<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NTN COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
NTN COMMUNICATIONS, INC.
5966 La Place Court
Carlsbad, California 92008
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 28, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of NTN Communications, Inc. will be held at the offices of NTN
Communications, Inc., 5966 La Place Court, Carlsbad, California, at 10:00 A.M.
local time, on August 28, 1998, for the following purposes, as more fully
described in the attached Proxy Statement:
1. To elect two directors to hold office until the 2001 annual
meeting of stockholders; and
2. To consider and act upon such other matters as may properly
come before the meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on July 17, 1998
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting or at any adjournment thereof.
You are cordially invited to attend the Annual Meeting in person. In
order to ensure your representation at the meeting, however, please promptly
complete, date, sign, and return the enclosed proxy in the accompanying
envelope. The prompt return of your proxy will help to save expenses involved in
further communication. Your proxy can be revoked as described in the Proxy
Statement and will not affect your right to vote in person should you decide to
attend the Annual Meeting.
By Order of the Board of Directors
F. Kevin Loughran
Secretary
Carlsbad, California
August 4, 1998
<PAGE> 3
NTN COMMUNICATIONS, INC.
5966 La Place Court
Carlsbad, California 92008
-------------
PROXY STATEMENT
ANNUAL MEETING TO BE HELD AUGUST 28, 1998
-------------
SOLICITATION AND VOTING
GENERAL
The accompanying proxy is solicited by the Board of Directors
(sometimes hereinafter referred to as the "Board") of NTN Communications, Inc.
("NTN") for use at the annual meeting of stockholders to be held at the offices
of NTN Communications, Inc., 5966 La Place Court, Carlsbad, California, at 10:00
A.M., local time, on August 28, 1998, and at any adjournment or postponement
thereof (the "Annual Meeting"). The accompanying proxy names V. Tyrone Lam and
F. Kevin Loughran as proxies for purposes of the Annual Meeting. This Proxy
Statement, together with the accompanying proxy, is first being mailed to
stockholders on or about August 4, 1998.
All shares of common stock of NTN represented by a properly completed
proxy received in time for the Annual Meeting will be voted by the proxy holders
as directed in the proxy. If no direction is given in the proxy, it will be
voted "FOR" the election as directors of the nominees named in this Proxy
Statement. With respect to any other item of business that may come before the
Annual Meeting, the proxy holders will vote the proxy in accordance with their
best judgment.
REVOCABILITY OF PROXIES
A proxy may be revoked at any time before it has been exercised by
giving written notice of revocation to the Secretary of NTN, by executing and
delivering to the Secretary a proxy dated as of a later date than the
accompanying proxy, or by attending the Annual Meeting and voting in person. If,
however, your shares are held of record by a broker, bank or other nominee and
you wish to vote in person at the Annual Meeting, you must obtain from the
record holder a proxy issued in your name. Attendance at the Annual Meeting, by
itself, will not serve to revoke a proxy.
VOTING SECURITIES
NTN has one class of voting stock outstanding, designated common stock,
$.005 par value ("Common Stock"). Each share of Common Stock is entitled to one
vote for each director to be elected at the Annual Meeting. Only holders of
record of Common Stock at the close of business on July 17, 1998 are entitled to
notice of and to vote at the Annual Meeting. There were 27,475,762 shares of
Common Stock outstanding as of the record date. The presence, in person or by
proxy, at the Annual Meeting of stockholders entitled to cast at least a
majority of the votes entitled to be cast by all stockholders will constitute a
quorum for the transaction of business at the Annual Meeting. All votes will be
tabulated by the inspector of election appointed for the Annual Meeting, who
will separately tabulate the affirmative and negative votes, abstentions and
broker non-votes. Abstentions will be counted for purposes of determining the
presence of a quorum and will have the same effect as negative votes. Broker
non-votes also will count towards establishing a quorum, but will not count for
purposes of determining whether a matter has been approved.
1.
<PAGE> 4
SOLICITATION
The cost of soliciting proxies will be borne by NTN. This Proxy
Statement and the accompanying materials, in addition to being mailed directly
to stockholders, will be distributed through brokers, custodians and other
nominees to beneficial owners of shares of Common Stock. NTN may reimburse such
parties for their expenses in forwarding solicitation materials to beneficial
owners. Directors, officers or regular employees of NTN may follow up the
mailing to stockholders by telephone, telegram or personal solicitations, but no
special or additional compensation will be paid to directors, officers or
employees for doing so.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals intended to be included in NTN's proxy materials
for the 1999 annual meeting of stockholders of NTN must be received by March 26,
1999. Such proposals should be addressed to the Secretary of NTN.
With respect to any stockholder proposals to be presented at the 1999
annual meeting which are not included in the 1999 proxy materials, management
proxies for the 1999 meeting will be entitled to exercise their discretionary
authority to vote on such proposals notwithstanding that they are not discussed
in the proxy materials unless the proponent notifies NTN of such proposal by not
later than June 7, 1999.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION FOR TERM EXPIRING IN 2001
The Bylaws of NTN provide that the Board of Directors is to consist of
not less than five nor more than thirteen directors, with the exact number of
directors within such range to be specified by the Board. Prior to June 1998,
there were six authorized directors. In June 1998, Edward C. Frazier resigned as
a director. The Board of Directors currently consists of five members.
The Bylaws of NTN provide that the Board is to be classified into
three classes, as nearly equal in number as possible, with each class having a
three-year term. Vacancies on the Board (including vacancies created by an
increase in the authorized number of directors) may be filled by the Board. A
director appointed by the Board to fill a vacancy would serve for the remainder
of the full term of the directors of the class in which the vacancy occurs and
until his or her successor is elected and qualified.
Two directors are subject to election at the Annual Meeting. The Board
of Directors has selected the following nominees for election as directors of
the class of directors to be elected at the Annual Meeting. If elected, the
following nominees will hold office until the annual meeting of stockholders in
2001 and until their respective successors are duly elected and qualified.
ROBERT M. BENNETT, age 71, has been a director since August 1996. From
1991 to the present, Mr. Bennett has been the President of Trans Atlantic
Entertainment, a film distribution company. Since 1989, Mr. Bennett has been the
President of Bennett Productions, Inc., an entertainment company.
ESTHER L. RODRIGUEZ, age 56, was appointed was a director of NTN in
September 1997. She retired as a Vice President of Next Level Systems, Inc.
(formerly General Instrument), a leading telecommunications company, in November
1996 after having served in various executive capacities since she joined
General Instrument in 1987. For the two years prior to her retirement, Ms.
Rodriguez served as head of worldwide business development and sale teams for
private commercial business and
2.
<PAGE> 5
educational network systems. Following her retirement, she founded and has
served as Chief Executive Officer of Rodriguez Consulting Group, a management
consulting firm. Ms. Rodriguez has over 25 years' experience in general
management, business development and marketing, including 17 years' experience
in worldwide telecommunications.
The nominees have indicated a willingness to serve as directors. If
either of them should decline or be unable to act as a director, however, the
proxy holders will vote for the election of another person as the Board of
Directors recommends.
Nominees receiving the highest number of affirmative votes cast at the
Annual Meeting, up to the number of directors to be elected, will be elected as
directors. Proxies may not be voted for a greater number of persons than the
number of nominees named herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES NAMED. PROXIES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES NAMED
IF NO DIRECTION IS GIVEN IN THE PROXIES.
3.
<PAGE> 6
The following biographical information is furnished with respect to
the other current directors of NTN:
DIRECTORS WHOSE TERM EXPIRES IN 1999
STANLEY B. KINSEY, age 44, was appointed as a director of NTN in
November 1997. Since 1995, Mr. Kinsey has been engaged in private investment
activities and in 1996 founded K5 Media to implement certain technology products
in the sports industry. Mr. Kinsey was the Chief Executive Officer and
co-founder of IWERKS Entertainment, a leading high-technology entertainment
company, from 1985 to 1995. Prior to 1985, Mr. Kinsey was the Senior Vice
President of Operations and New Technologies for the Walt Disney Studios.
DONALD C. KLOSTERMAN, age 68, has been a director of NTN (or its
predecessor) since 1985. He served as the President of Pacific Casino
Management, Inglewood, California from June 1994 to November 1995. Mr.
Klosterman served as Chairman of the Board from 1985 until April 1994. From 1990
until March 1994, he also has acted as a consultant to NTN. Mr. Klosterman is a
director of Aldila Shaft Manufacturer, a manufacturer or golfing equipment.
DIRECTOR WHOSE TERM EXPIRES IN 2000
GERALD SOKOL, JR., age 35, has been a director of NTN since April 1997
and has served as Chief Financial Officer since July 1996, President since
February 1997, Chief Executive Officer since October 1997 and Chairman of the
Board since February 1998. From November 1996 to September 1997, he served as
Chief Operating Officer as well. Prior to joining NTN in July 1996, Mr. Sokol
served as Vice President of Finance and Treasurer of TeleCommunications, Inc. He
had been with TeleCommunications, Inc. since 1987.
MEETINGS AND ORGANIZATION
The business affairs of NTN are managed by and under the direction of
the Board of Directors. During the fiscal year ended December 31, 1997 the Board
met on seventeen occasions.
The Board has standing Audit and Compensation Committees. The primary
functions of the Audit Committee are to periodically review NTN's accounting and
financial reporting and control policies and procedures, to recommend to the
Board the firm of certified public accountants to be retained as NTN's
independent auditors, and to review NTN policies and procedures relating to
business conduct and conflicts of interest. The Audit Committee is currently
composed of three non-employee directors; Messrs. Kinsey and Klosterman and Ms.
Rodriguez. The Audit Committee met once in 1997.
The primary functions of the Compensation Committee are to review and
advise the Board on salaries, bonuses and awards of stock options to NTN's
officers and other executive compensation matters. The Compensation Committee
also is currently composed of Messrs. Kinsey and Klosterman and Ms. Rodriguez.
The Compensation Committee met once in 1997.
During 1997, each director attended at least 75% of the meetings of
the Board and of each Committee of the Board on which he or she served.
4.
<PAGE> 7
BOARD NOMINATIONS
The Board has no standing Nominating Committee. The Board in its
entirety acts upon matters that would otherwise be the responsibility of such a
committee. The Board will consider as prospective nominees for election as
directors persons recommended by NTN's stockholders. Any such recommendations
should be in writing and should be mailed or delivered to NTN, marked for the
attention of the Secretary of NTN, on or before the date for timely submission
of stockholder proposals. See "Stockholder Proposals for 1999 Annual Meeting."
EXECUTIVE OFFICERS
The following table lists the names of the executive officers of NTN,
along with their respective ages, positions and offices held with NTN:
<TABLE>
<CAPTION>
Name Age Position(s) Held
- ---- --- ----------------
<S> <C> <C>
Gerald Sokol, Jr. 35 Chief Executive Officer, President and Chief
Financial Officer
Geoffrey D. Labat 38 Chief Operating Officer
V. Tyrone Lam 36 Vice President and General Manager of NTN Network
F. Kevin Loughran 49 Vice President, Secretary and General Counsel
</TABLE>
See "Board of Directors" for Mr. Sokol's biography. The following
biographical information is furnished with respect to the other executive
officers of NTN:
GEOFFREY D. LABAT has served as Chief Operating Officer since
September 5, 1997. Prior to joining NTN as Chief Technology Officer in May 1997,
from July 1995 to May 1997, Mr. Labat served as Regional Director,
Engineering/Operations of GST Telecommunications, a public competitive local
exchange telecommunications of GST Telecommunications, public competitive local
exchange telecommunications carrier, deploying fiber optic communication
networks in the southwest United States. From December 1992 to June 1995, Mr.
Labat was Director of Telecommunications for Autotote Corporation, a provider of
wagering systems, wagering facility management, lottery systems and satellite
television broadcast services. Mr. Labat is a 19-year veteran of the
telecommunications/broadcast television industry, experienced in the design,
implementation, and management of telecommunications/broadcast networks
worldwide.
V. TYRONE LAM has served as Vice President and General Manager of the
NTN Network since September 1997. Prior to this he served as Associate Vice
President of Marketing from February 1997. Mr. Lam joined NTN in December 1994
in a marketing position. From April 1992 to December 1994, Mr. Lam managed the
interactive television sports and games development for the EON Corporation and
has held other sales and marketing positions in the computer software industry.
F. KEVIN LOUGHRAN joined NTN in October 1997. Prior to joining NTN, he
was engaged in the private practice of law, specializing in banking and
commercial law since January 1993. Prior to this, Mr. Loughran served as
Executive Vice President and General Counsel of Mercantile National Bank from
1990 to 1993 and as Senior Vice President and Assistant General Counsel of
Security Pacific National Bank from 1988 to 1990.
5.
<PAGE> 8
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 all individuals who
served as the Chief Executive Officer of NTN during 1997 and to the two other
most highly compensated executive officers of NTN who were serving as executive
officers at the end of fiscal year 1997 whose total annual salary and bonus
exceeded $100,000 (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.(2)............ 1997 $240,662 $ 335,500(3) $ 4,749(4) 600,000
Chief Executive Officer, 1996 87,423 -- 14,480(5) 875,000
President and Chief Financial 1995 -- --
Officer
Patrick J. Downs(6)............. 1997 -- -- $345,963(7) --
Chief Executive Officer 1996 192,885 -- 930,879(8) 200,000
1995 192,044 -- -- 200,000
Daniel F. Purner(9)............. 1997 104,085(10) -- 4,749(11) 175,000
Vice President 1996 79,073 -- 4,319 85,000
Business Development 1995 82,400 -- 3,978 12,500
V. Tyrone Lam................... 1997 105,367(10) -- 4,575(11) 165,000
Vice President and General 1996 75,177 -- 4,319 45,000
Manager NTN Network 1995 53,846 -- 3,255 5,000
</TABLE>
- -----------------
(1) Includes amounts, if any, deferred under the Company's 401(k) Plan and
Deferred Compensation Plan.
(2) Mr. Sokol joined NTN in July 1996.
(3) Includes a $150,000 home loan made to Mr. Sokol in August 1996, which in
accordance with its terms was forgiven in March 1997, and bonuses
aggregating $185,500.
(4) Represents group insurance premiums. Does not include directors' fees
of $12,000 payable to Mr. Sokol for 1997. See "Director Compensation."
(5) Represents moving expenses paid or reimbursed by NTN in connection with
Mr. Sokol's joining NTN.
(6) In March 1997, Mr. Downs resigned as Chairman of the Board and Chief
Executive Officer of NTN.
(7) In March 1997, NTN entered into a Resignation and General Release
Agreement (the "Resignation Agreement") with Mr. Downs for the purpose of
settling his prior employment agreements and other contracts and
arrangements with NTN. See "Termination of Employment and Change in
Control Arrangement." Pursuant to the Resignation Agreement, Mr. Downs
agreed to enter into a Consulting Agreement with NTN, in consideration of
which NTN agreed to honor certain provisions of Mr. Downs' prior
employment agreement which called for NTN's payment of his annual salary
for the remaining term of such employment agreement. The amount shown
represents those payments, along with certain payments for accrued
vacation, deferred compensation and insurance premiums called for in the
Resignation Agreement.
(8) Mr. downs was indebted to NTN for prior loans extended to him by NTN in
the amount shown in the table. In accordance with the original terms of
the loan, pursuant to the Resignation Agreement described in Note 8 above,
NTN agreed to cancel such indebtedness as of December 31, 1996, along with
the accrued interest.
6.
<PAGE> 9
(9) Mr. Purner has announced his resignation from NTN, effective as of the
end of July 1998.
(10) Mr. Purner and Mr. Lam were employees of NTN in previous years but were
not executive officers until 1997.
(11) Represents group medical insurance premiums.
STOCK OPTION GRANTS
The following table contains information concerning grants of stock
options during fiscal 1997 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............. 600,000(2) 25.2%(2) $2.81(2) 3/11/07 $1,060,316 $2,687,050
Daniel F. Purner............. 75,000(3) 3.2% 3.25 11/04/06 153,293 388,475
100,000(3) 4.2% 2.00 11/03/07 125,779 318,748
V. Tyrone Lam................ 65,000(3) 2.7% 3.25 11/04/06 132,854 336,678
100,000(3) 4.2% 2.00 11/03/07 125,779 318,748
Patrick J. Downs............. -- -- -- -- -- --
</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 an option granted under NTN's 1995 Option Plan which was
immediately exercisable upon grant as to 300,000 of the shares shown. The
original exercise price of the option of [$4.50] per share was reduced in
May 1997 to the exercise price shown in the table.
(3) Represents options granted under NTN's 1995 Option Plan which become
exercisable in three equal installments on each of the first, second and
third anniversaries of the dates of grant.
7.
<PAGE> 10
STOCK OPTION EXERCISES AND OPTION VALUES
The following table contains information concerning stock options
exercised during 1997 and stock options which were unexercised at the end of
fiscal 1997 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
Fiscal Year-End at Fiscal Year-End (1)
Shares Acquired Value ------------------------- --------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ---------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald Sokol, Jr........ -- -- 1,052,500 422,500 *(2) *(2)
Daniel F. Purner........ 3,000 $5,070 50,333 238,167 * *
V. Tyrone Lam........... -- -- 17,000 198,000 * *
Patrick J. Downs........ -- -- 750,000 -- $146,875 *
</TABLE>
- ----------------
(1) Represents the amount by which the aggregate market price on December 31,
1997 of the shares of NTN'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, 1997.
(2) Based on the exercise price of the options as amended in May 1997.
OPTION REPRICINGS
In May 1997, the Board amended all of the stock options previously
granted to Mr. Sokol to reduce the exercise price of such options to $2.81 per
share, the then current fair market value of the Common Stock. The option
repricings were approved by the Board in light of the precipitous decline in the
market value of the Common Stock that had occurred since the options were
originally granted. The Board believed that the drop was due to conditions and
factors beyond the control or responsibility of Mr. Sokol, and the result of the
drop in the market price was that the options were no longer affording a
significant incentive to him to deal with these preexisting factors and
conditions. The Board intends to consider additional repricings as appropriate
to afford NTN's executive officers and other employees incentives to continue to
work to improve the performance of NTN.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
Length of
Number of Exercise Original
Securities Market Price Price at Option Term
Underlying of Stock at Time of Remaining at
Options Time of Repricing New Date of
Repriced or Repricing or or Exercise Repricing or
Name Date Amended (#) Amendment ($) Amendment Price Amendment
- --------------------------- ----------- ------------- ---------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald Sokol, Jr........... 05/14/97 221,260 $2.81 $5.00 $2.81 9.25 years
Chief Executive Officer,
President and Chief
Financial Officer
05/14/97 400,000 2.81 5.00 2.81 9.25 years
05/14/97 78,740 2.81 5.08 2.81 9.25 years
05/14/97 175,000 2.81 3.50 2.81 9.5 years
05/14/97 600,000 2.81 4.00 2.81 9.8 years
</TABLE>
8.
<PAGE> 11
DIRECTOR COMPENSATION
Directors currently receive compensation of $2,000 per month for their
services as directors. On December 17, 1997, the Board elected to pay the 1997
and 1998 fees in shares of treasury stock, which was valued for this purpose at
$1.125 the market value of the Common Stock as of December 16, 1997. Each
director who served in 1997 is to be issued 16,000 shares of stock, except Mr.
Sokol, who will receive 10,667 shares for serving a partial year. For 1998, each
current director will receive 21,333 shares of Common Stock, with the
understanding that should they fail to serve the entire year, they would repay
to NTN, in cash or shares of Common Stock valued for the purpose of its then
market value, the unearned portion of their fees. Directors are also eligible
for the grant of 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, Mr. Bennett was granted options
to purchase 100,000 shares each at an exercise price of $5.00 per share. These
options became vested as to one-third of the shares covered thereby on the first
anniversary of grant date and will become vested and exercisable as to the
balance of the covered shares in two equal installments on the second and third
anniversaries of the grant date, subject to Mr. Bennett remaining as a director.
The options were amended in May 1997 to reduce their exercise prices to $2.81
per share and to provide for immediate vesting in the event of a "Change of
Control Event" as defined.
Upon joining the Board in September 1997, Ms. Rodriguez was granted
options to purchase 100,000 shares of Common Stock at an exercise price of
$2.4375 per share. Ms. Rodriguez's options will become vested and exercisable in
three equal installments on the first, second and third anniversaries of the
grant date, subject to Ms. Rodriguez remaining as a director. The options
provide for immediate vesting in full in the event of a "Change of Control
Event" as defined.
Upon joining the Board in November 1997, Mr. Kinsey was granted
options to purchase 100,000 shares of Common Stock at an exercise price of
$1.875 per share. Mr. Kinsey's options will become vested and exercisable in
three equal installments on the first, second and third anniversaries of the
grant date, subject to Mr. Kinsey remaining as a director. The options provide
for immediate vesting in full in the event of a "Change of Control Event" as
defined.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In July 1998, NTN entered into a written Employment Agreement with
Gerald Sokol, Jr. under which Mr. Sokol will serve as President and Chief
Executive Officer of the Company for a period of two years ending July 21, 2000.
Under the Employment Agreement, Mr. Sokol is to receive an annual salary of
$262,500, which will increase in proportion to any increase in the consumer
price index during the second year of the term of employment. Mr. Sokol also is
entitled to an annual bonus based on NTN's "Operating Cash Flow" (as defined)
for calendar year 1998 as follows: 2.5% of the first $5,000,000 of Operating
Cash Flow; 1.5% of any Operating Cash Flow in excess of $5,000,000 and up to
$10,000,000; and 1% of any Operating Cash Flow in excess of $10,000,000.
Pursuant to a similar clause in his previous Employment Agreement, Mr. Sokol
received a bonus of $100,500 in 1997. Any bonus for any period subsequent to
1998 will be at the discretion of the Board of Directors.
NTN also has agreed pursuant to the Employment Agreement to provide
Mr. Sokol and his dependents certain medical insurance and to purchase
$1,000,000 of life insurance ($2,000,000 in the event of accidental death or
dismemberment) on Mr. Sokol payable to his beneficiaries.
Mr. Sokol's Employment Agreement may be terminated by NTN in the event
of his disability, in which event Mr. Sokol or his representatives will be
entitled to be paid severance in an amount equal to 75% of his compensation
(including the annual bonus calculated as described above) for the remainder of
the term of the Employment Agreement. The Employment Agreement also may be
terminated by NTN in the event of Mr. Sokol's personal dishonesty, willful
misconduct or breach of
9.
<PAGE> 12
fiduciary duty, or if he breaches the Employment Agreement and fails to cure the
breach within 30 days. In the event NTN terminates the Employment Agreement
without cause, attempts to reassume Mr. Sokol's duties or to change his duties
without cause, Mr. Sokol will be entitled to a liquidated amount equal to his
entire compensation under the Employment Agreement for the remainder of its
term.
Mr. Sokol may terminate the Employment Agreement on sixty days' notice
to NTN and, in such event, will be entitled to receive severance in an amount
equal to one year's salary. Either Mr. Sokol or NTN may terminate the Employment
Agreement at any time following a "Change of Control Event" as defined. In the
event Mr. Sokol or NTN terminates Mr. Sokol's employment following a Change of
Control Event, he will be entitled to receive severance in an amount equal to
one year's salary.
In connection with his agreeing to join NTN as its Chief Financial
Officer, in August 1996 Mr. Sokol was granted various options to purchase an
aggregate of up to 700,000 shares of Common Stock. In February 1997, Mr. Sokol
was granted an option to purchase 175,000 shares of Common Stock at an exercise
price of $3.50 per share. In March 1997, Mr. Sokol was granted additional
options to purchase 600,000 shares of Common Stock at an exercise price of $4.00
per share. All of these options were amended in May 1997 to reduce the
respective exercise prices of the options to $2.81 per share.
BOARD COMPENSATION REPORT
Executive Compensation Policy
During 1997, as it has in prior years, the Board of Directors as a
whole acted on matters of executive compensation and makes the following report:
NTN's executive compensation policy is intended to foster job
satisfaction and encourage continuous service by NTN's executive officers by
providing reasonable short-term cash compensation and long-term stock-based
incentives. NTN's policies apply equally to its Chief Executive Officer and
other executives.
A summary of NTN's executive compensation policy is described below:
o In connection with the reorganization of its management in early
1997, NTN discontinued its prior profit-sharing program, which provided for
NTN's establishment of an annual profit-sharing pool based on the achievement of
certain specified pre-tax income levels to be allocated among NTN's executive
officers and other employees. NTN consistently failed to achieve the specified
income levels and, thus, the Plan was not affording real incentives to executive
officers or other employees. In March 1998, NTN established a cash bonus plan
for calendar year 1998 applicable to all employees, including executive officers
(the "Employee Bonus Plan"). Cash bonuses are payable under the 1998 Employee
Bonus Plan on a quarterly basis to the extent NTN achieves on or more of its
planned revenue, expense and cash flow projections, respectively, on a monthly
basis in a given quarter. The total amount awardable under the 1998 Employee
Bonus Plan for each month is $12,500; however, should NTN exceed $600,000 of
cash flow per month for two consecutive months during 1998, the total amount
payable under the 1998 Employee Bonus Plan for the second of such months will be
increased to $32,500.
o NTN has established a 401(k) Plan. NTN may, in the Board's
discretion, make annual contributions to the 401(k) Plan, subject to applicable
limitations, but it has never made any such contributions and the Board
anticipates that it will not do so until NTN achieves consistent, profitable
operations.
o Short-term cash compensation to executives for 1997 consisted
primarily of salaries, subject to any written employment agreement between NTN
and any executive.
10.
<PAGE> 13
o In May 1997, NTN entered into a written Employment Agreement with
Mr. Sokol as President and Chief Operating Officer, the terms of which are
described elsewhere in this Proxy Statement. Mr. Sokol has since relinquished
his duties as Chief Operating Officer and become NTN's Chief Executive Officer.
The terms of Mr. Sokol's employment, which provides for an annual salary and an
annual cash bonus based on the results of operations of NTN, as well as the
grant of certain stock options also described elsewhere in this Report, were
determined by arm's-length negotiations between NTN and Mr. Sokol. Among the
criteria the Board considered in approving the terms of Mr. Sokol's Employment
Agreement were the compensation then being paid to NTN's other executive
officers, Mr. Sokol's prior compensation as Treasurer of Tele-Communications,
Inc., and the scope of Mr. Sokol's responsibilities at NTN.
o Equity compensation, in the form of stock options and stock purchase
warrants, constitute the principal element of long-term compensation for NTN's
executive officers. The grant of stock options and warrants increases
management's potential equity ownership in the Company with the goal of ensuring
that the interests of management remain closely aligned with those of the
Company's stockholders. Accordingly, commensurate with Mr. Sokol's appointment
as President of NTN in March 1997, the Board granted him options to purchase
600,000 shares of Common Stock at an original exercise price of $4.00 per share.
Attaching vesting requirements to stock options and warrants also creates an
incentive for executive officers to remain with NTN for the long term. In
appropriate circumstances, the Board also will consider repricing previously
granted stock options if necessary so that the options continue to afford
realistic incentives to executives.
In May 1997, the Board amended all of the stock options previously
granted to Mr. Sokol to reduce the exercise price of such options to $2.81 per
share, the then current fair market value of the Common Stock. The option
repricings were approved by the Board in light of the precipitous decline in the
market value of the Common Stock that had occurred since the options were
originally granted. The Board believed that the drop was due to conditions and
factors beyond the control or responsibility of Mr. Sokol, and the result of the
drop in the market price was that the options were no longer affording a
significant incentive to him to deal with these preexisting factors and
conditions. The Board intends to consider additional repricings as appropriate
to afford NTN's executive officers and other employees incentives to continue to
work to improve the performance of NTN.
o Compensation to NTN's executive officers is subject to a $1,000,000
compensation deduction cap pursuant to Section 162(m) of the Internal Revenue
Code, as amended. In 1997, no executive officer received aggregate compensation
of $1,000,000 or more. However, the Board is aware that the grant of stock
options and stock purchase warrants to the executive officers may subject NTN to
the deduction cap in subsequent years. With respect to incentive stock options,
the Board does not anticipate NTN taking a deduction in the absence of a
disqualifying disposition by an executive officer. With respect to nonqualified
options and warrants, the Board is aware that any deduction that NTN may have at
the time of exercise will be subject to the $1,000,000 cap. The Board does not
anticipate that the compensation deduction cap will significantly affect its
executive compensation policies.
Chief Executive Officer Compensation
As indicated above, subject to any written employment agreement, the
factors and criteria upon which the compensation of NTN's Chief Executive
Officer is based are identical to the criteria used in evaluating the
compensation packages of the other executive officers of the Company.
Stanley B. Kinsey Donald C. Klosterman Esther L. Rodriguez
Gerald Sokol, Jr. Robert M. Bennett
11.
<PAGE> 14
Notwithstanding anything to the contrary set forth in any of NTN's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement in
whole or in part, the foregoing Board Compensation Report and the following
Performance Graph shall not be incorporated by reference into any such filings.
PERFORMANCE GRAPH
The following graph sets forth a comparison of cumulative total
returns for NTN, the American Stock Exchange Index, and an NTN-constructed
Industry Index for 1997 ("Industry Index"). The Industry Index consists of all
companies (i) that are listed in the same industry group as NTN in the Media
General Industry Group Stock Index, and (ii) whose securities have been
registered under Section 12 of the Exchange Act during the period covered by the
performance graph.
<TABLE>
<CAPTION>
Measurement Period NTN Industry Broad
(Fiscal Year Covered) Communications, Inc. Index Market
<S> <C> <C> <C>
1992 100 100 100
1993 202.53 140.07 118.81
1994 121.52 101.55 104.95
1995 91.14 117.24 135.28
1996 77.22 95.31 142.74
1997 20.25 159.62 171.76
</TABLE>
The companies listed in the Industry Index are as follows:
*@ Entertainment Inc.
Adelphia Communication A
Advanced Radio Telecom
American Telecasting Inc.
Ascent Entertain Gr Inc.
Cablevision Systems Cl A
CAI Wireless Systems Inc.
Cellularvision USA Inc.
Century Communications
Comcast Corp. Cl A
Comcast Special Stock
Comcast UK Cable Prt Ltd
Cox Communications Inc.
Digitale Telekabl Ag Adr
General Cable PLC ADR
Heartland Wireless Comm
Internat Fibercom Inc.
Jones Intercable Inc.
Jones Intercable Inc. A
Lodgenet Entertainment
Matav-Cable Sys Media
Multicanal Participacoes
National Wireless Hldgs
Network Event Theater
Network North Inc
NTL Inc.
On Command Corporation
Peoples Choice TV Corp.
TCA Cable TV Inc.
TCA Satellite Ent Inc. A
TCA Satellite Ent Inc. B
Tel-Com Wireless Cable
Tele-Comm Ser A TCI GP
Tele-Comm Ser B TCI GP
TeleWest Comm. PLC ADR
TV Filme Inc.
United Internat Hldg CLA
United Video Satl Grp A
Wireless One Inc.
12.
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All compensation determinations for 1997 for NTN's executives were
made by the Board of Directors of NTN as a whole upon the advice of the
Compensation Committee of the Board. The Compensation Committee consisted of
Messrs. Frazier and Bennett until November, 1997 when they were replaced by
Messrs. Kinsey and Klosterman and Ms. Rodriguez. None of the directors or
executive officers of NTN has served on the Board of Directors or the
compensation committee of any other company or entity, any of whose officers
served either on the Board of Directors or on the Compensation Committee of the
Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of July 1, 1998 the number and percentage
ownership of Common Stock by (i) all persons known to NTN 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 NTN, (iii) each of the Named Executive Officers, and (iv)
all of the executive officers and directors of NTN 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 Beneficially Owned Common Stock(1)
---- ------------------ ---------------
<S> <C> <C>
Gerald Sokol, Jr.(2)......................... 1,114,500 4%
Edward C. Frazier(3)......................... 682,833 2.5%
Robert M. Bennett(4)......................... 140,666 *
Donald C. Klosterman(5)...................... 795,082 2.9%
Esther L. Rodriguez(6)....................... 22,333 *
Stanley B. Kinsey............................ 21,333 *
V. Tyrone Lam(7)............................. 17,000 *
Patrick J. Downs(8).......................... 276,419 1%
All executive officers and directors of
NTN as a group (9 persons)(9)............... 3,168,477 11.5%
</TABLE>
- ---------------
(1) Included as outstanding for purposes of this calculation are
27,475,762 shares of Common Stock (the amount outstanding as of July
1, 1998) 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
July 1, 1998) 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) Includes 1,052,500 shares subject to currently exercisable options
held by Mr. Sokol.
(3) Includes 500,000 shares subject to currently exercisable warrants and
137,500 shares subject to currently exercisable options held by Mr.
Frazier.
(4) Includes 33,333 shares subject to currently exercisable options held
by Mr. Bennett.
(5) Includes 200,000 shares subject to currently exercisable warrants and
150,000 shares subject to currently exercisable options held by Mr.
Klosterman.
13.
<PAGE> 16
(6) Includes 1,000 shares owned by the Rodriguez Family Trust, of which
Ms. Rodriguez is a co-trustee with members of her immediate family. As
co-trustee, Ms. Rodriguez shares voting and investment power with
respect to the shares.
(7) Includes 17,000 shares subject to currently exercisable options held
by Mr. Lam.
(8) Includes 138,600 shares to be issued pursuant to the Stock Exchange
Agreement dated March 19, 1998, and excludes 750,000 options and
warrants to be exchanged pursuant to the Stock Exchange Agreement.
(9) Includes 649,666 shares subject to currently exercisable warrants and
1,464,000 shares subject to currently exercisable options held by
executive officers and directors, including those described in notes
(2) through (8) above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 between NTN and each resigning officer, and in
accordance with the terms of certain notes payable by each former officer to
NTN, NTN cancelled the obligations of Patrick J. Downs, Daniel C. Downs, Gerald
P. McLaughlin and Ronald E. Hogan under such notes effective December 31, 1996.
The principal and accrued interest of the cancelled notes totaled $953,710,
$657,265, $514,715 and $463,526, respectively. See "Executive Compensation -
Employment Agreements and Termination of Employment and Change in Control
Arrangements."
ADVANCE TO MR. SOKOL
In March 1997, as a consequence of the reorganization of NTN's
management, an advance of $150,000 provided to Mr. Sokol in 1996 was forgiven.
The advance, originally provided in August 1996, in connection with his agreeing
to join NTN was for use in purchasing a residence in California. The advance was
to be forgiven over four years as a bonus or upon the occurrence of a change of
control of NTN. Such a change of control occurred in March 1997.
CONSULTING ARRANGEMENTS
In December 1996, NTN retained Frazier/King Media Holding Co.
("Frazier/King"), a media consulting firm of which Edward C. Frazier is a
principal and a 50% owner, to provide consulting services to NTN relating to the
development of a local advertising sales program. Under the terms of the
one-year engagement, NTN paid Frazier/King $100,000 plus reimbursement of
expenses incurred by Frazier/King of approximately $35,000. In March 1997, NTN
entered into a separate Consulting Agreement with Mr. Frazier, under which he
agreed to spend on average seven days a month consulting with management of NTN
regarding NTN's operations and serving as a consultant to NTN's President and as
a member of NTN's Executive Advisory Board, which had just been created by NTN's
Board of Directors. The Executive Advisory Board was subsequently disbanded. The
Consulting Agreement was to expire in March 1999, unless sooner terminated. In
consideration for his services under the foregoing Consulting Agreement, Mr.
Frazier was granted a five-year, nonqualified stock option to purchase 250,000
shares of Common Stock at an exercise price of $4.50 per share, which was to
vest in 24 monthly installments of approximately 10,416 shares each, subject to
Mr. Frazier remaining as a consultant, and was to become exercisable on and
after February 28, 1999. NTN also agreed to reimburse Mr. Frazier for certain
expenses relating to his consulting services. In May 1997, Mr. Frazier's option
was amended to reduce the exercise price to $2.81 and to provide that it would
become immediately exercisable in full in the event of a "Change of Control" (as
defined) of NTN. In January 1998, the Board of Directors cancelled the
Consulting Agreement and reduced the compensation to 104,167 options, which
vested 100% at March 31, 1998. In connection with the option granted to Mr.
Frazier under the Consulting Agreement, NTN recorded a charge pursuant to SFAS
No. 123 of $224,000 in 1997. An additional charge of $58,000 will be recorded in
1998.
14.
<PAGE> 17
In April 1997, NTN entered into another Consulting Agreement with
Frazier/King, under which Frazier/King was engaged to review and consult with
management of NTN regarding NTN's strategic business plan, current operations
and future development and to devise and structure an appropriate plan to secure
future financing for NTN. The Consulting Agreement was terminable by NTN any
time upon ten days notice to Frazier/King in the event the Board of Directors as
a whole determined in good faith that Frazier/King had failed materially to
perform, or had breached its duties, under the Consulting Agreement.
For Frazier/King's services under the foregoing Consulting Agreement,
NTN granted Frazier/King a warrant to purchase 1,000,000 shares of Common Stock
at an exercise price of $2.81, the approximate market value of the Common Stock
on the date of the Consulting Agreement, and agreed to reimburse Frazier/King
for expenses (other than normal operating expenses) incurred by it in performing
its consulting services. Frazier/King's warrant was immediately vested and
exercisable as to 200,000 shares of Common Stock covered thereby and was to
become vested and exercisable as to the balance of 800,000 covered shares in
quarterly installments of 100,000 shares each as of the 15th day of each July,
October, January and April commencing July 15, 1997 and ending April 15, 1999,
provided that the Board of Directors of NTN has determined that Frazier/King was
performing satisfactorily under the Consulting Agreement. In January, 1998, the
Board and Frazier/King agreed to terminate this Consulting Agreement and the
number of warrants granted was reduced to 500,000, which were immediately
vested. In connection with the warrant granted to Frazier/King, NTN recorded a
charge pursuant to SFAS No. 123 of $1,401,000, in 1997.
INDEMNITY AGREEMENTS
NTN has entered into indemnity agreements with each of its directors
and executive officers. The indemnity agreements provide that NTN will indemnify
these individuals under certain circumstances against certain liabilities and
expenses they may incur in their capacities as directors of NTN. NTN believes
that the use of such indemnity agreements is customary among corporations and
that the terms of the indemnity agreements are reasonable and fair to NTN, and
are in its best interests to retain experienced directors.
RECENT SALE OF LEARNSTAR
In January 1998, the Board of Directors concluded that the interests
of NTN's shareholders are best served by concentrating NTN's resources and
efforts on its two core businesses, the NTN Network and Online/Internet
services. Accordingly, the Board resolved either to sell or cease the operations
of its two subsidiaries, LearnStar, Inc.
("LearnStar") and IWN, Inc.
In March 1998, NTN entered into a letter of intent ("LOI") to sell a
majority interest in LearnStar to NewStar Learning Systems ("NewStar"), a
company in which Sally A. Zoll, President of LearnStar, and Joe King, a
principal of Frazier/King Media Holding Co., are shareholders.
The closing of the transaction with NewStar occurred on June 16, 1998.
At closing, Newstar acquired 82.5% of the outstanding LearnStar common stock for
a cash payment of $1,860,000. NTN retains a 17.5% equity interest in LearnStar.
Upon the closing of the sale Edward C. Frazier resigned from the Board of
Directors of NTN in order to avoid any perception of a conflict of interest
between his ongoing business relationship with Mr. King and NTN's continued
minority ownership interest in LearnStar.
15.
<PAGE> 18
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, NTN's directors and officers and
any persons holding more than 10% of NTN's Common Stock are required to report
their ownership of Common Stock and any changes in that ownership to the
Commission. Specific due dates for these reports have been established, and NTN
is required to report in this Proxy Statement any failure to file by these
dates. During 1997, all of these filing requirements were satisfied by its
directors, officers and 10% stockholders, except as follows: Messrs. Labat, Lam,
Purner and Loughran did not file appropriate documents in timely fashion upon
becoming executive officers of NTN during 1997 but each officer is currently in
compliance with beneficial ownership reporting requirements.
In making the foregoing statements, NTN has relied upon a review of
Forms 3 and 4 and amendments thereto furnished to NTN pursuant to Rule 16a-3
under the Exchange Act to date and the written representations of its incumbent
directors and officers.
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP independent
accountants of NTN for the fiscal year ending December 31, 1998.
KPMG Peat Marwick LLP is a nationally recognized firm of independent
accountants and has audited NTN's financial statements for the fiscal years
ended December 31, 1989 through December 31, 1997. A KPMG Peat Marwick LLP
representative will be present at the Annual Meeting and will be available to
make a statement, if he or she desires to do so, and to respond to appropriate
questions.
OTHER MATTERS
Accompanying this Proxy Statement is a letter to stockholders from Mr.
Sokol, NTN's President and Chief Executive Officer, together with selected
information derived from NTN's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997. These accompanying materials constitute NTN's Annual
Report to Stockholders.
NTN WILL FURNISH, WITHOUT CHARGE, TO EACH PERSON TO WHOM THIS PROXY
STATEMENT IS BEING SENT A COMPLETE COPY OF NTN'S FORM 10-K (OTHER THAN EXHIBITS)
FOR FISCAL 1997. WRITTEN REQUESTS FOR THE FORM 10-K SHOULD BE DIRECTED TO MS.
JUDY PIERCEY, DIRECTOR OF MARKETING COMMUNICATIONS, AT NTN'S OFFICES. TELEPHONE
REQUESTS MAY BE DIRECTED TO MS.
PIERCEY AT (760) 438-7400.
Management of NTN does not know of any matter to be acted upon at the
Annual Meeting other than the matters described above. If any other matter
properly comes before the Annual Meeting, however, the proxy holders will vote
the proxies thereon in accordance with their best judgment.
By Order of the Board of Directors
F. Kevin Loughran
Secretary
Carlsbad, California
August 4, 1998
16.
<PAGE> 19
NTN COMMUNICATIONS, INC.
5966 LA PLACE CT.
SUITE 100
CARLSBAD, CALIFORNIA 92008
------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
------------------------------------------------------------
The undersigned hereby appoints V. Tyrone Lam and F. Kevin Loughran, and
each or either of them, as proxy holders with power to appoint his substitute,
and hereby authorizes the proxy holders to represent and vote, as designated on
the reverse side, all shares of Common Stock of NTN Communications, Inc. (the
"Company") held of record by the undersigned on July 17, 1998, at the annual
meeting of stockholders to be held on August 28, 1998 or any adjournment
thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 20
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
NTN COMMUNICATIONS, INC.
AUGUST 28, 1998
o PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED o
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
A PLEASE MARK YOUR
VOTES AS INDICATED
[X] IN THIS EXAMPLE.
FOR WITHHOLD
all nominees listed AUTHORITY
(except as indicated to vote for all
to the contrary) nominees listed
1. ELECTION OF NOMINEES: Robert M. Bennett
DIRECTORS. [ ] [ ] Esther L. Rodriguez
INSTRUCTIONS: To withhold authority to
vote for any nominee, draw a line through
such nominee's name.
- --------------------------------------------
SIGNATURE(S) DATE SIGNATURE(S) DATE
------------------------------- ------------ ------------------------- -------------
NOTE: Please sign exactly as name appears hereon. When shares are by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a partnership, please sign in partnership name by authorized partner.
</TABLE>
