Exhibit 4.1
NTN COMMUNICATIONS, INC.
COMMON STOCK WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT. UNDER NASD RULE 2710(c)(7)(A)(i) AND SUBJECT
TO LIMITED EXCEPTIONS, THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED PRIOR TO JANUARY
30, 2005.
This certifies that, for good and valuable consideration, receipt of which
is hereby acknowledged, Roth Capital Partners LLC ("Holder") is entitled to
purchase, subject to the terms and conditions of this Warrant, from NTN
Communications, Inc., a Delaware corporation (the "Company"), [236,619] fully
paid and nonassessable shares of the Company's common stock, $0.005 par value
per share ("Common Stock") of the Company, in accordance with Section 2 hereof
during the period commencing on January 30, 2004 (the "Commencement Date") and
ending at 5:00 p.m. California time, January 30, 2009 (the "Expiration Date"),
at which time this Warrant will expire and become void unless earlier terminated
as provided herein. The shares of Common Stock of the Company for which this
Warrant is exercisable, as adjusted from time to time pursuant to the terms
hereof, are hereinafter referred to as the "Shares."
1. Exercise Price. The initial purchase price for the Shares shall be $3.91
per share. Such price shall be subject to adjustment pursuant to the terms
hereof (such price, as adjusted from time to time, is hereinafter referred to as
the "Exercise Price").
2. Exercise and Payment.
(a) Cash Exercise. At any time after the Commencement Date, this Warrant
may be exercised, in whole or in part, from time to time by the Holder, during
the term hereof, by surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed by the Holder to the Company at the principal
executive offices of the Company, together with payment in the amount obtained
by multiplying the Exercise Price then in effect by the number of Shares thereby
purchased, as designated in the Notice of Exercise. Payment may be in cash or by
check payable to the order of the Company.
(b) Net Issuance. In lieu of payment of the Exercise Price described in
Section 2(a), the Holder may elect to receive, without the payment by the Holder
of any additional consideration, shares equal to the value of this Warrant or
any portion hereof by the surrender of this Warrant or such portion to the
Company, with the net issue election notice annexed hereto
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(the "Net Issuance Election") duly executed, at the principal executive offices
of the Company. Thereupon, the Company shall issue to the Holder such number of
fully paid and nonassessable Shares as is computed using the following formula:
where: X = Y (A-B)
-------
A
X = the number of Shares to be issued to the Holder pursuant to this
Section 2.
Y = the number of Shares covered by this Warrant in respect of which
the net issuance election is made pursuant to this Section 2.
A = the fair market value of one share of Common Stock, as determined
in accordance with the provisions of this Section 2.
B = the Exercise Price in effect under this Warrant at the time the
net issuance election is made pursuant to this Section 2.
For purposes of this Section 2, the "fair market value" per share of the Common
Stock shall mean:
(i) If the Common Stock is traded on a national securities exchange or
admitted to unlisted trading privileges on such an exchange, or is listed
on the National or SmallCap Market of the National Association of
Securities Dealers Automated Quotations System (the "Nasdaq National
Market" and "Nasdaq SmallCap Market", respectively) or other
over-the-counter quotation system, the fair market value shall be the last
reported sale price of the Common Stock on such exchange, the Nasdaq
National Market, the Nasdaq SmallCap Market or other over-the-counter
quotation system on the last business day before the effective date of
exercise of the Net Issuance Election or if no such sale is made on such
day, the mean of the closing bid and asked prices such day on such
exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or other
over-the-counter quotation system; and
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not reported, the fair market
value shall be the price per share which the Company could obtain from a
willing buyer for shares sold by the Company for authorized but unissued
shares, as such price shall be determined by mutual agreement of the
Company and the Holder of this Warrant.
3. Reservation of Shares. The Company hereby agrees that at all times there
shall be reserved for issuance and delivery upon exercise of this Warrant such
number of shares of Common Stock or other shares of capital stock of the Company
from time to time issuable upon exercise of this Warrant. All such shares shall
be duly authorized, and when issued upon such exercise, shall be validly issued,
fully paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale and free and clear of all
preemptive rights.
4. Delivery of Stock Certificates. Within a reasonable time after exercise,
in whole or in part, of this Warrant, the Company shall issue in the name of and
deliver to the Holder a certificate or certificates for the number of fully paid
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and nonassessable shares of Common Stock which the Holder shall have requested
in the Notice of Exercise or Net Issuance Election, as applicable. If this
Warrant is exercised in part, the Company shall deliver to the Holder a new
Warrant for the unexercised portion of this Warrant at the time of delivery of
such stock certificate or certificates.
5. No Fractional Shares. No fractional shares or scrip representing
fractional shares will be issued upon exercise of this Warrant. If upon any
exercise of this Warrant a fraction of a share results, the Company will pay the
Holder the difference between the cash value of the fractional share and the
portion of the Exercise Price allocable to the fractional share.
6. Listing. Prior to the issuance of any shares of Common Stock upon
exercise of this Warrant, the Company shall secure the listing of such shares of
Common Stock upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange or
automated quotation system, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
7. Charges, Taxes and Expenses. The Company shall pay all transfer taxes or
other incidental charges, if any, in connection with the transfer of the Shares
purchased pursuant to the exercise hereof from the Company to the Holder.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.
9. Saturdays, Sundays, Holidays, Etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding weekday that
is not a legal holiday.
10. Adjustment of Exercise Price and Number of Shares. The Exercise Price
and the number of and kind of securities purchasable upon exercise of this
Warrant shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time after the date hereof but prior to the expiration of this
Warrant subdivide its outstanding securities as to which purchase rights
under this Warrant exist, by split-up or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant
exist, the number of Shares as to which this Warrant is exercisable as of
the date of such subdivision, split-up or combination will be
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proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments also will
be made to the Exercise Price, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant as of such date
shall remain the same.
(b) Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in Common
Stock or Convertible Securities without payment of any consideration by
such holder for the additional shares of Common Stock or the Convertible
Securities (including the additional shares of Common Stock issuable
pursuant to the terms thereof), then the number of Shares of Common Stock
for which this Warrant may be exercised shall be increased as of the record
date (or the date of such dividend distribution if no record date is set)
for determining which holders of Common Stock shall be entitled to receive
such dividend, in proportion to the increase in the number of outstanding
shares (and shares of Common Stock issuable pursuant to the terms of the
Convertible Securities) of Common Stock as a result of such dividend, and
the Exercise Price shall be adjusted so that the aggregate amount payable
for the purchase of all the Shares issuable hereunder immediately after the
record date (or on the date of such distribution, if applicable) for such
dividend will equal the aggregate amount so payable immediately before such
record date (or on the date of such distribution, if applicable). As used
herein, "Convertible Securities" means evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for,
with or without payment of additional consideration, shares of Common
Stock, either immediately or upon the arrival of a specified date or the
happening of a specified event or both.
(c) Other Distributions. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of
its dissolution or liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than cash, Common Stock or Convertible Securities), then the Company
may, at its option, either (i) decrease the Exercise Price of this Warrant
by an appropriate amount based upon the value distributed on each share of
Common Stock as determined in good faith by the Company's board of
directors or (ii) provide by resolution of the Company's board of directors
that on exercise of this Warrant, the Holder hereof shall thereafter be
entitled to receive, in addition to the Shares of Common Stock otherwise
receivable on exercise hereof, the number of shares or other securities or
property which would have been received had this Warrant at the time been
exercised.
(d) Merger. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into another corporation
when the Company is not the surviving corporation, then the Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares or other securities or property of the
successor corporation resulting from such merger or consolidation, which
would have been received by Holder for the Shares subject to this Warrant
had this Warrant been exercised at such time.
(e) Reclassification, Etc. If at any time after the date hereof there
shall be a change or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Holder shall
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thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise Price then in
effect, the number of shares or other securities or property resulting from
such change or reclassification, which would have been received by Holder
for the Shares subject to this Warrant had this Warrant been exercised at
such time.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or number
of Shares purchasable hereunder is adjusted pursuant to Section 10 hereof, the
Company must execute and deliver to the Holder a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise
Price and number of and kind of securities purchasable hereunder after giving
effect to such adjustment, and must cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the Holder.
12. Rights As Stockholder; Notice to Holders. Nothing contained in this
Warrant will be construed as conferring upon the Holder or his or its permitted
transferees the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Company or of any other matter, or any rights
whatsoever as shareholders of the Company. The Company will notify the Warrant
Holder by registered mail if at any time prior to the expiration or exercise in
full of the Warrant, any of the following events occur:
(a) a dissolution, liquidation or winding up of the Company shall be
proposed;
(b) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock
and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety; or
(c) a taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to
receive any other rights.
Such giving of notice will be simultaneous with the giving of notice to
holders of Common Stock. Such notice must specify the record date or the date of
closing the stock transfer books, as the case may be. Failure to provide such
notice will not affect the validity of any action taken in connection with such
dividend, distribution or subscription rights, or proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up.
13. Restricted Securities. The Holder understands that this Warrant and,
subject to the last sentence of this Section 13, the Shares purchasable
hereunder constitute "restricted securities" under the federal securities laws
inasmuch as they are, or will be, acquired from the Company in transactions not
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involving a public offering and accordingly may not, under such laws and
applicable regulations, be resold or transferred without registration under the
Securities Act of 1933, as amended (the "1933 Act") or an applicable exemption
from such registration. Unless the Shares are subsequently registered pursuant
to Section 16 of this Warrant, the Holder further acknowledges that the
securities legend on Exhibit A to the Notice of Exercise attached hereto shall
be placed on any Shares issued to the Holder upon exercise of this Warrant.
Notwithstanding the foregoing, if a Holder exercises a net issuance under
Section 2(b), the Shares will be deemed to purchased under Section 3(a)(9) of
the 1933 Act and will not be "restricted securities" or subject to legend if the
Warrant has been held for a period of one year or more.
14. Certification of Investment Purpose. Unless a current registration
statement under the 1933 Act shall be in effect with respect to the securities
to be issued upon exercise of this Warrant, the Holder covenants and agrees
that, at the time of exercise hereof, it will deliver to the Company a written
certification executed by the Holder that the securities acquired by him upon
exercise hereof are for the account of such Holder and acquired for investment
purposes only and that such securities are not acquired with a view to, or for
sale in connection with, any distribution thereof.
15. Disposition of Shares; Transferability.
(a) Holder hereby agrees not to make any disposition of any Shares
purchased hereunder unless and until:
(i) Holder shall have notified the Company of the proposed
disposition and provided a written summary of the terms and conditions
of the proposed disposition; and
(ii) Holder shall have complied with all requirements of this
Warrant applicable to the disposition of the Shares.
The Company shall not be required (i) to transfer on its books
any Shares which have been sold or transferred in violation of the
provisions of this Section 15 or (ii) to treat as the owner of the
Shares, or otherwise to accord voting or dividend rights to, any
transferee to whom the Shares have been transferred in contravention
of the terms of this Warrant.
(b) Transfer. This Warrant shall be transferable only on the books of
the Company maintained at its principal office in Carlsbad, CA, or wherever
its principal office may then be located, upon delivery thereof duly
endorsed by the Holder or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver new Warrants to the person entitled thereto.
(c) Limitations on Transfer. This Warrant may not be sold,
transferred, assigned or hypothecated (any such action, a "Transfer") by
the Holder except to (i) one or more persons, each of whom on the date of
transfer is an officer of the Holder; (ii) a general partnership or general
partnerships, the general partners of which are the Holder and one or more
persons, each of whom on the date of transfer is an officer of the Holder;
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(iii) a successor to the Holder in any merger or consolidation; (iv) a
purchaser of all or substantially all of the Holder's assets; (v) any
person receiving this Warrant from one or more of the persons listed in
this Section 15(c) at such person's death pursuant to will, trust or the
laws of intestate succession, or (vi) after one year from the date of this
Warrant, any person receiving the Warrant from the persons listed in this
Section 15. This Warrant may be divided or combined, upon request to the
Company by the Holder, into a certificate or certificates representing the
right to purchase the same aggregate number of Shares. If at the time of a
Transfer, a Registration Statement is not in effect to register this
Warrant, the Company may require the Holder to make such representations,
and may place such legends on certificates representing this Warrant, as
may be reasonably required in the opinion of counsel to the Company to
permit a Transfer without such registration.
16. Registration Rights.
(a) Piggyback Registration. If at any time prior to the Expiration
Date, the Company determines to register for its own account or the account
of others under the 1933 Act any of its equity securities, other than on
Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any
entity or business, or equity securities issuable in connection with stock
option or other employee benefit plans, the Company shall send to each
Holder of Warrants or Shares written notice of such determination and, if
within twenty (20) days after receipt of such notice, such Holder shall so
request in writing (hereafter a "Selling Holder"), the Company shall
include in such Registration Statement all or any part of the Shares
issuable or issued upon exercise of the Warrants (the "Registrable
Securities") such Selling Holder requests to be registered. The obligations
of the Company under this Section 16(a) may be waived by Holders holding a
majority in interest of the Registrable Securities. In the event that the
managing underwriter for an offering advises the Company in writing that
the inclusion of such securities in the offering would be materially
detrimental to the offering, such Registrable Securities shall be excluded
from the Registration Statement.
(b) Demand Registration. Within 90 days after the Commencement Date,
the Company will on Form S-3 (or an equivalent form) prepare and file at
its own expense a Registration Statement with the Commission and
appropriate "blue sky" authorities sufficient to permit the public offering
of the Registrable Securities and will use its best efforts at its own
expense through its officers, directors, auditors and counsel, in all
matters necessary or advisable, to cause such Registration Statement to
become effective as promptly as practicable and to maintain such
effectiveness so as to permit resale of the Shares covered by the Request.
The Company shall take all commercially reasonable actions to maintain
eligibility to use Form S-3 (or an equivalent form) for resales of the
Shares.
(c) Obligations of the Holders. In connection with the registration of
the Registrable Securities pursuant to either Sections 16(a) or (b), the
Selling Holders shall have the following obligations:
(i) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to
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each Selling Holder that such Selling Holder shall furnish to the
Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
registration of the Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Selling Holder of the information the Company
requires from each such Selling Holder (the "Requested Information")
in the case of a Registration Statement being prepared pursuant to
Section 16(b) or if such Selling Holder elects to have any of such
Selling Holder's Registrable Securities included in the Registration
Statement in the case of a Registration Statement being prepared
pursuant to Section 16(a).
(ii) Each Selling Holder by such Selling Holder's acceptance of
the Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement hereunder, unless such
Selling Holder has notified the Company in writing of such Selling
Holder's election to exclude all of such Selling Holder's Registrable
Securities from the Registration Statement; and
(iii) No Selling Holder may participate in any underwritten
registration hereunder unless such Selling Holder (i) agrees to sell
such Selling Holder's Registrable Securities on the basis provided in
any underwriting arrangements approved by the Selling Holders entitled
hereunder to approve such arrangements, (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions and other fees and
expenses of investment bankers and any manager or managers of such
underwriting, except as provided in Section 16(d) below.
(d) Obligations of the Company. If and whenever the Company is
required to use its best efforts to take action pursuant to any Federal or
state law or regulation to permit the sale or other disposition of any
Shares purchasable upon exercise of this Warrant that are then held or that
may be acquired upon exercise of the Warrants in order to effect or cause
the registration of any Registrable Securities under the 1933 Act as
provided in this Section 16, the Company shall, as expeditiously as
practicable:
(i) Prepare and file with the SEC, as soon as practicable and no
later than ninety (90) days after any request for registration has
been given to the Company, a Registration Statement on any appropriate
form under the 1933 Act, which form shall be available for the sale of
the Registrable Securities in accordance with the intended method or
methods of distribution thereof, and use its best efforts to cause
such Registration Statements to become effective; provided that before
filing a Registration Statement or Prospectus or any amendment or
supplements thereto, including documents incorporated by reference
after the initial filing of any Registration Statement, the Company
will furnish to the Holders of the Registrable Securities covered by
such Registration Statement and the underwriters, if any, copies of
all such documents provided to be filed, which documents will be
subject to the review of such Holders and underwriters;
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(ii) prepare and file with the SEC such amendments and
post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for a
reasonable period or as otherwise provided herein; cause the related
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933
Act; and comply with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration
Statement or supplement to such Prospectus;
(iii) notify the selling Holders of Registrable Securities and
the managing underwriters, if any, promptly, and (if requested by any
such Person) confirm such advice in writing, (A) when a Prospectus or
any Prospectus supplement or post-effective amendment has been filed,
and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective; (B) of any request by
the SEC for amendments or supplements to a Registration Statement or
related Prospectus or for additional information; (C) of the issuance
by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose; (D) if at any time the representations and warranties of the
Company contemplated by paragraph (xiv) below ceases to be true and
correct in all material respects; (E) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose; and
(F) of the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus or
any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement or
Prospectus so that they will not contain any 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;
(iv) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment, and promptly file any amendment to the
Registration Statement or supplement to the Prospectus necessary to
correct any information contained in the Registration Statement or
Prospectus which makes any statement of a material fact made in such
Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or misleading;
(v) if reasonably requested by the managing underwriters,
immediately incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters believe (on
advice of counsel) should be included therein as required by
applicable law relating to such sale of Registrable Securities,
including, without limitation, information with respect to the
purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten
(or "best-efforts" underwritten) offering; and make all required
filings of such Prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
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(vi) furnish to each selling Holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of
the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(vii) deliver to each selling Holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each preliminary Prospectus) any
amendment or supplement thereto as such Persons may reasonably
request; the Company consents to the use of such Prospectus or any
amendment or supplement thereto by each of the selling Holders of
Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by
such Prospectus or any Amendment or supplement thereto;
(viii) prior to any public offering of Registrable Securities,
cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with
the registration or qualification of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder or
underwriter reasonably requests in writing, keep each such
registration or qualification effective during the period such
Registration Statement is required to be kept effective and do any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided that the
Company will not be required to qualify to do business in any
jurisdiction where it is not then so qualified or to take any action
which would subject the Company to general service of process in any
jurisdiction where it is not at the time so subject;
(ix) cooperate with the selling Holders of Registrable Securities
and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at
least two Business Days prior to any sale of Registrable Securities to
the underwriters;
(x) use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with
or approved by such other governmental agencies or authorities within
the United States as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(xi) upon the occurrence of any event contemplated by Section
16(d)(iii)(F) above, prepare a supplement or post-effective amendment
to the applicable Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
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(xii) with respect to each issue or class of Registrable
Securities, use its best efforts to cause all Registrable Securities
covered by the Registration Statements to be listed on each securities
exchange, if any, on which similar securities issued by the Company
are then listed if requested by the Holders of a majority of such
issue or class of Registrable Securities;
(xiii) enter into such agreements (including an underwriting
agreement) and take all such other action reasonably required in
connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, if
the registration is in connection with an underwritten offering (A)
make such representations and warranties to the underwriters, in such
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offering and confirm the same if and when
requested; (B) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions in form, scope and substance shall
be reasonably satisfactory to the underwriters and selling Holders of
Registrable Securities) addressed to the underwriters and selling
Holders of Registrable Securities covering the matters customarily
covered in opinions requested in underwritten offerings and such other
matters as may be reasonably requested by such underwriters and
selling Holders of Registrable Securities; (C) obtain "cold comfort"
letters and updates thereof from the Company's accountants addressed
to the underwriters and selling Holders of Registrable Securities,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings; (D) set forth in full in any underwriting
agreement entered into the indemnification provisions and procedures
of Section 16(f) hereof with respect to all parties to be indemnified
pursuant to said Section; and (E) deliver such documents and
certificates as may be reasonably requested by the underwriters to
evidence compliance with clause (i) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company; the above shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required hereunder;
(xiv) [reserved]
(xv) make available for inspection by one or more representatives
of the Holders of Registrable Securities being sold, any underwriter
participating in any disposition pursuant to such registration, and
any attorney or accountant retained by such Holders or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such representatives, in connection with such; and
(xvi) otherwise use its best efforts to comply with all
applicable Federal and state regulations; and take such other action
as may be reasonably necessary to or advisable to enable each such
Holder and each such underwriter to consummate the sale or disposition
in such jurisdiction or jurisdiction in which any such Holder or
underwriter shall have requested that the Registrable Securities be
sold.
Except as otherwise provided in this Agreement, the Company shall have sole
control in connection with the preparation, filing, withdrawal, amendment or
11
supplementing of each Registration Statement, the selection of underwriters, and
the distribution of any preliminary prospectus included in the Registration
Statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information as may
otherwise be required by the 1933 Act to be included in such Registration
Statement.
(e) Expenses of Registration. All expenses, other than underwriting
discounts and commissions and other fees and expenses of investment bankers
and other than brokerage commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 16(a) or
16(b), including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees and the fees and
disbursements of counsel for the Company and the Selling Holders, shall be
borne by the Company; provided, however, that the Company shall only be
required to bear the fees and out-of-pocket expenses of one legal counsel
selected by the Selling Holders in connection with such registration.
(f) Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(i) To the extent permitted by law, the Company will indemnify
and hold harmless each Selling Holder who holds such Registrable
Securities, the directors, if any, of such Selling Holder, the
officers, if any, of such Selling Holder, each person, if any, who
controls any Selling Holder within the meaning of the 1933 Act, any
underwriter (as defined in the 1933 Act) for the Selling Holders, the
directors, if any, of such underwriter and the officers, if any, of
such underwriter, and each person, if any, who controls any such
underwriter within the meaning of the 1933 Act (each, an "Indemnified
Person"), against any losses, claims, damages, expenses or liabilities
(joint or several) (collectively, "Claims") to which any of them may
become subject under the 1933 Act or otherwise, insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement when it first became effective, or any related
final prospectus, amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which the statements therein were made, not
misleading (a "Violation"). The Company shall reimburse the Selling
Holders and each such underwriter or controlling person, promptly as
such expenses are incurred and are due and payable, for any legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained
in this Section 16(f)(i) shall not apply in such case to the extent
any such Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
12
thereof or supplement thereto, and shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the
prior written consent of the Company, which consent shall not be
unreasonably withheld.
(ii) In connection with any Registration Statement in which a
Selling Holder is participating, each such Selling Holder agrees to
indemnify and hold harmless, to the same extent and in the same manner
set forth in Section 16(f)(i), the Company, each of its directors,
each of its officers who signs the Registration Statement, each
person, if any, who controls the Company within the meaning of the
1933 Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter
within the meaning of the 1933 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to
which any of them may become subject, under the 1933 Act or otherwise,
insofar as such Claim arises out of or is based upon any Violation, in
each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Selling Holder expressly for use in
connection with such Registration Statement, and such Selling Holder
will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this
Section 16(f)(ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent
of such Selling Holder, which consent shall not be unreasonably
withheld.
(iii) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution to the same
extent as provided above, with respect to information furnished in
writing by such persons expressly for inclusion in the Registration
Statement.
(iv) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 16(f) of notice of the
commencement of any action or proceeding (including any governmental
action or investigation), such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is made against any indemnifying
party under this Section 16(f), deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying parties; provided,
however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such
proceeding. The Indemnifying Party shall pay for only one separate
legal counsel and local counsel for the Indemnified Parties; such
legal counsel shall be selected by the Indemnified Parties holding a
majority in interest of the Registrable Securities. The failure to
deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 16(f), except to the extent that
13
the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 16(f) shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
(v) Notwithstanding any of the foregoing, if, in connection with
an underwritten public offering of Registrable Securities, the
Company, the Selling Holders and the underwriter(s) enter into an
underwriting or purchase agreement relating to such offering which
contains provisions covering indemnification and contribution among
the parties, the indemnification and contribution provisions of this
Section 16(f) shall be deemed inoperative for purposes of such
offering.
(g) Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to
make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 16(f) to the fullest extent
permitted by law; provided, however, that (i) no contribution shall be made
under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 16(f), (ii)
no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty
of such fraudulent misrepresentation, and (iii) contribution by any seller
of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.
(h) Reports Under Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the 1933 Act or any
other similar rule or regulation of the SEC that may at any time permit the
Holders to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144; and
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(iii) furnish to each Holder so long as such Holder owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested to permit the Holders to sell such securities without
registration pursuant to Rule 144.
(i) Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Holders to transferees or assignees of all or
any portion of such securities only if: (i) the Holder agrees in writing
14
with the transferee or assignee to assign such rights, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee,
(iii) such assignment is in accordance with and permitted by law and all
other agreements between the transferor or assignor and the Company,
including without limitation, stockholder's agreements, warrants and
subscription agreements, and the transferor or assignor otherwise is not in
material default of any obligation to the Company under any such other
agreement, and (iv) at or before the time the Company received the written
notice contemplated by clause (ii) of this sentence, the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions contained herein.
17. Miscellaneous.
(a) Construction. Unless the context indicates otherwise, the term
"Holder" shall include any transferee or transferees of this Warrant
pursuant to Section 15(b), and the term "Warrant" shall include any and all
warrants outstanding pursuant to this Agreement, including those evidenced
by a certificate or certificates issued upon division, exchange,
substitution or transfer pursuant to Section 15.
(b) Restrictions. By receipt of this Warrant, the Holder makes the
same representations with respect to the acquisition of this Warrant as the
Holder is required to make upon the exercise of this Warrant and
acquisition of the Shares purchasable hereunder as set forth in the Form of
Investment Letter attached as Exhibit A to the Notice of Exercise attached
hereto.
(c) Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or
three (3) days following deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to
be notified (or one (1) day following timely deposit with a reputable
overnight courier with next day delivery instructions), or upon
confirmation of receipt by the sender of any notice by facsimile
transmission, at the address indicated below or at such other address as
such party may designate by ten (10) days' advance written notice to the
other parties.
To Holder: Roth Capital Partners LLC
24 Corporate Plaza
Newport Beach, California 92660
Attention: Managing Director
To the Company: NTN Communications, Inc.
5966 La Place
Carlsbad, CA 92008
Attention: Chief Executive Officer
(d) Governing Law. This Warrant shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
15
(e) Entire Agreement. This Warrant, the exhibits and schedules hereto,
and the documents referred to herein, constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, whether oral or written, between the parties hereto with
respect to the subject matter hereof.
(f) Binding Effect. This Warrant and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding
upon the Company and its successors and assigns, and Holder and its
successors and assigns.
(g) Waiver; Consent. This Warrant may not be changed, amended,
terminated, augmented, rescinded or discharged (other than by performance),
in whole or in part, except by a writing executed by the parties hereto,
and no waiver of any of the provisions or conditions of this Warrant or any
of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto.
(h) Severability. If one or more provisions of this Warrant are held
to be unenforceable under applicable law, such provision shall be excluded
from this Warrant and the balance of the Warrant shall be interpreted as if
such provision were so excluded and the balance shall be enforceable in
accordance with its terms.
(i) Counterparts. This Warrant may be signed in several counterparts,
each of which shall constitute an original.
16
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Warrant effective as of the date hereof.
DATED: January 30, 2004
COMPANY:
NTN COMMUNICATIONS, INC.,
a Delaware corporation
------------------------------------------
By: Stanley Kinsey
Its: Chief Executive Officer
HOLDER:
ROTH CAPITAL PARTNERS LLC, a California
limited liability company
By:
---------------------------------------
Its:
--------------------------------------
17
NOTICE OF EXERCISE
To: NTN Communications, Inc.
5966 La Place
Carlsbad, CA 92008
Attention: Chief Executive Officer
1. The undersigned hereby elects to purchase _____________ shares of common
stock, $0.005 par value per Share ("Stock") of NTN Communications, Inc., a
Delaware corporation (the "Company") pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price pursuant to the
terms of the Warrant.
2. Attached as Exhibit A is an investment representation letter addressed
to the Company and executed by the undersigned as required by Section 14 of the
Warrant.
3. Please issue certificates representing the shares of Stock purchased
hereunder in the names and in the denominations indicated on Exhibit A attached
hereto.
4. Please issue a new Warrant for the unexercised portion of the attached
Warrant, if any, in the name of the undersigned.
Holder:
----------------------------
Dated: _______________
--------------------------------------------
By:
-----------------------------------------
Its:
----------------------------------------
18
EXHIBIT A
Investment Representation Letter
(attached hereto)
19
INVESTMENT LETTER
To: NTN Communications, Inc. Date:_____________
5966 La Place
Carlsbad, CA 92008
Attention: Chief Executive Officer
The undersigned holder (the "Holder") of a Warrant to purchase
_____________ shares of common stock, $0.005 par value per share ("Stock") of
NTN Communications, Inc., a Delaware corporation (the "Company"), hereby
certifies that, as of the date hereof, the Stock acquired by such Holder upon
delivery of the Notice of Exercise and exercise of the Warrant is for the
account of such Holder and acquired for investment purposes only and that such
Stock is not acquired with a view to, or for sale in connection with, any
distribution thereof.
Holder:
----------------------------
Dated: _______________
--------------------------------------------
By:
-----------------------------------------
Its:
----------------------------------------
20
NET ISSUANCE ELECTION NOTICE
To: NTN Communications, Inc. Date:_____________
5966 La Place
Carlsbad, CA 92008
Attention: Chief Executive Officer
The undersigned hereby elects under Section 2 of the attached Warrant to
surrender the right to purchase ___________ shares of Common Stock pursuant to
the attached Warrant. The Certificate(s) for the shares issuable upon such net
issuance election shall be issued in the name of the undersigned or as otherwise
indicated below.
Signature:
Name for Registration:
Mailing Address:
21