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<TABLE>
<S> <C>
10.43* General Release, dated as of December 31, 1996, between NTN
Communications Inc. and Gerald P. McLaughlin.(9)
10.44* General Release, dated as of December 31, 1996, between NTN
Communications Inc. and Michael J. Downs.(9)
10.45* General Release, dated as of December 31, 1996, between NTN
Communications Inc. and Robert Klosterman.(9)
10.46 Agreement of Purchase and Sale of Assets dated June 30, 1996 with
schedules and exhibits, among NTN Communications, Inc, New World
Computing Inc., and the 3DO Company.(10)
10.47* Special Stock Option dated August 18, 1996 between NTN Communications,
Inc. and Gerald Sokol, Jr.(11)
10.48* Special Stock Option dated August 25, 1996 between NTN Communications,
Inc. and Robert Bennett.(11)
10.49* Special Stock Option dated August 30, 1996 between NTN Communications,
Inc. and Ed Frazier.(11)
23.00 Consent of KPMG Peat Marwick LLP.
27.00 Financial Data Schedule.(11)
</TABLE>
______________________
* Management Contract or Compensatory Plan.
(1) Previously filed as an exhibit to the Company's report on Form 10-Q for
the quarter ended June 30, 1991, and incorporated by reference.
(2) Previously filed as an exhibit to the Company's registration statement on
Form S-8, File No. 33-75732, and incorporated by reference.
(3) Previously filed as an exhibit to the Company's report on Form 10-K for
the year ended December 31, 1989, and incorporated by reference.
(4) Previously filed as an exhibit to the Company's report on Form 10-K for
the year ended December 31, 1990, and incorporated by reference.
(5) Previously filed as an exhibit to the Company's report on Form 8-K dated
December 31, 1993, and incorporated by reference.
(6) Previously filed as an exhibit to the Company's report on Form 10-K for
the year ended December 31, 1993, and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's report on Form 10-K for
the year ended December 31, 1994, and incorporated herein by reference.
(8) Previously filed as an exhibit to the Company's report on Form 10-K for
the year ended December 31, 1995, and incorporated herein by reference.
(9) Previously filed as an exhibit to the Company's report on Form 8-K dated
March 5, 1997 and incorporated by reference.
(10) Previously filed as an exhibit to the Company's report on Form 8-K dated
June 30, 1996 and incorporated by reference.
(11) Previously filed.
(b) Reports on Form 8-K.
None.
12.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 to be signed on its behalf by
the undersigned, thereunto duly authorized.
NTN COMMUNICATIONS, INC.
April 29, 1997 By: /s/ Gerald Sokol
-------------------------------------
Gerald Sokol, Jr.
Chief Operating Officer and
Chief Financial Officer
13.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
NTN Communication, Inc.
We consent to incorporation by reference in the Registration Statement
(No.s 333-17247 and 333-12777) on Form S-8 and in the Registration Statement
(Nos. 333-14129, 33-42350, 33-77826, 33-97780, 33-64417 and 333-03805) on
Form S-3 of NTN Communications, Inc. of our report dated April 10, 1997,
relating to the consolidated balance sheets of NTN Communications, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996, and the related
schedule, which report appears in the December 31, 1996 Annual Report on
Form 10-K of NTN Communications, Inc. Our report dated April 10, 1997, contains
an explanatory paragraph that states that the Company has suffered recurring
losses from operations and has a net working capital deficiency, that raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
San Diego, California
April 30, 1997
