NTN COMMUNICATIONS, INC.
SUBSCRIPTION AGREEMENT
JANUARY 13, 2003
TO EACH OF THE SUBSCRIBERS
WHO ARE SIGNATORIES HERETO
Ladies and Gentlemen:
NTN Communications, Inc., a Delaware corporation (the "COMPANY"), hereby
agrees with each of you as follows:
1. AUTHORIZATION OF SALE OF THE SECURITIES
The Company has authorized the sale and issuance of up to 1,000,000 units
(the "UNITS"; each Unit consisting of one share of the Company's common stock,
par value $0.005, and one-half of a warrant to purchase one share of the
Company's common stock) as described in the Confidential Private Placement
Memorandum dated June 2002 (including all attachments thereto and incorporating
all SEC filings described in Section 4.3 since the date thereof, the
"MEMORANDUM") and subsequent short form term sheet dated December 26, 2002. The
shares of the Company's common stock sold hereunder shall be referred to herein
as the "SHARES," the Company's warrants sold hereunder shall be referred to
herein as the "WARRANTS," and the shares of the Company's common stock
underlying the Warrants shall be referred to herein as the "WARRANT SHARES." A
form of the Warrant is attached as APPENDIX I hereto.
2. AGREEMENT TO SELL AND PURCHASE THE UNITS
2.1 SALE OF UNITS. Subject to the terms of this Subscription Agreement
(this "AGREEMENT"), at the Closing (as defined in Section 3.1 hereof), the
Company agrees to sell to each purchaser of Units who has executed a counterpart
execution page to this Agreement (each an "SUBSCRIBER"), and each Subscriber
agrees to purchase from the Company, the aggregate number of Units set forth
above such Subscriber's signature on the counterpart execution page hereof, at a
purchase price per Unit equal to $1.00.
2.2 SEPARATE AGREEMENT. Each Subscriber shall severally, and not jointly,
be liable for only the purchase of the Units that appears above such
Subscriber's signature and that relates to such Subscriber. The Company's
agreement with each Subscriber is a separate agreement, and the sale of Units to
each Subscriber is a separate sale. The obligations of each Subscriber hereunder
are expressly not conditioned on the purchase by any or all of the other
Subscribers of the Units such other Subscribers have agreed to purchase.
2.3 ACCEPTANCE OF PROPOSED PURCHASE OF UNITS. Each Subscriber understands
and agrees that the Company, in its sole discretion, reserve the right to accept
or reject, in whole or in
part, any proposed purchase of Units. The Company shall have no obligation
hereunder with respect to any Subscriber until the Company shall execute and
deliver to such Subscriber an executed copy of this Agreement. If this Agreement
is not executed and delivered by the Company or the offering is terminated, this
Agreement shall be of no further force and effect.
3. CLOSING AND DELIVERY
3.1 CLOSING. The closing of the purchase and sale of the Units pursuant to
this Agreement (the "CLOSING") shall be held as soon as practicable after the
satisfaction or waiver of all other conditions to Closing set forth in Sections
6 and 7 hereof, at the offices of O'Melveny & Xxxxx LLP, located at 000 Xxxxx
Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, or on such other date and place as may be
agreed to by the Company and the Subscribers. Prior to the Closing, each
Subscriber shall execute any related agreements or other documents required to
be executed hereunder.
3.2 DELIVERY OF THE CERTIFICATES AND WARRANTS AT THE CLOSING. At the
Closing, the Company shall deliver to each Subscriber stock certificates and
warrants registered in the name of such Subscriber, or in such nominee name as
designated by such Subscriber, representing the Units to be purchased by such
Subscriber at the Closing as set forth in the Schedule of Subscribers against
payment of the purchase price for such Units. The name in which the stock
certificates are to be issued to each Subscriber are set forth in the
Subscriber's counterpart execution page hereto, as completed by each Subscriber.
3.3 PAYMENT OF PURCHASE PRICE. At the Closing, each Subscriber shall make
payment of the purchase price for the Units purchased by such Subscriber by
check payable to the Company or wire transfer to an account specified by the
Company.
4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants as of the date hereof to, and
covenants with, the Subscribers as follows:
4.1 ORGANIZATION; STANDING; PERMITS. The Company and each of its
subsidiaries is duly incorporated and validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation with full
corporate power and corporate authority to own, lease and operate its properties
and conduct its current business as described in the Memorandum; the Company and
each of its subsidiaries is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing is not reasonably likely to have a material adverse effect on the
condition (financial or otherwise), operations, business or business prospects
of the Company and each of its subsidiaries (hereinafter, a "MATERIAL ADVERSE
EFFECT"); no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification; except as described in the Memorandum, the Company
and each of its subsidiaries is in possession of and operating in compliance
with all authorizations, licenses, certificates, consents, orders and permits
from federal, state and other regulatory authorities except where the failure to
possess or be in compliance with any of the foregoing is
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not reasonably likely to have a Material Adverse Effect, all of which are valid
and in full force and effect.
4.2 CORPORATE POWER; AUTHORIZATION; COMPLIANCE WITH OTHER INSTRUMENTS. The
Company has full legal right, power and authority to enter into this Agreement
and to perform the transactions contemplated hereby and thereby. This Agreement
has been duly authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery by each of the other parties thereto,
is a valid and binding agreement on the part of the Company, enforceable in
accordance with their terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles. The
making, execution and performance of this Agreement by the Company and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any bond, debenture, note or
other evidence of indebtedness, or under any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which its properties may be
bound, (ii) the certificates of incorporation or bylaws of the Company or (iii)
any law, order, rule, regulation, writ, injunction, judgment or decree of any
court, administrative agency, regulatory body, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or its
properties, except for any conflict, breach, violation or default which is not
reasonably likely to have a Material Adverse Effect.
4.3 SEC FILINGS; MEMORANDUM; FINANCIAL STATEMENTS. The Company has not
distributed any offering material in connection with the offering of the Units
other than the Memorandum. The Company has filed in a timely manner all
documents that the Company was required to file with the Securities and Exchange
Commission ("SEC") under Sections 13, 14(a) and 15(d) of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), during the twelve (12) months
preceding the date of this Agreement. As of their respective filing dates (or,
if amended, when amended), the documents filed by the Company with the SEC
referenced in the Memorandum complied with the requirements of the Exchange Act.
The Company satisfies the registrant requirements for the use of Form S-3 under
the Securities Act of 1933, as amended (the "SECURITIES ACT"). The Memorandum
did not contain any untrue statement of a material fact or omit to state
material facts required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the
documents filed by the Company with the SEC and referenced in the Memorandum
(the "FINANCIAL STATEMENTS") comply in all respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied ("GAAP") and
fairly present the financial position of the Company at the dates thereof and
the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring adjustments
and the absence of complete footnotes). Except as and to the extent reflected in
the Financial Statements, the Company did not have, as of the date of the
Financial Statements, any liabilities or obligations (other than obligations of
continued performance under contracts and other commitments and arrangements
entered into in the ordinary course of business) which GAAP would require the
Company to reflect in the Financial Statements. Except as otherwise disclosed in
the Memorandum, there have not been
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any changes in the assets, liabilities, financial condition or operations of the
Company from that reflected in the Financial Statements, except changes in the
ordinary course of business that have not had a Material Adverse Effect.
4.4 PROPERTIES. Except as set forth in the Memorandum, (i) the Company has
good title to all properties and assets described in the Memorandum as owned by
it, free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than as would not have a Material Adverse Effect, (ii)
the agreements to which the Company is a party described in the Memorandum are
valid agreements, enforceable by the Company, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default under any of such agreements, and (iii) the Company has valid and
enforceable leases for all properties described in the Memorandum as leased by
it, except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles. Except
as set forth in the Memorandum, the Company owns or leases all such properties
as are necessary to its operations as now conducted.
4.5 CAPITALIZATION. All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. The
Shares and Warrant Shares have been duly authorized for issuance and sale to the
Subscribers pursuant to this Agreement, and, when issued and delivered by the
Company against payment therefor in accordance with the terms of this Agreement,
will be duly and validly issued and fully paid and nonassessable, and will be
sold free and clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest. Except as disclosed in the Memorandum, no preemptive
right, co-sale right, registration right, right of first refusal or other
similar right of shareholders exists with respect to any of the Shares or
Warrant Shares or the issuance and sale thereof other than those that have been
satisfied or expressly waived prior to the date hereof and those that will
automatically expire upon and will not apply to the consummation of the
transactions contemplated on or before the Closing. No further approval or
authorization of any shareholder or the Board of Directors of the Company is
required for the issuance and sale or transfer of the Shares or Warrant Shares.
Except as disclosed in the Memorandum and the Financial Statements, and the
related notes thereto included in the Memorandum, and subject to the applicable
anti-dilution provisions of securities described in the Memorandum, the Company
have no outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations.
4.6 LITIGATION. There is not pending or, to the Company's knowledge,
threatened, any action, suit, claim or proceeding against the Company or any of
its respective officers, properties, assets or rights before any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any of its
respective officers, properties, or otherwise which (i) is reasonably likely,
individually
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or in the aggregate, to have a Material Adverse Effect or is reasonably likely
to materially and adversely affect the Company's properties, assets or rights or
(ii) is reasonably likely to prevent consummation of the transactions
contemplated hereby and is not so disclosed in the Memorandum. Neither the
Company nor any of its subsidiaries is a party or subject to the provisions of
any injunction, judgment, decree or order of any court, regulatory body,
administrative agency, government or governmental agency or body domestic or
foreign, that could reasonably be expected to have a Material Adverse Effect.
The Company and each of its subsidiaries has conducted and is conducting its
business in compliance with all applicable federal, state, local and foreign
statutes, laws, rules, regulations, ordinances, codes, decisions, decrees,
directives and orders, except where the failure to do so would not reasonably be
likely, singly or in the aggregate, to have a Material Adverse Effect.
4.7 LISTED SHARES. The Shares are, or will be, registered pursuant to
Section 12(b) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and approved for quotation on the American Stock Exchange ("AMEX").
Except as disclosed in the Memorandum, the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of its common
stock under the Exchange Act or delisting its common stock from the AMEX.
4.8 INTELLECTUAL PROPERTY. The Company owns or possesses rights to use all
patents, patent rights, inventions, trademarks, service marks, trade names and
copyrights and possesses all of the trade secrets and know-how which are
material and necessary to conduct its business as now conducted and as described
in the Memorandum. Except as disclosed in the Memorandum, the Company has not
received any written notice of, nor has it any actual knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights that are reasonably likely
to have a Material Adverse Effect that would prevent the Company from carrying
out its business substantially as described in the Memorandum.
4.9 NO CHANGE. Subsequent to the respective dates as of which information
is given in the Memorandum, there has not been (i) any material adverse change
in the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company (not including reductions in the cash position
of the Company in the ordinary course consistent with past practices since the
date of the Memorandum), (ii) any transaction that is material to the Company,
(iii) any obligation, direct or contingent, incurred by the Company, except
obligations incurred in the ordinary course of business, (iv) any change in the
capital stock or outstanding indebtedness of the Company, except the incurrence
of trade debt and obligations incurred in the ordinary course consistent with
past practices, (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company, (vi) any default in the payment of
principal of or interest on any outstanding debt obligations, or (vii) any loss
or damage (whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a Material Adverse Effect.
4.10 NO DEFAULTS. The Company is not (a) in violation of its certificate
of incorporation or bylaws or (b) in default (upon notice or lapse of time or
both) in the performance or observance of any obligation, agreement, covenant or
condition contained in any
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bond, debenture, note or other evidence of indebtedness, or in any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which it is a party or by which its properties
may be bound, or (c) in violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or its
properties except in the case of (b) or (c) for any default or violation not
reasonably likely to have a Material Adverse Effect.
4.11 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement (the "CONSENTS"), except for (a) such Consents which are not
material, (b) compliance with the securities and Blue Sky laws in the states and
other jurisdictions in which Units are offered and/or sold, which compliance
will be effected in accordance with such laws and (c) such Consents required by
the AMEX and the SEC. To the knowledge of the Company, the Company and its
subsidiaries are conducting business in compliance in all material respects with
all applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including but not limited to, all applicable federal, state
and local environmental laws and regulations, except for any failure to comply
which is not reasonably likely to have a Material Adverse Effect.
4.12 LABOR; EMPLOYEES.
(A) No labor disturbance by the employees of the Company or its
subsidiaries exists or, to the Company's knowledge, is imminent. The Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its principal suppliers, subcontractors, authorized dealers or international
distributors that is reasonably likely to result in a Material Adverse Effect.
No collective bargaining agreement exists with any employees of the Company or
its subsidiaries and, to the Company's knowledge, no such agreement is imminent.
(B) If any employee of the Company or its subsidiaries has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company or its subsidiaries of which the
Company is aware, to the Company's knowledge, such employee is neither in
violation thereof nor is expected to be in violation thereof as a result of the
business conducted or expected to be conducted by the Company and its
subsidiaries as described in the Memorandum or such person's performance of his
or her obligations to the Company and its subsidiaries.
4.13 TAXES. The Company and its subsidiaries have timely filed all
necessary federal, state and foreign income and franchise tax returns and have
paid all taxes shown thereon as due, and there is no tax deficiency that has
been or, to the Company's knowledge, that might be asserted against the Company
or its subsidiaries that is reasonably likely to have a Material Adverse Effect.
All tax liabilities are adequately provided for on the books of the Company in
accordance with generally accepted accounting principles.
4.14 INSURANCE. The Company maintain insurance with insurers of recognized
financial responsibility of the types and in the amounts generally deemed
prudent for its business
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and consistent with insurance coverage maintained by similar companies in
similar businesses, including, but not limited to, insurance covering real and
personal property owned or leased by the Company or its subsidiaries against
theft, damage, destruction, acts of vandalism, products liability, errors and
omissions, and all other risks customarily insured against, all of which
insurance is in full force and effect.
4.15 OFFERING. Subject in part to the truth and accuracy of the
representations and warranties of each Subscriber set forth in Section 5 of this
Subscription Agreement, the offer, sale and issuance of the Units as
contemplated by the Subscription Agreement are exempt from the registration
requirements of any applicable state and federal securities laws, and neither
the Company nor any authorized agent acting on its behalf shall take any action
hereafter that would cause the loss of such exemption.
4.16 ENVIRONMENTAL MATTERS. (i) The Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment ("ENVIRONMENTAL
LAWS") which are applicable to its business, except where the failure to comply
would not reasonably be likely to have a Material Adverse Effect, (ii) the
Company has not received any written notice from any governmental authority or
third party of an asserted claim under Environmental Laws, which claim would be
required to be disclosed in its filings with SEC under the Exchange Act, (iii)
to the Company's knowledge, the Company will not be required to make future
material capital expenditures to comply with Environmental Laws and (iv) no
property which is, or has been, owned, leased or occupied by the Company has, to
the Company's knowledge, been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended, or
otherwise designated as a contaminated site under applicable state or local law.
4.17 RESERVATION OF WARRANT SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, the number of shares of common stock necessary to provide for the
issuance of the Warrant Shares.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBERS
5.1 INVESTMENT REPRESENTATIONS. Each Subscriber, severally and not
jointly, represents and warrants to and covenants with the Company that:
(A) The Subscriber is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
shares presenting an investment decision like that involved in the purchase of
the Units, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information Subscriber deems
relevant (including the Memorandum and the documents filed by the Company with
the SEC) in making an informed decision to purchase the Units. The Subscriber
further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Units and the business, properties, prospects and financial condition of the
Company and its subsidiaries.
(B) The Subscriber is purchasing the Units in the ordinary course of
its business for its own account for investment only and with no present
intention of distributing the
7
Units or any arrangement or understanding with any other persons regarding the
distribution of the Units.
(C) The Subscriber shall not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the securities purchased
hereunder except in compliance with the Securities Act, applicable Blue Sky
laws, and the rules and regulations promulgated thereunder. The Subscriber also
understands that there is no assurance that any exemption from registration
under the Securities Act and applicable Blue Sky laws will be available and
that, even if available, such exemption may not allow the Subscriber to transfer
all or any portion of the securities under the circumstances, in the amounts or
at the times the Subscriber might propose.
(D) The Subscriber has completed or caused to be completed the
information requested on the Subscriber's counterpart execution page and the
Subscriber Questionnaire attached as APPENDIX II, and the answers thereto are
true and correct as of the date hereof and will be true and correct as of the
effective date of the Registration Statement (provided that Subscriber shall be
entitled to update such information by providing notice thereof to the Company
prior to the effective date of such Registration Statement).
(E) The Subscriber has, in connection with its decision to purchase
the Units, relied with respect to the Company and its affairs solely upon the
Memorandum and the representations and warranties of the Company contained
herein.
(F) The Subscriber is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
(G) The Subscriber has full right, power, authority and capacity to
enter into this Agreement and to perform the transactions contemplated hereby
and thereby. This Agreement has been duly authorized, executed and delivered by
the Subscriber. Assuming due authorization, execution and delivery by each of
the other parties hereto and thereto, this Agreement is a valid and binding
obligation of the Subscriber, enforceable in accordance with their terms.
5.2 ABILITY TO BEAR RISK. The Subscriber is able to bear the economic risk
of holding the Units for an indefinite period, including the loss of
Subscriber's entire investment. The Units were not offered or sold to the
Subscriber by any form of general solicitation or advertising. If other than an
individual, the Subscriber also represents it has not been organized for the
purpose of acquiring the Units.
5.3 INDEPENDENT ADVICE. Subscriber understands that nothing in the
Memorandum, this Agreement or any other materials presented to Subscriber in
connection with the purchase and sale of the Units constitutes legal, tax or
investment advice and that no independent legal counsel retained by the Company
has reviewed these documents and materials on Subscriber's behalf. Subscriber
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Units.
5.4 NO TRANSFERABILITY. Subscriber understands that: (a) the Units and the
underlying shares of common stock shall not be transferable in the absence of
registration under
8
the Securities Act and applicable Blue Sky laws or an exemption therefrom or in
the absence of compliance with any term of this Agreement; (b) the Company shall
provide stop transfer instructions to its transfer agent with respect to the
Shares and the Warrant Shares in order to enforce the restrictions contained in
this Section 5.4; and (c) each certificate representing Shares and Warrant
Shares shall be in the name of Subscriber and shall bear substantially the
following legends (in addition to any legends required under applicable
securities laws):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS
OF ANY JURISDICTION, AND MAY ONLY BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF BY AN SUBSCRIBER IF SUBSEQUENTLY REGISTERED UNDER
THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY APPLICABLE
STATE SECURITIES LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND
QUALIFICATION REQUIREMENTS ARE AVAILABLE."
The legend contained in this Section 5.4 may be removed from a stock certificate
representing the Shares immediately upon receipt by the Company's transfer agent
of a certificate substantially in the form of APPENDIX III attached hereto and
such other documentation as the transfer agent may routinely require, including,
but not limited to, an opinion of counsel. Notwithstanding the foregoing, such
Shares and Warrant Shares must be held in certificated form until such shares
have been sold in accordance with the provisions of APPENDIX III attached
hereto.
5.5 RESIDENCE. If the Subscriber is an individual, then the Subscriber
resides in the state identified in the address of the Subscriber set forth on
the signature page; if the Subscriber is a partnership, corporation, limited
liability company or other entity, then the office or offices of Subscriber in
which its investment decision was made is located at the address or addresses of
the Subscriber set forth on the signature page.
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The Company's obligations to complete the sale and issuance of the Units
and to deliver Units to each Subscriber, individually, as set forth in the
Schedule of Subscribers shall be subject to the following conditions (to the
extent not waived by the Company):
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations and
warranties made by such Subscriber in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing. The Subscriber shall
have performed and complied in all material respects with all of its obligations
under this Agreement which are to be performed or complied with on or prior to
the Closing.
6.2 DELIVERY OF PURCHASE PRICE. The purchase price for the Units being
purchased shall have been delivered by all of the Subscribers.
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6.3 CONSENTS. The Subscriber shall have obtained any and all consents,
permits and waivers necessary or appropriate for the consummation of the
transactions contemplated by this Agreement (except for such as may be properly
obtained subsequent to the Closing).
7. CONDITIONS TO SUBSCRIBERS' OBLIGATIONS AT THE CLOSING
Each Subscriber's obligation to accept delivery of the Units and to pay
for the Units shall be subject to the following conditions (to the extent not
waived by such Subscriber):
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations and
warranties made by the Company in Section 4 shall be true and correct when made
and as of the Closing. The Company shall have performed and complied in all
material respects with all of its obligations under this Agreement which are to
be performed or complied with on or prior to the Closing.
7.2 CONSENTS. The Company shall have obtained any and all consents,
permits and waivers necessary or appropriate for the consummation of the
transactions contemplated by this Agreement (except for such as may be properly
obtained subsequent to the Closing).
8. REGISTRATION RIGHTS
8.1 REGISTRATION RIGHTS. The Company agrees to file a Registration
Statement with the SEC for the resale of the Shares underlying the Units as soon
as reasonably practicable following the Closing, but in no event more than
ninety (90) calendar days after the Closing. Subject to the provisions of this
Agreement, the Company shall use reasonable efforts to effect such Registration
Statement with the SEC as promptly as shall be practicable. For the purposes of
this Agreement: (A) "REGISTRABLE SHARES" means the Shares and the Warrant Shares
issued and acquired pursuant to this Agreement (and including any shares issued
in connection with any split or dividend in respect of any such shares);
provided, however, that any such Share will cease to be a Registrable Share when
(1) a Registration Statement covering a Registrable Share has been declared
effective by the SEC and such Share has been disposed of by the Subscribers
pursuant to such effective Registration Statement, (2) the Registrable Share is
transferred to another person, (3) such share (after initial issuance) is held
by the Company or otherwise ceases to be outstanding, or (4) such share may be
traded without restriction pursuant to paragraph (k) of Rule 144, if applicable;
and (B) "REGISTRATION STATEMENT" means any registration statement or comparable
document under the Securities Act through which a public sale or disposition of
the Registrable Shares may be registered, including the prospectus, amendments
and supplements to such registration statement, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
8.2 SUSPENSION OF EFFECTIVENESS. The Company's obligations under Section
8.1 above shall not restrict its ability to suspend the effectiveness of, or
direct the Subscribers not to offer or sell securities under, any Registration
Statement, at any time, for such reasonable period of time which the Company
believes is necessary to prevent the premature disclosure of any events or
information having a material effect on the Company. In addition, the Company
shall not be required to keep any Registration Statement effective, or may,
without suspending such effectiveness, instruct the Subscribers not to sell such
securities, during any period during which
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the Company is instructed, directed, ordered or otherwise requested by any
governmental agency or self-regulatory organization to stop or suspend such
trading or sales.
8.3 HOLDBACK AGREEMENT. In the event of any filing of a prospectus
supplement or the commencement of an underwritten public distribution of the
Company's common stock under a Registration Statement, whether or not
Registrable Shares are included, the Subscribers agree not to effect any public
sale or distribution of the Shares or Warrant Shares (except as part of such
underwritten public distribution), including a sale pursuant to Rule 144 or Rule
144A under the Securities Act, during a period designated by the Company in a
written notice duly given to the Subscribers, which period shall commence up to
14 days prior to the effective date of any such filing of such prospectus
supplement or the commencement of such underwritten public distribution of such
common stock under a Registration Statement and shall continue for up to 134
consecutive days.
8.4 REGISTRATION PROCEDURES. Except as otherwise expressly provided
herein, in connection with any registration of Registrable Shares pursuant to
this Agreement, the Company shall:
(A) furnish to the Subscribers such number of copies as may be
reasonably requested in writing by the Subscribers of such Registration
Statement, each amendment and supplement thereto (including copies of any
document to be incorporated by reference therein), including all exhibits
thereto, the prospectus included in such Registration Statement (including each
preliminary prospectus), and, promptly after the effectiveness of a Registration
Statement, the definitive final prospectus filed with the SEC;
(B) notify the Subscribers, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the occurrence
of any event as a result of which the prospectus included in such Registration
Statement (including any document to be incorporated by reference therein)
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading and, at the request of the
Subscribers, the Company shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and promptly make
available to the Subscribers any such supplement or amendment;
(C) notify the Subscribers and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in writing,
(i) when the Registration Statement, the prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose and the Company shall promptly use its reasonable
best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued and (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from
11
qualification of a Registration Statement or any of the Registrable Shares for
offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose.
The Company may require the Subscribers to furnish to the Company such
information regarding themselves and the distribution of such Registrable Shares
as the Company may from time to time reasonably request in writing and such
other information as may be legally required in connection with such
registration. The Subscribers agree, by their acquisition of Registrable Shares
and their acceptance of the benefits provided to it hereunder, to furnish
promptly to the Company all information required to be disclosed in order to
make any previously furnished information not materially misleading. All
Subscribers proposing to distribute their Registrable Shares through such
underwriting shall (together with the Company) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected by the
Company for such underwriting and shall provide to such underwriter or
underwriters any opinions and certificates, and any indemnification with respect
to such Subscriber as reasonably required by such underwriter or underwriters.
The Subscriber agrees, in connection with any disposition of Registrable
Shares, to comply with all applicable prospectus delivery requirements of the
SEC. The Subscribers agree that upon receipt of any notice from the Company of
the happening of any event of the kind described herein requiring the cessation
of the distribution of a prospectus or the distribution of a supplemented or
amended prospectus, the Subscribers will forthwith discontinue disposition of
Registrable Shares pursuant to the Registration Statement covering such
Registrable Shares until the Subscribers' receipt of the copies of the
supplemented or amended prospectus contemplated by this Agreement, or until it
is advised in writing by the Company that the use of the prospectus may be
resumed, and, if so directed by the Company, the Subscribers will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in the Subscribers' possession, of the prospectus covering such Registrable
Shares current at the time of receipt of such notice.
8.5 REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with the registration of shares pursuant to this
Subscription Agreement, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel of the Company and
counsel for the underwriters in connection with "blue sky" qualifications of the
Registrable Shares), fees and expenses associated with filings required to be
made with the National Association of Securities Dealers, Inc., and with listing
on any national securities exchange or exchanges in which listing may be sought,
printing expenses, messenger and delivery expenses, fees and expenses of counsel
for the Company and its independent certified public accountants, securities
acts liability insurance (if the Company elects to obtain such insurance), the
fees and expenses of any special experts retained by the Company in connection
with such registration, and fees and expenses of other persons retained by the
Company (all such expenses being herein called "REGISTRATION EXPENSES") will be
borne by the Company; provided that in no event shall Registration Expenses
payable by the Company include any (i) underwriting discounts, commissions, or
fees attributable to the sale of Registrable Shares, (ii) fees and expenses of
any counsel, accountants, or other persons retained or employed by the
Subscribers or underwriters, or (iii) transfer taxes, if any.
12
9. ARBITRATION
9.1 SCOPE. Resolution of any and all disputes arising from or in
connection with the Agreements, whether based on contract, tort, common law,
equity, statute, regulation, order or otherwise ("DISPUTES"), shall be
exclusively governed by and settled in accordance with the provisions of this
Section 9; provided, that the foregoing shall not preclude equitable or other
judicial relief to enforce the provisions hereof or to preserve the status quo
pending resolution of Disputes hereunder.
9.2 BINDING ARBITRATION. The parties hereby agree to submit all Disputes
to arbitration for final and binding resolution. Either party may initiate such
arbitration by delivery of a demand therefor (the "ARBITRATION DEMAND") to the
other party. The arbitration shall be conducted in Los Angeles, California by a
sole arbitrator selected by agreement of the parties not later than 10 days
after delivery of the Arbitration Demand, or, failing such agreement, appointed
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, as amended from time to time (the "AAA RULES"). If the arbitrator
becomes unable to serve, his successor(s) shall be similarly selected or
appointed.
9.3 PROCEDURE. The arbitration shall be conducted pursuant to the Federal
Arbitration Act and such procedures as the parties may agree or, in the absence
of or failing such agreement, pursuant to the AAA Rules. Notwithstanding the
foregoing, (a) each party shall have the right to conduct limited discovery of
information relevant to the Dispute; (b) each party shall provide to the other,
reasonably in advance of any hearing, copies of all documents that a party
intends to present in such hearing; (c) all hearings shall be conducted on an
expedited schedule; and (d) all proceedings shall be confidential, except that
either party may at its expense make a stenographic record thereof.
9.4 TIMING. The arbitrator shall use best efforts to complete all hearings
not later than 90 days after his or her selection or appointment, and shall use
best efforts to make a final award not later than 30 days thereafter. The
arbitrator shall apportion all costs and expenses of the arbitration, including
the arbitrator's fees and expenses, and fees and expenses of experts
("ARBITRATION COSTS") between the prevailing and non-prevailing party as the
arbitrator shall deem fair and reasonable. In circumstances where a Dispute has
been asserted or defended against on grounds that the arbitrator deems
manifestly unreasonable, the arbitrator may assess all Arbitration Costs against
the non-prevailing party and may include in the award the prevailing party's
attorney's fees and expenses in connection with any and all proceedings under
this Section 9. Notwithstanding the foregoing, in no event may the arbitrator
award multiple or punitive damages.
10. MISCELLANEOUS.
10.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Units, or, in the case of non-material or ministerial
amendments, upon the written consent of the Company.
13
10.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
10.3 BROKER'S FEE. The Company and each Subscriber (severally and not
jointly) hereby represent that there are no brokers or finders entitled to
compensation in connection with the sale of the Units, and shall indemnify each
other for any such fees for which they are responsible.
10.4 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
10.5 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (c) upon receipt when sent by first-class registered or
certified mail, return receipt requested, postage prepaid, or (d) upon receipt
after deposit with a nationally recognized overnight express courier, postage
prepaid, specifying next day delivery with written verification of receipt. All
communications shall be sent to the party to be notified at the address as set
forth below or at such other address as such party may designate by ten (10)
days advance written notice to the Company. All communications shall be
addressed as follows:
(A) if to the Company, to:
NTN COMMUNICATIONS, INC.
0000 Xx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy so mailed to:
O'MELVENY & XXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: C. Xxxxx Xxxxx
(B) if to the Subscribers, at the address as set forth on the
signature page of this Agreement.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
14
10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
10.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
each Subscriber herein and in the certificates for the securities delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Subscribers of the Units and the payment therefor.
10.9 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto. Neither the terms "successors" nor "assigns" as used herein
shall include any entity or person who purchases Units, Warrants, Shares or
Warrant Shares from any Subscriber after the Closing and is not an affiliate of
an Subscriber.
10.10 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
10.11 PAYMENT OF FEES AND EXPENSES. Each of the Company and the
Subscribers shall bear its own expenses and legal fees incurred on its behalf
with respect to this Subscription Agreement and the transactions contemplated
hereby; provided, however, that the Company shall bear the costs in connection
with the Registration Statement as described in Section 8.5. If any action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
10.12 CONFIDENTIALITY. Each Subscriber acknowledges and agrees that any
information or data it has acquired from the Company and its subsidiaries, not
otherwise properly in the public domain, was received in confidence. Except to
the extent authorized by the Company and required by any federal or state law,
rule or regulation or any decision or order of any court or regulatory
authority, the Subscriber agrees that it will refrain from disclosing any such
information to any person other than to any agent, attorneys, accountants,
employees, officers and directors of the Subscriber who need to know such
information in connection with the Subscriber's purchase of the Units, and who
agree to be bound by the confidentiality provisions of this Agreement. In the
event that the Subscriber or its agents are required by federal or state or
other law, rule or regulation or any decision or order of any court or
regulatory authority to release such information, it shall give the Company
sufficient prior notice so that the Company may seek a stay or other release or
waiver from disclosing such information. Each Subscriber agrees not to use to
the detriment of the Company or its subsidiaries or for the benefit of any other
person or persons, or misuse in any way, any confidential information of the
Company or its subsidiaries.
10.13 KNOWLEDGE. The phrases "knowledge," "to the Company's knowledge,"
"to our knowledge," "of which the Company is aware" and similar language as used
herein shall mean
15
the actual knowledge and current awareness, or knowledge which a reasonable
person would have acquired following a reasonable investigation, of Xxxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxx, Xxxx XxXxxxxx and Xxxxxx X. Xxx; PROVIDED, HOWEVER,
that the term "actual knowledge of the Company" shall mean the actual knowledge
and current awareness of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxx XxXxxxxx and
Xxxxxx X. Xxx.
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance on a counterpart execution page to this Agreement and return such
counterpart to the Company.
NTN COMMUNICATIONS, INC.,
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
16
SUBSCRIPTION AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Subscription
Agreement and to purchase the number of Units set forth below.
Number of Units being purchased:
-------------------------------------
SUBSCRIBER:
-------------------------------------
By:----------------------------------
Name:
Title:
Address:
Facsimile:
PLEASE COMPLETE THE FOLLOWING:
1. The exact name that your Units -----------------------------------
are to be registered in (this
is the name that will appear on
your stock certificate(s) and
warrant(s)). You may use a
nominee name if appropriate:
2. The relationship between the -----------------------------------
purchaser of the Units and the
Registered Holder listed in
response to item 1 above:
3. The mailing address and facsimile -----------------------------------
number of the Registered Holder
listed in response to item 1
above (if different from above): -----------------------------------
Facsimile:
4. (FOR U.S. SUBSCRIBERS:) The -----------------------------------
Social Security Number or Tax
Identification Number of the
Registered Holder listed in the
response to item 1 above:
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE
APPENDIX I
FORM OF WARRANT
1
APPENDIX II
SUBSCRIBER QUESTIONNAIRE
1
APPENDIX III
NTN COMMUNICATIONS, INC.
INVESTOR'S CERTIFICATE OF RESALE OF THE SHARES
The undersigned, an officer of, or other person duly authorized by
________________________________________ hereby certifies that the undersigned
[FILL IN OFFICIAL NAME OF INSTITUTION
was the holder of the Shares evidenced by the attached stock certificate(s)
since such Shares were originally issued by the issuer of such Shares, and, as
the holder of such Shares, the undersigned sold__________________ of such
[NUMBER]
Shares on _________ in accordance with Registration Statement no. _____________,
[DATE]
and the requirement of delivering a current prospectus has been complied with in
connection with the sale of such Shares.
------------------------------------------------------------
Name of Holder
By:
---------------------------------------------------------
Title:
------------------------------------------------------
2
