Exhibit 2.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of the
fifth day of May, 2003, by and among NTN Communications, Inc., a Delaware
corporation (the "Company"), Buzztime Entertainment, Inc., a Delaware
corporation ("Buzztime"), and Media General, Inc., a Virginia corporation
(the "Investor," and collectively with the Company and Buzztime, the "Parties").
The Parties hereby agree as follows:
1. AUTHORIZATION OF SALE OF THE SECURITIES
The Company and Buzztime have authorized the sale and issuance of
certain units (the "Units"; each Unit consisting of one share of the Company's
common stock, par value $.005 per share, and one-fourth of a warrant to purchase
one share of Buzztime's common stock, par value $.001 per share). The shares of
the Company's common stock sold hereunder shall be referred to herein as the
"Shares," the Buzztime warrants sold hereunder shall be referred to herein as
the "Warrants," and the shares of Buzztime common stock underlying the Warrants
shall be referred to herein as the "Warrant Shares." A form of the Warrant is
attached as Appendix I.
At the Closing, the Company and the Investor will enter into the NTN
Investor Rights Agreement and the Company, Buzztime and the Investor will enter
into the Buzztime Investor Rights Agreement. The warrants exercisable for shares
of the Company's common stock that are issuable upon the exchange of the
Warrants pursuant to the Buzztime Investor Rights Agreement (subject to
adjustment to reflect stock splits, combinations, stock dividends, mergers or
reclassifications) shall be referred to herein as the "Exchange Warrants." The
shares of the Company's common stock that are issuable upon the exchange of the
Warrant Shares pursuant to the Buzztime Investor Rights Agreement at a fixed
ratio of two shares of the Company's common stock for each Warrant Share
(subject to adjustment to reflect stock splits, combinations, stock dividends,
mergers or reclassifications), together with the shares of the Company's common
stock that are issuable upon the exercise of the Exchange Warrants, shall be
referred to herein as "Exchange Shares."
In addition, the Company has authorized the issuance of 666,667 shares
of the Company's common stock to the Investor as payment of the license fee for
the initial term under Section 3.1 of the Licensing Agreement to be entered into
by the Company, Buzztime and the Investor at the Closing (the "Licensing
Agreement," and such shares to be issued to the Investor at the Closing pursuant
thereto, the "License Fee Shares"). The Licensing Agreement further permits the
issuance of additional shares of the Company's common stock or Buzztime's common
stock as payment for subsequent periods after the initial term (the "Renewal
License Fee Shares") at the election of the Investor.
The Licensing Agreement, the Warrants, the NTN Investor Rights
Agreement, and the Buzztime Investor Rights Agreement shall be collectively
referred to herein as the "Related Agreements." The Units, Shares, Warrants,
Warrant Shares, Exchange Shares, Exchange Warrants, License Fee Shares and
Renewal License Fee Shares shall be collectively referred to herein as the
"Securities."
The Investor has previously received the Company's annual report on
Form 10-K for the year ended December 31, 2002 (the "Form 10-K"), and all other
filings made with the Securities and Exchange Commission (the "SEC") under
Sections 13, 14(a) and 15(d) of the Exchange Act (as defined below) since the
filing of the Form 10-K through the date of this Agreement (such filings, along
with the Form 10-K, the "2003 SEC Filings"). The 2003 SEC Filings shall be
deemed to include any filings pursuant to Items 9 or 12 of Form 8-K made during
2003 through the date of this Agreement.
2. AGREEMENT TO SELL AND PURCHASE THE UNITS
Subject to the terms and conditions of this Agreement, at the Closing
(as defined below), the Company and Buzztime agree to sell to the Investor, and
the Investor agrees to purchase from the Company and Buzztime, 2,000,000 Units
at a purchase price of $1.50 per Unit for an aggregate amount of $3,000,000.
3. CLOSING AND DELIVERY
3.1 Closing. The closing of the purchase and sale of the Units pursuant
to this Agreement and the License Fee Shares (the "Closing") shall be held as
soon as practicable after the satisfaction or waiver of all of the 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 at such other place as may be agreed by the Company and the
Investor. Prior to the Closing, the Parties shall execute any Related Agreements
and other documents required to be executed hereunder.
3.2 Delivery of the Certificates and Warrants at the Closing. At the
Closing, the Company and Buzztime shall deliver to the Investor a stock
certificate for 2,000,000 shares of the Company's common stock, a stock
certificate for 666,667 shares of the Company's common stock and Warrants for
500,000 shares of Buzztime's common stock registered in the name of such
Investor, or in such nominee name as designated by such Investor, representing
the Units to be purchased by such Investor at the Closing against payment of the
purchase price for such Units and representing the License Fee Shares.
3.3 Payment of Purchase Price. At the Closing, the Investor shall make
payment of the aggregate purchase price of $3,000,000 for the Units by wire
transfer to an account specified by the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BUZZTIME
The Company and Buzztime each hereby jointly and severally represents
and warrants to the Investor 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 Form 10-K. 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. The Company and each of its subsidiaries is in
possession of and operating in compliance with all authorizations, licenses,
certificates, franchises, consents, orders and permits from federal, state and
other governmental and regulatory authorities necessary for its business and
operations as presently conducted and as proposed to be conducted, except where
the failure to possess or be in compliance with any of the foregoing is not
reasonably likely to have a Material Adverse Effect, all of which are valid and
in full force and effect.
4.2 Subsidiaries. Schedule 4.2 sets forth the names and jurisdictions
of organization of each of the Company's direct and indirect significant
subsidiaries. Except as set forth on Schedule 4.2, the Company holds of record
and owns beneficially 100% of the issued and outstanding shares of capital stock
and other securities of each such subsidiary.
4.3 Corporate Power; Authorization; Compliance with Other Instruments.
The Company and Buzztime each has full legal right, power and authority to enter
into this Agreement and the Related Agreements and to perform the transactions
contemplated hereby and thereby. This Agreement and the Related Agreements have
been duly authorized, executed and delivered by the Company and Buzztime and,
assuming due authorization, execution and delivery by the Investor, are valid
and binding agreements on the part of the Company and Buzztime, enforceable in
accordance with their terms, except as may be limited by applicable bankruptcy,
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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 and the Related Agreements
by the Company and Buzztime and the consummation of the transactions herein and
therein contemplated will not (with or without the passage of time and/or the
giving of notice) 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 or Buzztime is a party or by which it or its
assets or properties may be bound, (ii) the certificates of incorporation or
bylaws of the Company and Buzztime 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 Buzztime or their assets or properties,
except, with respect to (i) and (iii), for any conflict, breach, violation or
default which is not reasonably likely to have a Material Adverse Effect.
4.4 SEC Filings; Financial Statements. The Company has filed in a
timely manner all documents that the Company was required to file with the SEC
under Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934 (as
amended, and including any successor thereto and any rules and regulations
promulgated thereunder, the "Exchange Act") since January 1, 2001. As of their
respective filing dates (or, if amended, when amended), the documents filed by
the Company with the SEC since January 1, 2001 (the "SEC Filings") complied with
the requirements of the Exchange Act and the Securities Act of 1933 (as amended,
and including any successor thereto and any rules and regulations promulgated
thereunder, the "Securities Act"). The Company satisfies the registrant
requirements for the use of Form S-3 for secondary offerings under the
Securities Act. None of the SEC Filings 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 not misleading. Since January 1,
2001, the Company has timely filed all documents that it was required to file
under the Securities Act or the Exchange Act, and all such documents were
complete and accurate in all material respects. The consolidated financial
statements of the Company included in the SEC Filings (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
consolidated financial position of the Company and its subsidiaries at the dates
thereof and the results of their 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 and its subsidiaries did not
have, as of the respective dates 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 that are not in the nature of contingent liabilities) which GAAP would
require the Company to reflect in the Financial Statements. Except as disclosed
in the 2003 SEC Filings, there have not been any changes in the assets,
liabilities (contingent or otherwise), financial condition or operations of the
Company or any of its subsidiaries from that reflected in the Financial
Statements for the period ended December 31, 2002, except changes in the
ordinary course of business that are consistent with past practices that,
individually or in the aggregate, are not material to the financial condition or
results of operations of the Company.
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4.5 Properties. Except as set forth in the 2003 SEC Filings, (a) each
of the Company and its subsidiaries owns or leases all properties and assets,
and has all other rights and privileges, necessary to its business and
operations as now conducted and proposed to be conducted, and each of the
Company and its subsidiaries has good and marketable title to all such
properties and assets owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest except those that do not
materially impair the Company's or any of its subsidiaries' ownership or use of
such properties or assets; (b) the agreements, contracts and other instruments
to which each of the Company and its subsidiaries is a party are valid and
enforceable by the Company or the subsidiary that is a party thereto, 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, contracts or
instruments; and (c) each of the Company and its subsidiaries has valid and
enforceable leases for all material properties and assets 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.
4.6 Capitalization.
(a) All outstanding shares of capital stock of the Company and
Buzztime 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
tables included in Schedule 4.6(a) specify (i) the total number of authorized
shares of each class of capital stock of the Company and each of its
subsidiaries and (ii) the total number of issued and outstanding shares of each
class of capital stock of the Company and each of its subsidiaries and the total
number of shares held in treasury, in each case before and after giving effect
to the transactions contemplated by this Agreement. Schedule 4.6(a) also
specifies (1) the total number of shares of common stock of each of the Company
and Buzztime that are issuable upon the exercise, conversion or exchange of all
Convertible Securities of each of the Company and Buzztime that are outstanding
after giving effect to the transactions contemplated by this Agreement, on a
fully-diluted basis and after giving effect to any anti-dilution adjustments
resulting from the transactions contemplated by this Agreement and (2) the total
additional number of shares of common stock or Convertible Securities of each of
the Company and Buzztime that are authorized or reserved for issuance pursuant
to employee stock option plans or otherwise or that either the Company or
Buzztime may become obligated to issue under an outstanding contract or
commitment after giving effect to the transactions contemplated by this
Agreement. "Convertible Securities" means all securities or obligations that are
exercisable for, convertible into or exchangeable for shares of common stock of
the Company and Buzztime, as applicable, including options, warrants and other
rights to subscribe for or purchase other securities that are exercisable for,
convertible into or exchangeable for shares of common stock of the Company or
Buzztime, as applicable. The rights, privileges and preferences of the Company's
Series A Preferred Stock are as stated in the restated certificate of
incorporation of the Company in the form delivered to the Investor, and the
rights, privileges and preferences of Buzztime's Series A Preferred Stock are as
stated in the restated certificate of incorporation of Buzztime and the Investor
Rights Agreement dated June 8, 2001 between Buzztime and Scientific-Atlanta
Strategic Investments, LLC in the forms delivered to the Investor. Except as
disclosed in the 2003 SEC Filings, there are no accrued and unpaid dividends
with respect to any shares of capital stock or other securities of the Company
or its subsidiaries.
(b) The Shares and License Fee Shares to be issued and sold at
the Closing hereunder and the Licensing Agreement have been duly authorized for
issuance and sale to the Investor pursuant to this Agreement and the Licensing
Agreement, and, when issued and delivered by the Company and Buzztime against
payment therefor in accordance with the terms of this Agreement and the
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Licensing Agreement, will be duly and validly issued and fully paid and
nonassessable, issued in compliance with all applicable securities laws and
regulations, and sold free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest. The Units and Warrants to be issued
and sold at the Closing hereunder have been duly authorized for issuance and
sale to the Investor pursuant to this Agreement, and, when issued and delivered
by the Company and Buzztime against payment therefor in accordance with the
terms of this Agreement, will be duly and validly issued, issued in compliance
with all applicable securities laws and regulations, and sold free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest.
The Renewal License Fee Shares issuable under the Licensing Agreement have been
duly authorized and reserved for issuance to the Investor pursuant to the
Licensing Agreement and, upon issuance pursuant to Section 3.2 of the Licensing
Agreement, the Renewal License Fee Shares will be duly and validly issued and
fully paid and nonassessable, issued in compliance with all applicable
securities laws and regulations, and sold free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest. The Warrant Shares
issuable upon exercise of the Warrants have been duly and validly authorized and
reserved for issuance and, when issued and delivered by Buzztime against payment
therefor in accordance with the terms of the this Agreement and the Warrant,
will be duly and validly issued and fully paid and nonassessable, issued in
compliance with all applicable securities laws and regulations, and sold free
and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest. The Exchange Shares issuable upon exercise of the Investor's
exchange rights under the Buzztime Investor Rights Agreement and the Exchange
Shares issuable upon the exercise of the Exchange Warrants have been duly and
validly authorized and reserved for issuance and, upon issuance, will be duly
and validly issued and fully paid and nonassessable, issued in compliance with
all applicable securities laws and regulations, and sold free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest. The
Exchange Warrants to be issued and sold upon the exercise of the Investor's
exchange rights under the Buzztime Investor Rights Agreement have been duly
authorized for issuance and sale to the Investor pursuant to the Buzztime
Investor Rights Agreement, and, when issued and delivered by the Company against
payment therefor in accordance with the terms of the Buzztime Investor Rights
Agreement, will be duly and validly issued, issued in compliance with all
applicable securities laws and regulations, and sold free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest.
Except as set forth on Schedule 4.6(b), no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
stockholders exists with respect to any of the Securities or the issuance and
sale thereof other than those that have been 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 stockholder or the Board of Directors
of the Company or Buzztime is required for the issuance and sale of the
Securities to the Investor in accordance with this Agreement and the Related
Agreements.
4.7 Litigation. Except as disclosed in the 2003 SEC Filings, there is
not pending or, to the Company's knowledge, threatened, any action, suit, claim,
proceeding or investigation against the Company or any of its subsidiaries or
any of their respective directors, officers, employees, 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 its subsidiaries (or any of their respective directors, officers,
employees, properties, or otherwise) which (i) is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect or is
reasonably likely to materially and adversely affect the Company's or its
subsidiaries' properties, assets or rights or (ii) is reasonably likely to
prevent consummation of, or rescind or unwind, the transactions contemplated
hereby. 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
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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.
4.8 Listed Shares. Upon issuance, the Shares, License Fee Shares,
Renewal License Fee Shares and the Exchange Shares will be registered pursuant
to Section 12(b) of the Exchange Act, and approved for listing and quotation on
the American Stock Exchange ("AMEX"). Except as disclosed in the 2003 SEC
Filings, 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. The Company is, and after
giving effect to the issuance of the Shares and the License Fee Shares to the
Investor at the Closing hereunder, the Company will be in compliance with all
standards for continued listing on the AMEX. Based on the Company's financial
projections, which have been prepared by the Company in good faith and on a
reasonable basis, its stockholders' equity will exceed the minimum required by
the AMEX during and at the end of the twelve-month period following the Closing.
4.9 Intellectual Property. The Company and its subsidiaries each owns
or possesses sufficient rights in all patents, patent rights, inventions,
trademarks, service marks, trade names, copyrightable materials, domain names,
trade secrets, know-how and all other intellectual property which are necessary
to conduct its business as now conducted and as proposed to be conducted
(collectively, the "Intellectual Property"). Except as disclosed in the 2003 SEC
Filings or on Schedule 4.9 attached hereto, neither the Company nor any of its
subsidiaries has received any written notice of, nor has it any knowledge of,
any violation of or allegation that the Company or any of its subsidiaries has
violated or, by conducting its business as now conducted or as proposed to be
conducted, would violate, any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names, copyrights or any other
proprietary right of any third party. To the Company's knowledge, there is no
violation or infringement by any third party of any of the Company's or any
subsidiary's rights in the Intellectual Property.
4.10 No Change. Since December 31, 2002 and except as otherwise
disclosed in the 2003 SEC Filings, there has not been (i) any change or
development that, either individually or in the aggregate, has had a material
and adverse effect on, or could be reasonably expected to have a material and
adverse effect on, the condition (financial or otherwise), earnings, operational
results, operations, assets, liabilities (actual or contingent), business or
business prospects of the Company or any of its subsidiaries, (ii) any
transaction that is material to the Company or any of its subsidiaries, (iii)
any obligation, direct or contingent, incurred by the Company or any of its
subsidiaries, except obligations incurred in the ordinary course of business
consistent with past practices, (iv) any change in the capital stock or
outstanding indebtedness of the Company or any of its subsidiaries, 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 or any of its
subsidiaries, (vi) any default in the payment of principal of or interest on any
outstanding debt obligations, or (vii) any material loss or damage (whether or
not insured) to the property of the Company or any of its subsidiaries which has
been sustained or will have been sustained.
4.11 No Defaults. Neither the Company nor any of its subsidiaries is
(a) in violation of its certificate of incorporation, bylaws or other
organizational documents or (b) in violation of or default (with or without
notice or lapse of time or both) in the performance or observance of any
obligation, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness, or in any lease, contract, indenture,
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mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which it is a party or by which it or its assets or 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 any of its
subsidiaries or their assets or properties, except in the case of (b) or (c) for
any default or violation not reasonably likely to have a Material Adverse
Effect.
4.12 Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental or regulatory authority or other third
party on the part of the Company or any of its subsidiaries is required in
connection with the consummation of the transactions contemplated by this
Agreement or the Related Agreements (each a "Consent"), except for (a) Consents
required to comply with the securities and Blue Sky laws in the states and other
jurisdictions in which any of the Securities are offered and/or sold, which
compliance will be effected in accordance with such laws, (b) Consents required
by the AMEX and the SEC, and (c) Consents described on Schedule 4.12. The
Company and all of its subsidiaries are conducting business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which they
are 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
4.13 Labor; Employees; ERISA.
(a) The Company and its subsidiaries are in compliance in all
material respects with all laws, orders, rules and regulations relating to the
employment of labor. No strike by or other labor dispute involving the employees
of the Company or its subsidiaries exists or, to the Company's knowledge, has
been threatened. The Company is not aware of any existing or threatened labor
dispute involving 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 or other agreement with any labor union covering any
employees of the Company or any of its subsidiaries exists, no such agreement is
being negotiated or prepared, and, to the knowledge of the Company, no labor
union has sought to represent any of the employees, representatives, or agents
of the Company or any of its subsidiaries
(b) If any employee of the Company or any of 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, (i) 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 or
any of its subsidiaries or such person's performance of his or her obligations
to the Company or any of its subsidiaries and (ii) the Company will use
reasonable efforts to prevent its employees and the employees of its
subsidiaries from violating any such agreement.
(c) The Company and any ERISA Affiliate have complied in all
material respects with all applicable laws, orders, rules and regulations
relating to any Employee Plan or Compensation Arrangement. There are no material
undisclosed liabilities relating to, associated with or arising under any
Employee Plan or Compensation Arrangement. No governmental inspection,
investigation, audit or examination of any Employee Plan or Compensation
Arrangement is pending or threatened. There are no Employee Plans subject to
Title IV of the Employee Retirement Income Security Act of 1974 (as amended, and
including any successor thereto and any regulations promulgated thereunder,
"ERISA"). As used herein, the term "Code" means the Internal Revenue Code of
1986, as amended, any successor thereto and any regulations promulgated
thereunder; "Compensation Arrangement" means any plan or compensation
arrangement other than an Employee Plan, whether written or unwritten, which
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provides to employees, former employees, officers, directors and shareholders of
the Company or any ERISA Affiliate any compensation or other benefits, whether
deferred or not, including, but not limited to, any bonus or incentive plan,
stock rights plan, deferred compensation arrangement, life insurance, stock
purchase plan, severance pay plan and any other employee fringe benefit plan;
"Employee Plan" means any retirement or welfare plan or arrangement or any other
employee benefit plan as defined in Section 3(3) of ERISA to which the Company
or any ERISA Affiliate contribute or to which the Company or any ERISA Affiliate
sponsor, maintain or otherwise are bound; and "ERISA Affiliate" means any trade
or business related to the Company under the terms of Sections 414(b), (c), (m)
or (o) of the Code.
4.14 Taxes. The Company and its subsidiaries have timely filed all
federal, state, local and foreign income tax returns and all franchise, sales
and use and other material tax returns required by law 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 of the Company or any of its subsidiaries (whether or not shown
to be due on or with respect to the applicable tax return or claimed to be due
from it by any governmental authority) have either been paid or are adequately
provided for on the books and balance sheet of the Company or the applicable
subsidiary in accordance with GAAP. There are no tax sharing agreements or
similar arrangements with respect to or involving the Company or any of its
subsidiaries.
4.15 Insurance. Each of the Company and its subsidiaries maintains
insurance with insurers of recognized financial responsibility of the types and
in the amounts generally deemed prudent for its business 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, and directors and officers
liability insurance, all of which insurance is in full force and effect. Neither
the Company nor any of its subsidiaries is in default with respect to its
obligations under any insurance policy maintained by it. The Company has
delivered to the Investor a true and complete copy of the Company's directors
and officers liability insurance policy as currently in effect.
4.16 Offering. Subject in part to the truth and accuracy of the
representations and warranties of the Investor set forth in Section 5 of this
Agreement, the offer, sale and issuance of the Securities as contemplated by
this Agreement and the Related Agreements are exempt from the registration
requirements of any applicable state and federal securities laws, and neither
the Company, Buzztime nor any authorized agent acting on their behalf shall take
any action hereafter that would cause the loss of such exemption.
4.17 Environmental Matters. (i) The Company and its subsidiaries are in
compliance with all rules, laws, orders and regulations relating to the use,
treatment, storage, cleanup and disposal of toxic or hazardous substances and
protection of health and the environment ("Environmental Laws") which are
applicable to them or their businesses, except where the failure to comply would
not reasonably be likely to have a Material Adverse Effect, (ii) neither the
Company nor any of its subsidiaries has received any written notice or other
communication from any governmental authority or third party of an asserted or
threatened claim under any 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, neither the Company nor any subsidiary will 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
or any subsidiary has, to the Company's knowledge, been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or otherwise designated as
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a contaminated site under applicable state or local law. The Company and its
subsidiaries do not currently own any real property in fee simple.
4.18 Reservation of Shares. Buzztime shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance, the
number of shares of Buzztime common stock necessary to provide for the issuance
of the 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 the Company's common stock necessary to provide for the issuance of
the Exchange Shares and Renewal License Fee Shares. Buzztime shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, the number of shares of Buzztime common stock necessary to provide
for the issuance of the Renewal License Fee Shares.
4.19 Corporate Documents. True and complete copies of the certificates
of incorporation and bylaws of the Company and Buzztime as currently in effect
have been delivered to the Investor. Except as disclosed in the 2003 SEC
Filings, neither the Company nor any of its subsidiaries has taken any action to
amend or plans to amend its certificate of incorporation or bylaws.
4.20 Disclosure. No representation or warranty of the Company or
Buzztime contained in this Agreement or the Related Agreements, or the schedules
attached hereto and thereto contains any untrue statement of a material fact or
omits to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
5.1 Investment Representations. The Investor represents and
warrants to the Company and Buzztime that:
(a) The Investor is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in securities presenting an investment decision like that involved
in the purchase of the Units and License Fee Shares, including investments in
securities issued by the Company, and has requested, received, reviewed and
considered all information the Investor deems relevant (including the
Confidential Private Placement Memorandum dated May 31, 2002 and annexes thereto
(the "Memorandum") and the 2003 SEC Filings) in making an informed decision to
purchase the Units and License Fee Shares. The Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
and Buzztime regarding the terms and conditions of the offering of the Units and
License Fee Shares and the business, properties, prospects and financial
condition of the Company and its subsidiaries.
(b) The Investor is purchasing the Units and the License Fee
Shares for its own account for investment only and with no present intention of
distributing the Units or the License Fee Shares or any arrangement or
understanding with any other persons regarding the distribution of the Units or
the License Fee Shares in violation of any applicable federal or state
securities laws.
(c) The Investor 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
Investor also understands that there is no assurance that any exemption from
registration under the Securities Act and applicable Blue Sky laws will ever be
available and that, even if available, such exemption may not allow the Investor
to transfer all or any portion of the securities under the circumstances, in the
amounts or at the times the Investor might propose.
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(d) The Investor has, in connection with its decision to
purchase the Units and the License Fee Shares, relied with respect to the
Company and its affairs solely upon the Memorandum, the 2003 SEC Filings and the
representations and warranties of the Company and Buzztime contained herein.
(e) The Investor is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under
the Securities Act.
(f) The Investor has full right, power, authority and capacity
to enter into this Agreement and the Related Agreements and to perform the
transactions contemplated hereby and thereby. This Agreement and the Related
Agreements have been duly authorized, executed and delivered by the Investor.
Assuming due authorization, execution and delivery by each of the other Parties
hereto and thereto, this Agreement and the Related Agreements are valid and
binding obligations of the Investor, enforceable in accordance with their terms.
5.2 Ability to Bear Risk. The Investor is able to bear the economic
risk of holding the Units and License Fee Shares for an indefinite period,
including the loss of the Investor's entire investment. The Units and License
Fee Shares were not offered or sold to the Investor by any form of general
solicitation or advertising. The Investor also represents that it has not been
organized for the purpose of acquiring the Units and License Fee Shares.
5.3 Independent Advice. The Investor understands that nothing in the
Memorandum, this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Units and License Fee Shares
constitutes legal, tax or investment advice and that no independent legal
counsel retained by the Company has reviewed these documents and materials on
the Investor's behalf. The Investor 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. The Investor understands that (a) none of the
Securities shall be transferable in the absence of registration under 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 and
Buzztime shall provide stop transfer instructions to its transfer agent with
respect to each of the Securities in order to enforce the restrictions contained
in this Section 5.4; and (c) each certificate or instrument representing any of
the Securities shall be in the name of Investor and shall bear substantially the
following legend (in addition to any legends required under applicable
securities laws):
"THIS SECURITY [AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY]
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS
BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER
SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY IS FURNISHED UPON REQUEST BY THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED."
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The legend contained in this Section 5.4 may be removed from a certificate or
instrument representing any of the Securities immediately upon receipt by the
Company's transfer agent of a certificate substantially in the form of Appendix
II and such other documentation as the transfer agent may routinely require,
including, but not limited to, an opinion of counsel. Notwithstanding the
foregoing, such Securities must be held in certificated form until such shares
have been sold in accordance with the provisions of Appendix II.
5.5 Residence. The office or offices of the Investor in which its
investment decision was made is located at the address or addresses of the
Investor set forth on the signature page.
5.6 Effect on the Company's and Buzztime's Representations and
Warranties. The representations and warranties of the Investor in this Section 5
do not limit or modify in any respect the Company's and Buzztime's
representations and warranties in Section 4 herein or the right of the Investor
to rely on the Company's and Buzztime's representations and warranties in
Section 4.
6. CONDITIONS TO COMPANY'S AND BUZZTIME'S OBLIGATIONS AT THE CLOSING
The Company's and Buzztime's obligations to complete the sale and
issuance of the Units and to deliver Units to the Investor shall be subject to
the following conditions (to the extent not waived by the Company and Buzztime):
6.1 Representations and Warranties; Performance. The representations
and warranties made by the Investor in Section 5 hereof shall be true and
correct when made, and shall be true and correct as of the Closing as if made on
the Closing. The Investor 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 the Investor.
7. CONDITIONS TO INVESTOR'S OBLIGATIONS AT THE CLOSING
The Investor'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 the Investor):
7.1 Representations and Warranties; Performance. The representations
and warranties made by the Company and Buzztime in Section 4 shall be true and
correct when made, and shall be true and correct as of the Closing as if made on
the Closing. The representations and warranties made by the Company and Buzztime
in Section 4.6(a) with respect to capitalization shall be true and correct as of
the Closing as if made on the Closing, and the Company will provide an updated
Schedule 4.6(a) dated as of the date of the Closing (provided that the updated
Schedule 4.6(a) may reflect changes in the capitalization since the date of this
Agreement through the Closing so long as the total number of shares of
fully-diluted common stock of each of the Company and Buzztime, respectively,
disclosed on such updated Schedule 4.6(a) is equal to the number of shares of
fully-diluted common stock of each of the Company and Buzztime, respectively, as
disclosed in the original Schedule 4.6(a)). The Company and Buzztime shall have
performed and complied in all material respects with all of their obligations
under this Agreement which are to be performed or complied with on or prior to
the Closing.
7.2 Delivery of the Shares, Warrants and License Fee Shares. The stock
certificates representing the Shares and License Fee Shares, and the instruments
representing the Warrants, shall have been delivered by the Company and Buzztime
in accordance with Section 3.2 herein.
7.3 Consents. The Company and Buzztime 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).
7.4 Execution of Investor Rights Agreements and Licensing Agreement.
The Company and the Investor shall have executed the NTN Investor Rights
Agreement substantially in the form attached as Appendix III. Buzztime, the
Company and the Investor shall have executed the Buzztime Investor Rights
Agreement substantially in the form attached as Appendix IV and the Licensing
Agreement substantially in the form attached as Appendix V.
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7.5 AMEX Listing. The Shares and License Fee Shares shall have been
approved for listing and authorized for trading on AMEX, and trading in the
Shares and License Fee Shares shall not have been suspended by the SEC or AMEX.
7.6 Board Seat. The Board of Directors of the Company shall have
appointed Xxxx X. Xxxxxxx as the Investor's designee to the Board of Directors
to serve as a director of the Company in the class whose current term expires in
2005. The Company and Xx. Xxxxxxx shall have entered into an indemnity agreement
substantially similar to the indemnity agreements executed between the Company
and the other directors of the Company.
7.7 Officer's Certificate. The Investor shall have received a
certificate signed by a duly authorized officer of the Company attesting to the
satisfaction of all of the conditions contained in this Section 7. Such
certificate shall attest that from the date of this Agreement through the date
of Closing, no event or development has occurred that has resulted or could
reasonably be expected to result in a material adverse change (from the
information previously furnished to the Investor) in the condition (financial or
otherwise), operations, assets or liabilities of the Company or Buzztime taken
as a whole.
7.8 Opinion of Counsel. The Company and Buzztime shall have delivered
to the Investor an opinion of O'Melveny & Xxxxx LLP, counsel to the Company and
Buzztime, dated as of the Closing, in a form attached as Appendix VI.
8. MISCELLANEOUS
8.1 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, Buzztime and the Investor.
8.2 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.
8.3 Broker's Fee. Except as otherwise disclosed in writing, the
Company, Buzztime and the Investor hereby represent (as to such party only) 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.
8.4 Severability. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement will not
affect the validity or enforceability of any other of its provisions. If one or
more provisions hereof will be declared invalid or unenforceable, the remaining
provisions will remain in full force and effect and will be construed in the
broadest possible manner to effectuate the purposes hereof. If it is determined
by a court of competent jurisdiction in any state that any restriction in this
Agreement is excessive in duration or scope or is unreasonable or unenforceable
under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to
the maximum extent permitted by the law of that state. The parties further agree
to replace such void or unenforceable provisions of this Agreement with valid
and enforceable provisions that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provisions.
8.5 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
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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 and/or Buzztime, 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 Investor, at the address as set forth on the
signature page of this Agreement, with a copy so mailed to the same address and
to the attention of the general counsel of the Investor.
8.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of
Delaware, without regard to the conflicts of law principles thereof.
8.7 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.
8.8 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,
Buzztime and the Investor herein and in the certificates for the securities
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Investor of the Units and the payment therefor. The Company and
Buzztime shall indemnify, defend, reimburse and hold harmless the Investor from
and against all costs, losses, liabilities, damages and expenses (including
reasonable attorneys' fees) arising out of or related to the breach of or a
failure by the Company and/or Buzztime to perform any of their representations,
warranties, covenants or agreements under this Agreement. The Investor shall
indemnify, defend, reimburse and hold harmless the Company and Buzztime from and
against all costs, losses, liabilities, damages and expenses (including
reasonable attorneys' fees) arising out of or related to the breach of or a
failure by the Investor to perform any of its representations, warranties,
covenants or agreements under this Agreement.
8.9 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 any of the Securities from the
Investor after the Closing and is not an affiliate of the Investor. Neither the
Company nor Buzztime may assign this Agreement or delegate any of its
obligations hereunder.
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8.10 Entire Agreement. This Agreement, the Related Agreements and other
documents delivered pursuant hereto and thereto, including the exhibits,
constitute the full and entire understanding and agreement between the Parties
with regard to the subjects hereof and thereof.
8.11 Payment of Fees and Expenses. Each of the Company, Buzztime and
the Investor shall bear its own expenses and legal fees incurred on its behalf
with respect to this Agreement and the transactions contemplated hereby;
provided, however, that the Company shall bear the Registration Expenses as
described in the NTN Investor Rights Agreement and the Buzztime Investor Rights
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement (including, without limitation, any action
arising out of or related to a breach of a representation or warranty herein),
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.
8.12 Confidentiality. The Investor 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 or Buzztime or required by any federal or
state law, rule or regulation or any decision or order of any court or
regulatory authority, the Investor agrees that it will refrain from disclosing
any such information to any person other than to any agents, attorneys,
accountants, employees, officers and directors of the Investor who need to know
such information in connection with the Investor's purchase of the Units, and
who agree to be bound by the confidentiality provisions of this Agreement. In
the event that the Investor 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 and
Buzztime sufficient prior notice so that the Company and Buzztime may seek a
stay or other release or waiver from disclosing such information. The Investor
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. Nothing in this Section 8.12
will prohibit or restrict the Investor from complying with its disclosure
obligations under applicable federal and state securities laws.
8.13 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 the actual knowledge or awareness, or knowledge or awareness
which a prudent business person would have acquired following a reasonable
investigation, of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxx XxXxxxxx and Xxxxxx
X. Xxx.
8.14 Rights Cumulative. Each and all of the various rights, powers and
remedies of the Parties hereto will be considered to be cumulative with and in
addition to any other rights, powers and remedies that such Parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement.
8.15 Limitation on Issuance of Common Stock. Notwithstanding any
provision to the contrary contained herein or in the Related Agreements, in no
event shall the Investor be entitled to receive any Renewal License Fee Shares
or Exchange Shares under this Agreement and the Related Agreements to the extent
that, after giving effect to such issuances, the aggregate number of Shares,
License Fee Shares, Renewal License Fee Shares and Exchange Shares issued under
this Agreement and the Related Agreements would exceed 19.9% of the total shares
of the Common Stock outstanding as of the date hereof as disclosed on Schedule
4.6(a).
[remainder of the page left blank; signature page follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
NTN COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
BUZZTIME ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
MEDIA GENERAL, INC.,
a Virginia corporation
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice Chairman
Address: 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Pursuant to Item 601(b)(2) of Regulation S-K, the exhibits and
schedules listed below have been omitted. A copy of the omitted exhibits and
schedules will be furnished to the Securities and Exchange Commission upon
request.
TABLE OF EXHIBITS AND SCHEDULES
Appendix I. Form of Warrant
Appendix II. NTN Communications, Inc. Investor's
Certificate of Resale of the Shares
Appendix III. Form of NTN Investor Rights Agreement
Appendix IV. Form of Buzztime Investor Rights Agreement
Appendix V. Form of Licensing Agreement
Appendix VI. Form of Opinion of O'Melveny & Xxxxx LLP
Schedule 4.2 Subsidiaries
Schedule 4.6(a) Capitalization and Indebtedness
Schedule 4.6(b) Certain Rights
Schedule 4.7 Litigation
Schedule 4.9 Intellectual Property
Schedule 4.12 Consents
