EXHIBIT 4.2
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WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement") dated this 9th day of October,
1996, between NTN COMMUNICATIONS, INC., a Delaware corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation, as Warrant
Agent.
W I T N E S S E T H:
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WHEREAS, in connection with a settlement of a purported consolidated
class action lawsuit against the Company, the Company will issue up to 565,000
redeemable common stock purchase warrants (the "Warrants") to purchase an
aggregate of up to 565,000 shares of Common Stock; and
WHEREAS, the Company desires to provide for the form and provisions of
the Warrants, the terms upon which they shall be issued and exercised and the
respective rights and obligations of the Company, the Warrant Agent and the
holders of the Warrants, and the issuance of certificates representing the
Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on the Company's
behalf, and the Warrant Agent is willing to so act, in connection with the
issuance, acquisition, transfer, redemption and exchange of certificates
representing the Warrants and the transfer of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall
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have the meanings indicated, unless the context shall otherwise require:
(a) "Commission" shall mean the Securities and Exchange
Commission.
(b) "Common Stock" shall mean the Common Stock, par value
$.005 per share, of the Company.
(c) "Corporate Office" shall mean the office of the Warrant
Agent at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other address at
which the Warrant Agent's principal business in New York, New York, shall be
administered at any particular time.
(d) "Exercise Date" shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (i) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, and (ii)
payment in cash or by certified check made payable to the Warrant Agent for the
account of the Company, of the amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(e) "Initial Warrant Exercise Date" shall mean __________,
1996.
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(f) "Initial Warrant Redemption Date" shall mean the date 24
months after the Initial Warrant Exercise Date.
(g) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 9, _________ and ______/100th Dollars
($_______), and further subject to the Company's right, in its sole discretion,
to decrease the Purchase Price for a period of not less than 10 business days on
not less than 10 days' prior written notice to the Registered Holders and
Warrant Agent.
(h) "Redemption" shall have the meaning set forth in Section
10(c).
(i) "Redemption Date" shall have the meaning set forth in
Section 10(b).
(j) "Redemption Price" shall have the meaning set forth in
Section 10(c).
(k) "Registered Holder" shall mean the person in whose name
any certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 7.
(l) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(m) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary power to
elect a majority of the Board of Directors of such corporation (regardless of
whether or not at the time stock of any class or classes of such corporation
shall have or may have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by the Company or by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.
(n) "Transfer Agent" shall mean American Stock Transfer &
Trust Company or its successor.
(o) "Warrant Agent" shall mean American Stock Transfer & Trust
Company or its successor authorized herein.
(p) "Warrant Certificate" shall mean a certificate
representing each of the Warrants substantially in the form annexed hereto as
Exhibit A.
(q) "Warrant Exercise Expiration Date" shall mean the earlier
of (i) 5:00 P.M. (New York time), on _____________, 1999, or, if such date shall
in the State of New York be a holiday or a day on which banks are authorized to
close, then 5:00 P.M. (New York time) on the next following day which in the
State of New York is not a holiday or a day on which banks are authorized to
close, subject to the Company's right, prior to the Warrant Exercise Expiration
Date, in its sole discretion, to extend such Warrant Exercise Expiration Date on
20 days' prior written notice to the Registered Holders, or (ii) the Redemption
Date.
(r) "Warrant Redemption Expiration Date" shall mean 5:00 p.m.
(New York time) on the first date following the Initial Warrant Exercise Date as
of which the closing sale price of the Common Stock on the American Stock
Exchange, or on such other principal exchange on which Common Stock is traded at
any particular time (or if the Common Stock is no longer traded on a securities
exchange, the high closing bid price for the Common Stock in the over-the-
counter market as reported by NASDAQ), has exceeded the sum of (i) the Purchase
Price plus (ii) $3.25
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(subject to equitable adjustment to reflect stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences) for any seven trading
days, whether or not consecutive.
SECTION 2. Appointment of Warrant Agent.
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The Company hereby appoints the Warrant Agent to act as agent for the
Company with respect to the Warrants, and the Warrant Agent hereby accepts such
appointment and agrees to perform the same in accordance with the terms and
conditions set forth in this Agreement.
SECTION 3. Warrants and Issuance of Warrant Certificates.
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(a) Each Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase at the Purchase
Price therefor from the Initial Warrant Exercise Date until the Warrant Exercise
Expiration Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 9.
(b) Upon execution of this Agreement, Warrant Certificates
representing 565,000 Warrants to purchase up to an aggregate of 565,000 shares
of Common Stock (subject to modification and adjustment as provided in Section
9) shall be executed by the Company and delivered to the Warrant Agent.
(c) From time to time up to the Warrant Exercise Expiration Date,
the Warrant Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the persons entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) Warrant Certificates issued upon
any transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 8, and (iv) at the option of the Company, Warrant
Certificates in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price or the number of shares
of Common Stock purchasable upon exercise of the Warrants made pursuant to
Section 9 hereof.
SECTION 4. Form and Execution of Warrant Certificates.
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(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be dated the date of issuance
thereof (whether upon initial reissuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates).
(b) Warrant Certificates shall be executed on behalf of the Company
by the Chairman of the Board, President or any Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
by manual signatures or by facsimile signatures printed thereon, and shall have
imprinted thereon a facsimile of the Company's seal. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of
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the Warrant Certificates or before countersignature by the Warrant Agent and
delivery thereof, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be such
officer of the Company.
SECTION 5. Exercise.
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(a) Warrants in denominations of one or whole number multiples
thereof can be exercised commencing at any time on or after the Initial Warrant
Exercise Date, but not after the Warrant Exercise Expiration Date, upon the
terms and subject to the conditions set forth herein and in the applicable
Warrant Certificate. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date, provided that
the Warrant Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder thereof or his attorney duly
authorized in writing, together with payment in cash or by certified check made
payable to the Warrant Agent for the account of the Company, of an amount in
lawful money of the United States of America equal to the applicable Purchase
Price, together with any and all applicable taxes due in connection with the
exercise thereof, has been received in good funds by the Warrant Agent. The
person entitled to receive the securities deliverable upon such exercise shall
be treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. As soon as practicable on or after the Exercise
Date, the Warrant Agent on behalf of the Company shall cause to be issued to the
person or persons entitled to receive the same a Common Stock certificate or
certificates for the shares of Common Stock deliverable upon such exercise, and
the Warrant Agent shall deliver the same to the person or persons entitled
thereto. Upon the exercise of any Warrant, the Warrant Agent shall promptly
notify the Company in writing of such fact and of the number of securities
delivered upon such exercise and shall cause all payments of an amount in cash
or by certified check made payable to the order of the Company, equal to the
Purchase Price, to be deposited promptly in the Company's bank account. In
addition, if such Warrants shall not have been exercised in full, the Warrant
Agent shall deliver to such person a new countersigned Warrant for the number of
shares as to which such Warrant shall not have been exercised. Notwithstanding
the foregoing, the Company shall not be obligated to deliver any securities
pursuant to the exercise of a Warrant unless a registration statement under the
Securities Act with respect to such securities is effective. Warrants may not be
exercised, or securities issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(b) The Company shall not be obligated to issue any fractional
share interests or fractional warrant interests upon the exercise of any Warrant
or Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fraction equal to or greater than one-half shall be
rounded up to the next full share or Warrant, as the case may be, and any
fraction less than one-half shall be eliminated.
SECTION 6. Reservation of Shares; Listing; Payment of Taxes; etc.
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(a) The Company covenants that it will at all times up to the
Warrant Exercise Expiration Date reserve and keep available out of its
authorized Common Stock, solely for the purpose of issue upon exercise of all
outstanding Warrants, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery thereof, be duly and validly issued and
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, and that upon
issuance such shares shall be listed on each securities exchange, if any, on
which the other shares of outstanding Common Stock are then listed.
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(b) The Company covenants that it has filed a registration
statement under the federal securities laws with respect to the shares issuable
upon exercise of the Warrants, such registration statement has become effective
and it will use its best efforts to keep such registration statement current
while any of the Warrants are outstanding and, if required by law, deliver a
prospectus which complies with Section 10(a)(3) of the Securities Act to the
Registered Holder exercising any such Warrant (except, if in the opinion of
counsel to the Company, such registration is not required under the Act or if
the Company receives a letter from the staff of the Commission stating that it
would not take any enforcement action if such registration is not effected). The
Company will use its best efforts to obtain appropriate approvals or
registrations under state securities laws. With regard to any such securities,
however, the Warrants may not be exercised by, or shares of Common Stock issued
to, any Registered Holder in any state in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of the Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates representing shares
of Common Stock or other securities required upon exercise of the Warrants, and
the Company will comply with all such requisitions.
SECTION 7. Exchange and Registration of Transfer.
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(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and the Company
shall execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its Corporate Office books in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate to such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription or
exercise form, as the case may be, on the reverse thereof shall be duly endorsed
or be accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing.
(d) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates. However, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
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(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly cancelled by the Warrant Agent.
(f) Prior to due presentment for registration of transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate as the absolute owner thereof of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a duly authorized officer of the Company or
the Warrant Agent) for all purposes and shall not be affected by any notice to
the contrary.
(g) The Warrant Agent shall not be required to effect any
registration of transfer or exchange which would result in the issuance of a
Warrant Certificate for a fraction of a Warrant.
SECTION 8. Loss or Mutilation.
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Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory to them, and (in case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and the Warrant
Agent shall countersign and deliver in lieu thereof a new Warrant Certificate
representing an equal aggregate number of Warrants. Applicants for a substitute
Warrant Certificate shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Warrant Agent may prescribe.
SECTION 9. Adjustment of Purchase Price and Number of Shares of Common
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Stock Deliverable.
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(a) (i) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof up to the Warrant
Exercise Expiration Date, issue any shares of Common Stock as a stock dividend
to the holders of Common Stock, or subdivide or combine the outstanding shares
of Common Stock into a greater or lesser number of shares (any such issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price for the
Warrants (whether or not the same shall be issued and outstanding) in effect
immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the nearest cent) determined by
dividing (i) the sum of (a) the total number of shares of Common Stock issued
and outstanding immediately prior to such Change of Shares, multiplied by the
Purchase Price in effect immediately prior to such Change of Shares, and (b) the
consideration, if any, received by the Company upon such issuance, subdivision
or combination by (ii) the total number of shares of Common Stock issued and
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price immediately prior to such computation,
except in the case of a combination of outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance with this
Section 9, shares of Common Stock issuable by way of dividend or other
distribution shall be deemed to have been issued immediately after the opening
of business on the day following the record date for the determination of
stockholders entitled to receive such dividend or other distribution and shall
be deemed to have been issued without consideration.
(ii) Upon each adjustment of the Purchase Price pursuant to
this Section 9, the number of shares of Common Stock purchasable upon the
exercise of each Warrant shall be the number derived by multiplying the number
of shares of Common Stock purchasable immediately
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prior to such adjustment by the Purchase Price in effect prior to such
adjustment and dividing the product so obtained by the applicable adjusted
Purchase Price.
(b) In the event, at any time or from time to time after the date
hereof up to the Warrant Exercise Expiration Date, of any reclassification or
change of outstanding shares of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a Subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants (other than a change
in par value, or from par value to no par value, or from no par value to par
value or as a result of subdivision or combination)) or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially in its entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the Corporate Office of the Warrant Agent
a statement signed by its President or a Vice President and by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary evidencing
such provision. Such provisions shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Section 9(a). The provisions of this Section 9(b) shall similarly apply
to successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(c) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 3(c) hereof, continue to express the Purchase Price per
share and the number of shares purchasable thereunder as the Purchase Price per
share and the number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.
(d) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
promptly file each certificate with the Warrant Agent and cause a brief summary
to be sent by ordinary first-class mail to each Registered Holder at his last
address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof. The affidavit of an officer of the Warrant
Agent or the Secretary or an Assistant Secretary of the Company that such notice
has been mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated herein.
(e) No adjustment of the Purchase Price shall be made as a result
of or connection with the issuance of shares of Common Stock if the amount of
said adjustment shall be
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less than $.10; provided, however, that in such case, any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment that shall
amount, together with any adjustment so carried forward, to at least $.10. In
addition, Registered Holders shall not be entitled to cash dividends made by the
Company prior to the exercise of any Warrant or Warrants held by them.
SECTION 10. Redemption.
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(a) Subject to the provisions of Section 10(d), at any time or from
time to time on or after the Initial Warrant Redemption Date and up to the
Warrant Redemption Expiration Date, each Registered Holder may, at such
Registered Holder's option, cause the Company to redeem (a "Redemption"), out of
funds legally available therefor, up to all of the Warrants held by such
Registered Holder. The price (the "Redemption Price") to be paid by the Company
for any Warrants redeemed by the Company pursuant to this Section 10 shall be
$3.25 per Warrant (subject to equitable adjustment to reflect stock splits,
stock dividends, stock combinations, recapitalizations and like occurrences).
(b) Each Registered Holder of Warrants may exercise his right to
have Warrants redeemed pursuant to this Section 10 by surrendering for such
purpose to the Warrant Agent, at its Corporate Office, a Warrant Certificate or
Certificates representing the Warrants to be redeemed, accompanied by a written
notice stating that such Registered Holder elects to have redeemed all or a
specified whole number of such Warrants in accordance with this Section 10 and,
if less than the full number of Warrants evidenced by the surrendered Warrant
Certificate or Certificates are being redeemed, specifying the name or names in
which such Registered Holder wishes the Warrant Certificate or Certificates for
the balance of such Warrants to be issued. In case such notice shall specify a
name or names other than that of such Registered Holder, such notice shall be
accompanied by payment of all transfer taxes and other charges payable upon the
issuance of Warrants in such other name or names. As promptly as practicable,
and in any event within 30 days after the surrender of such Warrant Certificate
or Certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes, the Company shall deliver or cause to
be delivered to the Warrant Agent (i) the Redemption Price of the Warrants being
so redeemed and (ii) if less than the full number of Warrants evidenced by the
surrendered Warrant Certificate or Certificates are being redeemed, a new
Warrant Certificate or Certificates, of like tenor, for the number of Warrants
evidenced by such surrendered Warrant Certificate or Certificates less the
number of such Warrants redeemed. Such Redemption shall be deemed to have been
made at 5:00 p.m. (New York time) on the date (the "Redemption Date") of giving
of such notice and of such surrender of the Warrant Certificate or Certificates
representing the Warrants to be redeemed, so that the rights of the Registered
Holder thereof shall cease after such time, except for the right thereafter to
receive the Redemption Price in accordance herewith.
(c) If on any Redemption Date, less than all of the Warrants
requested to be redeemed by the Registered Holders thereof may be legally
redeemed by the Company, the Redemption shall be effected in compliance with the
requirements of the principal national securities exchange or over-the-counter
market, if any, on which the Warrants are listed or, if the Warrants are not
listed on a securities exchange or traded over-the-counter, pro rata among such
Registered Holders based upon the respective Redemption Price which would
otherwise be payable on or with respect to such Warrants if they were redeemed
in full.
(d) Notwithstanding any other provision of this Agreement, the
right of the Registered Holders to have the Warrants redeemed as provided herein
shall expire on the Warrant Redemption Expiration Date. The Company will notify
the Warrant Agent promptly following the
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occurrence of the Warrant Redemption Expiration Date and cause such notice to be
sent by ordinary first-class mail to each Registered Holder at his last address
as it shall appear on the registry books of the Warrant Agent. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity thereof or of the Warrant Redemption Expiration Date.
SECTION 11. Concerning the Warrant Agent.
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(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of the Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed in making the same. It shall not (i) be liable for any recital
or statement of fact contained herein or for any action taken, suffered or
omitted by it in reliance on any Warrant Certificate or other document or
instrument believed to be in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
negligence, willful misconduct or bad faith.
(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficient if evidenced by an instrument
signed by the Chairman of the Board of Directors, President or any Vice
President (unless other evidence in respect thereof is more specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and reasonable counsel fees, for anything done or
omitted by the Warrant Agent in the execution of its duties and powers hereunder
except losses, expenses and liabilities arising as a result of the Warrant
Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent may resign its duties and be discharged from
all other duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence, willful misconduct or bad faith),
after giving 60 days' prior written notice to the Company. At least 30 days
prior to the date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to the Registered
Holder of each
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Warrant Certificate at the Company's expense. Within a reasonable period of time
following such resignation the Company shall appoint in writing a new Warrant
Agent. If the Company shall fail to make such appointment within a period of 30
days after having been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant Certificate may apply
to any court of competent jurisdiction in the State of California for the
appointment of a new Warrant Agent. Any new Warrant Agent, either appointed by
the Company or by such a court, shall be a bank or trust company having capital
and surplus, as shown by its last published report to its stockholders, of not
less than $10,000,000 or a stock transfer company doing business in New York,
New York or the State of California. After acceptance in writing of such
appointment by the new Warrant Agent is received by the Company, such New
Warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new Warrant
Agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new Warrant Agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new Warrant Agent shall be a successor Warrant Agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding paragraph. Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.
(h) The Warrant Agent, its Subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two years from
the date of exercise any Warrant Certificate received by it upon such exercise.
SECTION 12. Modification of Agreement.
-------------------------
The Warrant Agent and the Company may by supplement agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained, or (ii) that they may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Warrant Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less than a
majority of the Warrants then outstanding; provided further, that no change in
the number or nature of the Warrants shall be made without the consent in
writing of the Registered Holders representing not less than a majority of the
Warrants then outstanding, other than such changes as are presently specifically
prescribed by this Agreement as originally executed.
10
SECTION 13. Notices.
-------
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered against
receipt or when deposited in the United States mails, first-class postage
prepaid, if to the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registry books maintained by the Warrant Agent; if
to the Company, at 0000 Xx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, Attention:
Chief Financial Officer, or at such other address as may have been furnished to
the Warrant Agent in writing by the Company; and if to the Warrant Agent, at its
Corporate Office.
SECTION 14. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California without giving effect to conflicts of laws.
SECTION 15. Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation.
SECTION 16. No Rights as Stockholders.
-------------------------
A Warrant does not entitle the Registered Holder thereof to any of the
rights of a stockholder of the Company, including, without limitation, the right
to receive dividends or other distributions, exercise any preemptive rights or
to vote or to consent or to receive notice as a stockholder in respect of the
meetings of stockholders or the election of directors of the Company or any
other matter.
SECTION 17. Counterparts.
------------
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be fully executed as of the first date first above written.
[SEAL]
NTN COMMUNICATIONS, INC. AMERICAN STOCK TRANSFER & TRUST COMPANY
As Warrant Agent
By: By:
--------------------- ---------------------------------
Name: Name:
Title: Title:
By:
---------------------
Secretary
12
EXHIBIT A
---------
_____________, 1996 VOID AFTER ________________, 1999
__________ WARRANTS
REDEEMABLE COMMON STOCK PURCHASE WARRANT CERTIFICATE
NTN COMMUNICATIONS, INC.
CUSIP________
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Common Stock Purchase Warrants (the "Warrants") specified above.
Each Warrant initially entitles the Registered Holder to purchase, subject to
the terms and conditions set forth in this Warrant Certificate and the Warrant
Agreement (as hereinafter defined), one fully paid and nonassessable share of
Common Stock, $.005 par value per share, of NTN Communications, Inc., a Delaware
corporation (the "Company"), at any time on or after _______, 1996 (the "Initial
Warrant Exercise Date"), and prior to the Warrant Exercise Expiration Date (as
hereinafter defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the corporate office of American Stock Transfer & Trust Company, ___________,
____________, New York, ________, as Warrant Agent, or its successor (the
"Warrant Agent"), accompanied by payment of ______ and ______ /100th Dollars
($_____), in lawful money of the United States of America in cash or by
certified check made payable to the Warrant Agent for the account of the
Company.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated __________,
1996, by and between the Company and the Warrant Agent. Capitalized terms used
but not defined herein have the meanings ascribed to them in the Warrant
Agreement.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Warrant Exercise Expiration Date" shall mean the earlier of
(i) 5:00 P.M. (New York time) on _________, 1999, or, if such date shall in the
State of New York be a holiday or a
A-1
day on which the banks are authorized to close, then 5:00 P.M. (New York time)
on the next following day which in the State of New York is not a holiday or a
day on which banks are authorized to close, subject to the Company's right,
prior to the Warrant Exercise Expiration Date, in its sole discretion, to extend
such Warrant Exercise Expiration Date on 20 days' prior written notice to the
Registered Holders, or (ii) the Redemption Date.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the Corporate Office of the Warrant Agent, for a new
Warrant Certificate or Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as such Registered Holder at the time of such surrender
shall be entitled to receive. Upon due presentment and payment of any tax or
other charge imposed in connection therewith or incident thereto, for
registration or surrender of this Warrant Certificate at such office, a new
Warrant Certificate of Certificates representing an equal aggregate number of
Warrants will be issued to the transferee for exchange therefor, subject to the
limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or other
distributions, exercise any preemptive rights or to vote or to consent or to
receive notice as a stockholder in respect of the meetings of stockholder or the
election of directors of the Company or any other matter.
Subject to the provisions of the Warrant Agreement, this Warrant may
be redeemed at the option of the Registered Holder, at a redemption price (the
"Redemption Price") of $3.25 per Warrant (subject to equitable adjustments to
reflect stock splits, stock dividends, stock combinations, recapitalizations,
and like occurrences) at any time commencing on or after the Initial Warrant
Redemption Date and up to the Warrant Redemption Expiration Date. On and after
the Redemption Date, the Registered Holder shall have no rights with respect to
this Warrant except the right to receive upon surrender of this Warrant
Certificate the Redemption Price as provided in the Warrant Agreement.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as may be provided
in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
conflicts of laws.
A-2
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: , 1996 NTN COMMUNICATIONS, INC.
---------------
By:
-------------------------
Name:
Title:
By:
-------------------------
Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent
By:
-------------------------------------
Authorized Officer
[SEAL]
A-3
SUBSCRIPTION FORM
-----------------
To Be Executed by the Registered Holder
in order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to
exercise ________ Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
_______________________
_______________________
_______________________
(please print or type name and address)
to be delivered to
_______________________
_______________________
_______________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of and delivered to, the Registered Holder at
the address stated below.
Dated: X
------------------ -------------------------------
-------------------------------
-------------------------------
Address
-------------------------------
Social Security or Taxpayer
Identification Number
ASSIGNMENT
----------
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, , hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
_______________________
_______________________
_______________________
(please print or type name and address)
__________________ of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints _________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated: X
------------------ --------------------------------
Signature Guarantee
--------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR CHANGE WHATSOEVER AND MUST BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (A BANK, STOCK BROKER, SAVINGS AND LOAN
ASSOCIATION OR CREDIT UNION WITH MEMBERSHIP IN AN APPROVED SIGNATURE PURSUANT TO
RULE 14AD-15 OF THE SECURITIES EXCHANGE ACT OF 1934.
