EXHIBIT 10.18
INVESTMENT AGREEMENT
by and among
NTN COMMUNICATIONS, INC.
IWN, INC.
and
SYMPHONY MANAGEMENT ASSOCIATES, INC.
Dated and Effective of December 31, 1995
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Certain Definitions......................................... 1
SECTION 2. Amendment and Restatement of
Partnership Agreement...................................... 2
2.1 Withdrawal of Existing Partners............................ 2
2.2 Amended and Restated Partnership Agreement................. 2
SECTION 3. Future Grant of Warrant; Reservation
of Warrant Shares.......................................... 2
3.1 Grant of Warrant........................................... 2
3.2 Reservation of Warrant Shares.............................. 2
3.3 Registration Rights Agreement.............................. 2
3.4 Other Documents............................................ 3
SECTION 4. Purchase and Sale of IWN Stock; Tax
Allocation and Other Business Agreements................... 3
4.1 Purchase of IWN Stock...................................... 3
4.2 Tax Allocation and Other Agreements........................ 3
SECTION 5. Representations and Warranties............................. 4
5.1 Representations and Warranties of NTN
and IWN.................................................... 4
5.2 Representations and Warranties of Symphony................. 18
SECTION 6. Symphony "Put" Right........................................ 20
6.1 "Put" Right; Notice of Exercise............................ 20
6.2 Put Price.................................................. 20
6.3 Closing.................................................... 21
6.4 Noncompetition Agreement................................... 22
6.5 Compromise................................................. 22
SECTION 7. Additional Agreements....................................... 23
7.1 Additional Agreements of NTN and IWN....................... 23
7.2 Additional Agreements of Symphony.......................... 28
SECTION 8. Indemnification............................................. 30
8.1 NTN and IWN Indemnification................................ 30
8.2 Symphony Indemnification................................... 32
8.3 Notice of Indemnity Claim.................................. 32
8.4 Indemnity Exclusive Remedy................................. 33
i.
Page
----
SECTION 9. Miscellaneous............................................... 33
9.1 Fees and Expenses........................................... 33
9.2 Specific Enforcement........................................ 33
9.3 Entire Agreement............................................ 34
9.4 Notices..................................................... 34
9.5 Waivers..................................................... 35
9.6 Headings.................................................... 35
9.7 Assignment.................................................. 35
9.8 No Third-Party Beneficiaries................................ 35
9.9 Governing Law............................................... 35
9.10 Survival of Representations and Warranties.................. 36
9.11 Execution; Facsimile Signatures............................. 36
9.12 Publicity................................................... 36
ii.
Symphony Management Associates, Inc.
900 Bestgate Road
Suite 400
Annapolis, Maryland 21401
Gentlemen:
The undersigned, NTN Communications, Inc., a Delaware corporation ("NTN"),
and IWN, Inc., a Delaware corporation ("IWN"), hereby agree with Symphony
Management Associates, Inc., a Delaware corporation ("Symphony"), as follows:
SECTION 1. Certain Definitions
-------------------
When used in this letter agreement (this "Agreement"), the following terms
have the meanings indicated:
1.1 "CPNI" means Command Performance Network, Inc., a Delaware
corporation.
1.2 "Effective Date" means December 31, 1995.
1.3 "IWN Common Stock" means the common stock, $.001 par value per share,
of IWN.
1.4 "LLC" means Symphony IWN Investment LLC, a limited liability company
to be formed following the Effective Date under the laws of the State of
Delaware and to which Symphony shall assign and transfer all of its right, title
and interest in and to this Agreement.
1.5 "NTN Common Stock" means the common stock, $.005 par value per share,
of NTN.
1.6 "Partnership" means IWN, L.P., a Delaware limited partnership.
1.7 "Partnership Agreement" means the Agreement of Limited Partnership of
the Partnership, dated as of September 30, 1994, by and among IWN and StarBet,
as the general partners, and CPNI, as the original limited partner, as amended
by a First Amendment thereto dated as of December 19, 1994.
1.8 "Partnership Business" means the development, distribution, and
operation of interactive applications for the worldwide gaming and wagering
industry.
1.9 "StarBet" means StarBet, Inc., a Delaware corporation.
1.
SECTION 2. Amendment and Restatement of Partnership Agreement
--------------------------------------------------
2.1 Withdrawal of Existing Partners. As of the Effective Date, CPNI and
-------------------------------
StarBet have withdrawn as partners of the Partnership pursuant to a Second
Amendment to the Partnership Agreement dated as of the Effective Date, a copy of
which is attached hereto as Schedule 2.1.
------------
2.2 Amended and Restated Partnership Agreement. Concur rently with the
------------------------------------------
withdrawal of CPNI and StarBet referred to in Section 2.1, IWN and Symphony are
entering into a certain Third Amended and Restated Agreement of Limited
Partnership of the Partnership, substantially in the form attached as Exhibit 1
---------
hereto (the "Restated Partnership Agreement"). Pursuant to the Restated
Partnership Agreement, Symphony is making an initial cash capital contribution
of $100 and is being admitted as a limited partner of the Partnership on the
terms set forth in the Restated Partnership Agreement. Pursuant to the Restated
Partnership Agreement, Symphony (or LLC) also shall make an additional aggregate
cash capital contribution of $2,649,900 at the times and in the install ments
set forth therein.
SECTION 3. Future Grant of Warrant; Reservation of Warrant Shares.
------------------------------------------------------
3.1 Grant of Warrant. As soon as is practicable following the formation
----------------
of LLC, NTN shall execute and deliver to LLC, against delivery by LLC to NTN of
a check in the amount of $400, a warrant, substantially in the form attached as
Exhibit 2 to this Agreement (the "Warrant"), to purchase 400,000 shares of NTN
- ---------
Common Stock at an exercise price of $4.125 per share and on the other terms set
forth in the Warrant.
3.2 Reservation of Warrant Shares. NTN agrees to reserve and keep
-----------------------------
available at all times during which the Warrant remains outstanding, free from
preemptive rights, out of its authorized but unissued shares of Common Stock,
400,000 shares of Common Stock plus such additional number of shares as may
become issuable pursuant to the antidilution provisions thereof (collectively,
the "Warrant Shares") in order to provide for the exercise of the Warrant as
provided therein.
3.3 Registration Rights Agreement. Concurrently with the execution and
-----------------------------
delivery of the Warrant, NTN also shall execute and deliver to LLC a
registration rights agreement, substantially in the form attached as Exhibit 3
---------
to this Agreement (the "Registration Rights Agreement"), pursuant to which LLC
shall be granted certain registration rights with respect to the Warrant Shares.
2.
3.4 Other Documents. Concurrently with the execution and delivery of the
---------------
Warrant, each of the parties also shall execute and deliver such additional
documents and instruments as the other party may reasonably request, including,
without limitation, a legal opinion, in form and substance acceptable to
Symphony, of Troy & Gould Professional Corporation, counsel for NTN, IWN and the
Partnership, and a corresponding opinion, in form and substance acceptable to
NTN and IWN, of Stradley, Ronon, Stevens & Young, LLP, counsel for Symphony and
LLC.
SECTION 4. Purchase and Sale of IWN Stock; Tax Allocation and Other Business
-----------------------------------------------------------------
Agreements.
- ----------
4.1 Purchase of IWN Stock. Concurrently with the execution of this
---------------------
Agreement, NTN and Symphony are entering in a Stock Purchase Agreement,
substantially in the form attached as Exhibit 4 to this Agreement (the "Stock
---------
Purchase Agreement"), pursuant to which Symphony is purchasing from NTN, and
NTN is selling to Symphony, 100,000 shares of (the "IWN Shares") IWN Common
Stock for an aggregate purchase price of $350,000. As part of and in connection
with entering into the Stock Purchase Agreement, NTN and Symphony also are
entering into a Stockholders Agreement, substantially in the form attached as
Exhibit 5 to this Agreement (the "Stockholders Agreement").
- ---------
4.2 Tax Allocation and Other Agreements. Concurrently with the execution
-----------------------------------
of this Agreement:
(a) NTN and IWN are entering into a Tax Allocation Agreement (the
"Tax Allocation Agreement") and a Support Services Agreement (the "Support
Services Agreement"), substantially in the forms attached as Exhibits 6 and 7,
----------------
respectively, to this Agreement;
(b) NTN, IWN and the Partnership are entering into a Noncompetition
Agreement related to the Partnership Business (the "Noncompetition Agreement"),
substantially in the form attached as Exhibit 8 to this Agreement; and
(c) IWN and the Partnership are entering into an Amended and
Restated Technology and Trademark Sublicense Agreement (the "Amended Sublicense
Agreement") and a Worldwide Technology and Trademark Sublicense Agreement (the
"New Sublicense Agreement"), substantially in the forms attached as Exhibits 9
----------
and 10, respectively, to this Agreement.
- ------
The Registration Rights Agreement, Stock Purchase Agreement, Stockholders
Agreement, Tax Allocation Agreement, Support Services Agreement, Noncompetition
Agreement, Amended Sublicense Agreement, New Sublicense Agreement and Warrant
are collectively referred to herein as the "Other Agreements."
3.
SECTION 5. Representations and Warranties.
------------------------------
5.1 Representations and Warranties of NTN and IWN. In order to induce
---------------------------------------------
Symphony to enter into and to consummate the transactions contemplated by this
Agreement, NTN and IWN, jointly and severally, hereby make as of the Effective
Date the following representations and warranties to Symphony and its assigns,
all of which are intended to survive the consummation of this transaction to
the extent provided in Section 9.10:
(a) Organization and Qualification of NTN. NTN is a corporation
-------------------------------------
duly incorporated and existing in good standing under the laws of the State of
Delaware, and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. NTN does not have any active
subsidiaries, except for those identified on Schedule 5.1(a). Each of the
---------------
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any adverse effect on the operations,
properties, prospects or financial condition of NTN or the subsidiary with
respect to which such term is used and which is material to NTN and its
subsidiaries taken as a whole.
(b) Authorization; Enforcement. (i) NTN has the requisite corporate
--------------------------
power and authority to enter into and perform this Agreement and the Other
Agreements and to grant the Warrant and issue and sell the Warrant Shares in
accordance with the terms hereof and of the Warrant, respectively, (ii) the
execution and delivery by NTN of this Agreement and the Other Agreements and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and no further consent or
authorization of NTN or its Board of Directors or stockholders is required,
(iii) this Agreement, the Other Agreements and the Warrant have been or will be
duly executed and delivered by NTN, and (iv) this Agreement, the Other
Agreements and the Warrant constitute or will, when executed and delivered by
NTN, constitute valid and binding obligations of NTN enforceable against NTN in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(c) Capitalization of NTN and IWN. The authorized capital stock of
-----------------------------
NTN consists solely of 50,000,000 shares of
4.
NTN Common Stock, of which 22,460,879 shares are issued and outstanding at
December 31, 1995, all of which are voting shares, and 10,000,000 shares of
preferred stock, of which 162,602 shares are issued and outstanding at December
31, 1995. Each share of NTN Common Stock is duly and validly authorized and
issued, fully paid and nonassessable, and was not issued in violation of the
preemptive rights of any stockholder. The authorized capital stock of IWN
consists solely of 1,000,000 shares of IWN Common Stock, all of which shares are
issued and outstanding. All of the outstanding shares of IWN Common Stock are
owned by NTN. Each share of IWN Common Stock is duly and validly authorized and
issued, fully paid and nonassessable. Copies of the charter documents and
by-laws of NTN and IWN, as amended to the date hereof, in each case certified as
of the date hereof by the Secretary of NTN or IWN, as the case may be, have been
delivered to Symphony. Except for the Registration Rights Agreement and the
Stockholders Agreement, and other than as set forth in Schedule 5.1(c) hereto,
---------------
no shares of NTN Common Stock or IWN Common Stock are entitled to preemptive
rights or registration rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of NTN or IWN, as the case may be, or contracts, commitments,
understandings or arrange ments by which NTN or IWN, as the case may be, is
bound to issue additional shares of capital stock of NTN or IWN, as the case may
be, or options, warrants, scrip, rights to subscribe to, or commitments to
purchase or acquire, any shares, or securities or rights convertible into
shares, of capital stock of NTN or IWN, as the case may be.
(d) Issuance of Warrant Shares. The grant and issuance of the
--------------------------
Warrant and the issuance of the Warrant Shares upon exercise of the Warrant have
been duly authorized and the Warrant Shares, when paid for or issued in
accordance with the terms of the Warrant, will be validly issued, fully paid and
nonassessable. The Warrant and the Warrant Shares are not subject to preemptive
or other preferential rights or similar statutory or contractual rights.
(e) No Conflicts. The execution, delivery and performance by NTN of
------------
this Agreement, the Warrant and the Other Agreements and the consummation by NTN
of the transactions contemplated hereby and thereby do not and will not (i)
result in a violation of NTN's Certificate of Incorporation By-Laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which NTN or any of its subsidiaries is a party or by
which any property or asset of NTN or any of its subsidiaries is bound or
affected
5.
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). The business of NTN is not being conducted in
violation of any law, ordinance or regulations of any governmental entity,
except for possible violations which either singly or in the aggregate do not
have a Material Adverse Effect. NTN is not required under federal, state or
local law, rule or regulation in the United States to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Warrant or the Warrant
Shares in accordance with the terms hereof and thereof, respectively (other than
the filing of a Form D with the SEC (as hereinafter defined), any stock exchange
filings or state securities filings which may be required to be made by NTN in
connection with or subsequent to the date hereof and except for any registration
statement which may be filed in accordance with the Registration Rights
Agreement); provided; however, that for purposes of the representation made in
this sentence, NTN is assuming and relying upon the accuracy of the relevant
representations, warranties and agreements of Symphony herein.
(f) SEC Reports. The NTN Common Stock is regis tered pursuant to
-----------
Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and NTN has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing including filings
incorporated by reference therein being hereinafter referred to herein as the
"SEC Reports"). True and complete copies of the quarterly and annual SEC Reports
filed with the SEC since December 31, 1994 have been delivered to Symphony. As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder.
(g) No Material Adverse Change. Since September 30, 1995, the date
--------------------------
through which the most recent quarterly report of NTN on Form 10-Q has been
prepared and filed with the SEC, a copy of which is included in the SEC Reports,
no Material Adverse Effect has occurred or exists with respect to NTN except as
otherwise disclosed on Schedule 5.1(g).
---------------
(h) Organization and Qualification of IWN. IWN is a corporation
-------------------------------------
duly incorporated and existing in good standing under the laws of the State of
Delaware and has the requisite corporate power to own its properties and to
carry on its business as now being conducted.
6.
(i) Authorization; Enforcement. (i) IWN has the requisite corporate
--------------------------
power and authority to enter into and perform this Agreement, the Restated
Partnership Agreement and the Other Agreements to which it is a party, (ii) the
execution and delivery of this Agreement, the Restated Partnership Agreement and
such Other Agreements by IWN and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and no further consent or authorization of IWN or its Board of
Directors or stockholder is required, (iii) this Agreement, the Restated
Partnership Agreement and such Other Agreements have been or will be duly
executed and delivered by IWN, and (iv) this Agreement, the Restated Partnership
Agreement and such Other Agreements constitute or will, when executed and
delivered by IWN, constitute valid and binding obligations of IWN enforceable
against IWN in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(j) No Conflicts. The execution, delivery and performance by IWN of
------------
this Agreement, the Restated Partnership Agreement and the Other Agreements to
which it is a party and the consummation by IWN of the transactions contemplated
hereby and thereby do not and will not (i) result in a violation of IWN's
Certificate of Incorporation or By-Laws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time, or both, would become a
default) under, or give to other any rights of termination amendment,
acceleration or cancellation of any material agreement, indenture or instrument
to which IWN is a party. IWN is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Restated Partnership Agreement or such
Other Agreements.
(k) Partnership Matters. (i) The Partnership is a limited
-------------------
partnership duly formed and validly existing under the laws of the State of
Delaware, and has the requisite power to own its properties and to carry on its
business as currently being conducted, (ii) IWN has delivered to Symphony true
and complete copies of the Partnership Agreement, as amended to date, (iii)
other than this Agreement and as set forth in the Restated Partnership
Agreement, and other than as set forth on Schedule 5.1(k), there are no
---------------
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any equity interest in the Partnership, or contracts,
commitments, understandings or
7.
arrangements by which the Partnership is become bound to issue additional equity
interests in the Partnership, or options, warrants, scrip, rights to subscribe
to, or commitments to purchase or acquire any equity interest or securities or
rights convertible into equity interests, in the Partnership, (iv) IWN has
delivered to Symphony a true and complete unaudited balance sheet of the
Partnership as of December 31, 1995, which has been prepared from the books and
records of the Partnership and fairly presents in all material respects the
financial position of the Partnership as of the date thereof, and (v) the
Partnership has full partnership power and authority to execute and deliver by
it all of the documents and agreements to be executed and delivered in
connection with the transactions contemplated by this Agreement.
(l) Warrant; Authority. NTN has the requisite corporate right,
------------------
power and authority to grant and issue the Warrant to LLC and the delivery of
the Warrant to LLC as herein provided will transfer valid title thereto, free
and clear of all liens, encumbrances, claims, options, calls and commitments of
any kind other than those of which may be created or incurred by Symphony. NTN
has complied and will comply with all applicable federal and state securities
laws in connection with the grant and issuance of the Warrant. Neither NTN nor
anyone acting on its behalf has offered or will offer to sell the Warrant or
other securities to, or solicit offers with respect thereto from, or enter into
any preliminary conversations or negotiations relating thereto with, any person,
so as to bring the grant and issuance of the Warrant under the registration
provisions of the Securities Act of 1933, as amended.
(m) Subsidiaries of IWN. IWN has no subsidiaries and owns no
-------------------
securities (i.e., stock, warrants, calls, options, notes, bonds or other
evidences of ownership or indebtedness) of any other person, firm or corporation
except the Partner ship and except as set forth in Schedule 5.1(m).
---------------
(n) Financial Statements of NTN. The consolidated audited financial
---------------------------
statements of NTN as of December 31, 1994 and December 31, 1993 and for the
periods then ended (the "NTN Financial Statements") and the unaudited
consolidated annual financial statements of NTN as at December 31, 1995 and for
the period then ended (the "1995 NTN Financial Statements") are attached hereto
as Schedule 5.1(n). The NTN Financial Statements present fairly, in all
---------------
material respects, the financial position of NTN as at their respective dates in
conformity with generally accepted accounting principles, applied on a basis
consistently applied throughout the periods indicated. The 1995 NTN Financial
Statements present fairly, in all material respects, the consolidated financial
condition and results of operations of NTN at the date and for the
8.
period indicated. Except for the absence of footnotes and normal and customary
year-end adjustments (which for this purpose shall include adjustments of any
nature relating to the transactions contemplated hereby), the 1995 NTN Financial
Statements were prepared in accordance with generally accepted accounting
principles consistently applied.
(o) Financial Statements of IWN. The unaudited financial statements
---------------------------
of IWN as of December 31, 1995 (the "1995 IWN Financial Statements") and
December 31, 1994 for the periods then ended (collectively, the "IWN Financial
Statements") are attached hereto as Schedule 5.1(o). The IWN Financial
---------------
Statements present fairly, in all material respects, the financial position of
IWN as at their respective dates. Except for the absence of footnotes and normal
and customary year-end adjustments, the 1995 IWN Financial Statements were
prepared in accordance with generally accepted accounting principles
consistently applied.
(p) Financial Statements of Partnership. The unaudited financial
-----------------------------------
statements of the Partnership as of December 31, 1995 (the "1995 Partnership
Financial Statements") and December 31, 1994 and for the periods then ended
(collectively, the "Partnership Financial Statements") are attached hereto as
Schedule 5.1(p). The Partnership Financial Statements present fairly, in all
material respects, the financial position as at their respective dates. Except
for the absence of footnotes and normal and customary year-end adjustments, the
1995 Partnership Financial Statements were prepared in accordance with generally
accepted accounting principles consistently applied.
(q) Liabilities. Except to the extent reflected or reserved for on
-----------
the 1995 NTN Financial Statements, the 1995 IWN Financial Statements or the 1995
Partnership Financial Statements (collectively, the "1995 Financial Statements")
and other than as set forth in Schedule 5.1(q), there are no liabilities or
---------------
obligations of NTN, IWN or the Partnership, or their respective businesses, of
any nature (absolute, accrued, contingent or otherwise) of the sort required in
accordance with generally accepted accounting principles to be set forth or
reflected in such financial statements which are not set forth or reflected in
the respective 1995 Financial Statements and which individually or in the
aggregate materially and adversely affect the respective businesses or
properties of NTN, IWN or the Partnership.
(r) Permits and Licenses.
--------------------
(i) Attached hereto as Schedule 5.1(r)(i) is a description of
------------------
all licenses and license applications, franchises, trademarks, tradenames,
service marks, patents, patent applications and copyrights owned or held by NTN,
IWN
9.
or the Partnership, as the case may be, used in the operation of the Partnership
Business as presently conducted. Except as disclosed in Schedule 5.1(r)(i), all
------------------
of the licenses, applications, franchises and other items described in Schedule
--------
5.1(r)(i) are valid and in full force and effect and adequate for the operation
- ---------
of IWN's and the Partnership Business as presently conducted.
(ii) Except as set forth in Schedule 5.1(r)(i) and except for
------------------
rights subject to the Amended Sublicense Agreement or the New Sublicense
Agreement, NTN, IWN and the Partnership own no patents or patent applications
used in or relating to the Partnership Business. All United States and foreign
patents and pending patent applications (either granted, issued or applied for)
licensed to NTN, IWN and the Partnership relating to or used in the Partnership
Business are listed and briefly described in Schedule 5.1(r)(ii) and, except as
-------------------
described in Schedule 5.1(r)(ii), require no consent, approval or other
-------------------
authorization from any third party to assign and transfer all of IWN's rights
therein to the Partnership pursuant to a certain Bill of Sale (Patent, Trademark
and Intellectual Property Assignment) executed by IWN in favor of the
Partnership (the "Bill of Sale").
(iii) Except as set forth in Schedule 5.1(r)(iii) and except
--------------------
for rights subject to the Amended Sublicense Agreement or the New Sublicense
Agreement, there are no trademarks or service marks owned by IWN and used in or
relating to the Partnership Business that will not be assigned and transferred
to the Partnership pursuant to the Bill of Sale. Neither NTN, IWN nor the
Partnership has in effect any license to any third party to use any trademark,
service mark or trade name used in the Partnership Business.
(iv) Except as described in Schedule 5.1(r)(iv), there are no
-------------------
actions, suits, proceedings or investigations pending or, to the best of NTN's
and IWN's knowledge, threatened against NTN, IWN or the Partnership (i) relating
to any patent, patent application, trade name, trade secret, trademark,
trademark application, service mark, service mark application, copyright,
process, design, computer program, invention, know-how or technology of IWN or
the Partnership in any court or before or by any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator, or (ii) against
NTN's, IWN's or the Partnership's making, using and selling all of the products
which it is presently making, using or selling, and (iii) to the best of NTN's
and IWN's knowledge, NTN's, IWN's and the Partnership's making, using and
selling of its present products and services does not infringe any patents of
others and, to the best of NTN's and IWN's knowledge, no other person has
infringed upon or is infringing upon any material patent or other proprietary
right of NTN, IWN or the Partnership.
10.
(s) Fixed Assets. All fixed assets used by IWN and the Partnership
------------
in the operation of their respective businesses are either owned by it or leased
under an agreement reflected in Schedule 5.1(s).
---------------
(t) Leases. Attached hereto as Schedule 5.1(t) is a description, as
------ ---------------
of the date hereof, of all leases of IWN and the Partnership requiring payments
per annum of more than $5,000, whether or not reflected on the books of the
respective entity as operating leases or capital leases, to which each entity is
a party and which relate to any property, real or personal, used by IWN or the
Partnership in the conduct of its business.
(u) Contracts and Agreements: Adverse Restrictions.
----------------------------------------------
(i) Attached hereto as Schedule 5.1(u)(i) is a list of all
------------------
contracts and agreements (other than the leases described on Schedule 5.1(t)) to
---------------
which either IWN or the Partnership is a party or by which it or any of its
property is bound and which provide for aggregate future pay ments by or to IWN
or the Partnership of more than $10,000 and are not cancelable by IWN or the
Partnership, as the case may be on 90 days' notice or less (including, without
limitation, sales representative agreements, equipment purchase agree ments,
equipment service agreements, joint venture or part nership agreements,
contracts with any labor organizations, loan agreements, bonds, mortgages,
liens, pledges or other security agreements). All such contracts and agreements
included in Schedule 5.1(u)(i) are in full force and effect and neither IWN nor
------------------
the Partnership, or to the best of NTN's and IWN's knowledge, any other party is
in breach of any of the material provisions thereof.
(ii) Except as disclosed in Schedule 5.1(u)(ii), neither IWN
-------------------
nor the Partnership is a party to any contract, agreement or other commitment or
instrument or subject to any charter or other corporate restriction or subject
to any restriction or condition contained in any permit, license, judgment,
order, writ, injunction, decree or award which, singly in or in the aggregate,
materially and adversely affects the business of IWN or the Partnership as
currently conducted.
(iii) All contracts and agreements (whether written or
otherwise) relating to the Partnership Business ("Partnership Contracts"),
whether entered into by NTN, IWN or their respective affiliates (with the
exception of the Partnership) are listed on Schedule 5.1(u)(iii). All
--------------------
Partnership Contracts are in full force and effect and, to the best of NTN's and
IWN's knowledge, no party thereto is in breach of any of the material provisions
thereof. All
11.
Partnership Contracts shall be assigned to the Partnership pursuant to a certain
Assignment and Assumption Agreement dated of even date herewith which shall be
amended and supplemented by NTN and IWN as of the date of NTN's delivery of the
Warrant to LLC as provided herein with respect to any Partnership Contracts
entered into by NTN and IWN prior to March 1, 1996.
(v) Insurance. Attached as Schedule 5.1(v) is a list of all
--------- ---------------
insurance policies of IWN and the Partnership. Such list specifies, for each
policy, the name of the insurer, the name of the insured, the expiration date
and whether the premiums are paid and current, a summary description of the
property or interest insured and the type of risks insured, the deductible and
limits of coverage, whether such coverage is on "an occurrence" or a "claims
made" basis and the annual premium therefor. Such policies are presently in full
force and effect and shall not be cancelled by IWN or the Partner ship on or
before NTN's delivery of the Warrant to LLC as provided herein without 30 days'
prior notice to Symphony.
(w) Personnel. Schedule 5.1(w) contains a true and correct list of
--------- ---------------
all of IWN's and the Partnership's employees, their names and present hourly
rates or salaries.
(x) Collective Bargaining Agreement; Benefit Plans.
----------------------------------------------
(i) None of the employees of NTN, IWN or the Partnership are
represented by a labor union or associ ation. Except as set forth on Schedule
--------
5.1(x)(i), to the best of NTN's and IWN's knowledge, IWN and the Partnership are
- ---------
in compliance in all material respects with all material federal, state or local
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours and neither is party to a labor dispute.
(ii) Neither IWN nor the Partnership main tains or contributes
to any employee benefit plan ("Employee Benefit Plan") as that term is defined
in Section 3(3) of ERISA, other than as set forth in Schedule 5.1(x)(ii). No
-------------------
Employee Benefit Plan is a multiemployer plan as described in Section 4001(a)(3)
of ERISA or a multiple employer plan as described in Sections 4063 and 4064 of
ERISA, Other than as set forth in Schedule 5.1(x)(ii), there are no employment
-------------------
or consulting agreements, severance agreements, plans or arrangements providing
for the payment of "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), employee
pension or retirement plans, profit-sharing plans, savings plans, deferred
compensation plans (either funded or unfunded), bonus, stock option, stock
purchase, restricted stock, incentive, supplemental retirement, retiree medical,
12.
disability or life insurance plans, or any other plans, programs or arrangements
providing similar benefits to directors, officers, employees, former employees
or retired employees of IWN or the Partnership. Schedule 5.1(x)(ii) also sets
-------------------
forth (i) each employee benefit plan for which IWN or the Partnership could
incur liability under Section 4069 of ERISA in the event such plan has been or
were to be terminated and (ii) any plan in respect of which IWN or the
Partnership could incur liability under Section 4212(c) of ERISA, and each such
plan shall also be considered an Employee Benefit Plan for purposes of this
Agreement. A true, accurate and complete copy of each such plan, a copy of each
trust or other funding arrangement, the most recently filed Internal Revenue
Service ("IRS") Form 5500, the most recently received IRS determina tion letter
for each such plan, and the applicable summary plan description, if any, have
been provided to Symphony.
(iii) Except as described in Schedule 5.1(x)(iii), each
--------------------
Employee Benefit Plan has been maintained in compliance (including all material
filing requirements) with the requirements of ERISA and the Code, the violation
of which would have a material adverse effect on IWN or the Partnership.
(iv) Each employee pension benefit plan, as defined in Section
3(2) of ERISA, and related trust maintained by IWN or the Partnership is
qualified as to its written form under Sections 401(a) and 501(a) of the Code.
(v) No employee pension benefit plan main tained by IWN or
the Partnership has incurred an "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA and Section 412 of the Code (whether or not
waived). A true and correct copy of the most recent actuarial report for any
defined benefit pension plan maintained by IWN and the Partnership has been
provided to Symphony.
(vi) No "reportable event" as such term is defined in Title IV
of ERISA has occurred with respect to any defined benefit pension plan
maintained by IWN or the Partner ship. To the best of NTN's and IWN's knowledge,
no prohibited transaction, as such term is defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any Employee Benefit
Plan. Except as disclosed on Schedule 5.1(x)(vi), no complete or partial
-------------------
termination has occurred within the five years preceding the date hereof with
respect to any employee pension benefit plan; all contributions, premiums or
payments required to be made with respect to any Employee Benefit Plan have been
made on or before their due dates; and neither IWN nor the Partnership has
incurred any liability under, arising out of or by operation of Title IV of
ERISA (other than liability for premiums arising in the ordinary course).
13.
(vii) Except as disclosed on Schedule 5.1(x)(vii), there are no
--------------------
actions, suits or claims pending, other than routine claims for benefits, with
respect to the Employee Benefit Plans, and to the best of NTN's and IWN's
knowledge there are no such actions, suits or claims threatened arising out of,
or in connection with, the existence, operation, maintenance or administration
of such Employee Benefit Plans.
(viii) Schedule 5.1(x)(viii) sets forth a complete and accurate
---------------------
list of each Employee Benefit Plan which provides or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of IWN or the Partnership, a list of each employee to whom such
benefits are provided, specifying which benefits are provided to each employee
so listed.
(ix) No event has occurred with respect to any Employee
Benefit Plan maintained by any individual or entity that is or has been a member
of any group of organizations described in Section 414(b) or (c) of the Code of
which IWN or the Partnership is a member which would result in a liability of
the IWN or the Partnership, as the case may be, by virtue of the IWN's or the
Partnership's membership in such group.
(y) Operations. NTN, IWN and the Partnership each owns, leases or
----------
has licenses to use all material assets being used in and necessary to the
operation of its business as currently being conducted.
(z) Laws and Regulations; Litigation. Except as set forth in
--------------------------------
Schedule 5.1(z), to the best of NTN's and IWN's knowledge, neither NTN, IWN nor
- --------------
the Partnership has violated or currently is in violation of or default under
any law or regulation, or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction it, the violation of which would have a
material adverse effect on its respective business or operations. Except as
described in Schedule 5.1(z), there are no claims, actions, suits or proceedings
---------------
pending or, to the best of NTN's and IWN's knowledge, threatened against NTN,
IWN or the Partnership, at law or in equity, before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over IWN or the Partnership which, if
determined adversely to IWN or the Partnership, would have a material adverse
effect on their respective businesses or financial condition.
(aa) Bank Accounts. Attached as Schedule 5.1(aa) is a list of the
------------- ----------------
bank accounts of IWN and the Partnership:
14.
(i) the name of each bank in which IWN or the Partnership have
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iv) the type of account; and
(v) the name of each person authorized to draw thereon or have
access thereto.
(bb) Environmental Matters. The operations of NTN, IWN and the
---------------------
Partnership have at all times been, and are currently being conducted in
material compliance with all material federal, state and local laws, rules,
ordinances and regulations relating to the protection of the environment and
there are presently no actions pending or, to the best of NTN's and IWN's
knowledge, threatened by any regulatory agency in any forum, whether judicial or
regulatory, arising out of any environmental laws, rules, ordinances or
regulations relating to NTN, IWN or the Partnership or their respective assets
or property.
(cc) Accurate and Complete Records. The books, ledgers, financial
-----------------------------
records and other records of NTN, IWN and the Partnership:
(i) are in the possession of NTN, IWN and the Partnership, as
the case may be; and
(ii) accurately reflect as of the dates shown thereon all items
of income and expense and all assets, liabilities and accruals of NTN, IWN and
the Partnership, as the case may be, required to be reflected thereon in
accordance with generally accepted accounting principles.
Neither NTN, IWN nor the Partnership has received any advice from its or
independent public accountants that there are any material weaknesses in its
system of internal controls. NTN has provided Symphony with copies of all (i)
management letters received from its independent public accountants and
management's responses thereto for NTN's, IWN's and the Partnership's three most
recent fiscal years (or such shorter period as they have been in existence) and
(ii) responses from its legal counsel to auditor's requests for information in
conjunction with NTN's, IWN's and the Partnership's annual audit for such
period.
(dd) Transactions with Insiders. Except as reflected in the SEC
--------------------------
Reports (or filings by NTN under the Securities Act of 1933) filed on or before
November 14, 1995, or as set forth in Schedule 5.1(dd) (or Schedules 5.1(w) or
----------------
5.1(x)), there are no officers or directors of IWN (or any
15.
other subsidiary or affiliate of NTN), the Partnership or, to the best of NTN's
knowledge, holder of more than 5% of NTN Common Stock or NTN Preferred Stock,
that is a party to any contract, loan, agreement, arrangement or continuing
transactions (individually, an "Insider Transaction") involving NTN, IWN, the
Partnership or any affiliate of the foregoing or otherwise requiring payments by
NTN, IWN or the Partnership to, any such person, or, to the best of NTN's
knowledge, any member of such person's family or any corporation, partnership or
other entity in which such person, or, to the best of NTN's knowledge, any
member of his family, is an officer, director, trustee or beneficiary.
(ee) Assumptions or Guarantees of Indebtedness of Other Persons.
----------------------------------------------------------
Except as set forth on Schedule 5.1(ee), neither IWN nor the Partnership has
assumed, guaranteed, endorsed or otherwise become directly or contingently
liable on (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, provide funds for payments, to supply
funds to or otherwise invest in the debtor or otherwise to assure the creditor
against loss) any indebtedness of any person.
(ff) Certain Agreements of Employees.
-------------------------------
(i) Except as set forth on Schedule 5.1(ff), to the best of
----------------
NTN's and IWN's knowledge, no key employee of IWN or the Partnership is a party
to or bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with any
previous employment by such person, which adversely affects or in the future may
adversely affect the business or operations of IWN or the Partnership or the
right of any such person to participate in the affairs of IWN or the
Partnership.
(ii) To the best of NTN's and IWN's knowl edge, no key employee
of IWN or the Partnership has any present intention of terminating his or her
employment with IWN or the Partnership in the foreseeable future.
(gg) Business Assets. As of the date hereof, except as otherwise set
---------------
forth on Schedule 5.1(gg), NTN, IWN or the Partnership has good, valid and
----------------
marketable title, free and clear of any liens, pledges, claims and encumbrances
whatsoever, to all of the assets used in the conduct of the Partnership Business
("Assets") as presently conducted except as contemplated by the Operating Budget
of the Partnership, a copy of which is attached as an exhibit to the Partnership
Agreement, which includes, without limitation, all tradenames, trademarks,
trademark applications, copyrights, franchises, rights (including, without
limitation, rights to software and rights to technology, trade secrets and
proprietary informa-
16.
tion, processes and know-how), software (including "Home stretch"), and other
intellectual property utilized in or reasonably necessary to the conduct of the
Partnership Business as now being conducted. The Assets are not subject to any
material liens, pledges, claims and encumbrances except for:
(i) liens for current taxes and assessments that are not yet
due and payable;
(ii) leases listed on Schedule 5.1(t); and
(iii) liens disclosed in Schedule 5.1(gg).
(hh) Contracts. Schedule 5.1(hh) sets forth a list of all contracts,
--------- ----------------
agreements, licenses, leases and undertakings and obligations (collectively,
"Contracts") relating to the Partnership Business as currently being conducted,
all of which shall be conveyed, transferred, and assigned (collectively,
"Transfer") by NTN or IWN, as the case may be, to the Partnership
contemporaneously with the execution of this Agreement, and none of which shall
require the consent or approval of any third party to effect the Transfer except
as described on Schedule 5.1(hh). NTN and IWN shall further assign and transfer
----------------
to the Partnership as of the date of NTN's delivery of the Warrant to LLC as
provided herein all such other Contracts, if any, as may be entered into prior
to such date.
(ii) Taxes. NTN, IWN and the Partnership have (a) filed all returns,
-----
declarations of estimated tax, tax reports, information returns and statements
(collectively, the "Returns") required to be filed by them prior to the date
hereof (other than those for which extensions shall have been granted prior to
the date hereof) relating to any Taxes (as defined below) with respect to any
income, properties or operations of NTN, IWN and the Partnership, and have paid
all Taxes shown thereon to be due; (b) as of the time of filing, the Returns
were complete and correct; (c) NTN, IWN and the Partnership have timely paid or
made provisions for all Taxes payable for all periods and for any period that
began on or before the date hereof and ends after the date hereof, to the extent
such Taxes are attributable to the portion of any such period ending on or
before the date hereof; (d) neither NTN, IWN nor the Partnership is delinquent
in the payment of any Taxes, nor have they requested any extension of time
within which to file any Return, which Return has not since been filed; (e)
there are no pending tax audits of any Returns of NTN, IWN or the Partnership,
(f) no tax liens have been filed and no deficiency or addition to Taxes,
interest or penalties for any Taxes with respect to any income, properties or
operations of NTN, IWN or the Partnership has been proposed, asserted or
assessed in writing against NTN, IWN or the
17.
Partnership; (g) neither NTN, IWN nor the Partnership has granted any extension
of the statute of limitations applicable to any Return or other Tax claim with
respect to any income, properties or operations of NTN, IWN or the Partnership.
As used in this Agreement, the term "Tax" shall mean any of the Taxes and the
term "Taxes" shall mean, with respect to any Person (as hereinafter defined),
(i) all income taxes (including any tax on or based upon net income, or gross
income, or income as specifically defined, or earnings, or profits, or selected
items of income, earnings or profits) and all gross receipts, sales, use, ad
valorem, transfer, franchise, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, documentary, property or windfall profits
taxes, alternative or add-on minimum taxes, customs duties or other taxes, fees,
levies, imposts, deductions, withholding assessments or charges of any kind
whatsoever, together with any interests and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or foreign) on such
person or entity, (ii) any liability for the payment of any amount of the type
described in the immediately preceding clause (i) as a result of being a
"transferee" (within the meaning of Section 6901 of the I.R.C. or any applicable
law of another person or entity or a member of an affiliated or combined group
and (iii) all other liabilities with respect to any of the foregoing.
5.2 Representations and Warranties of Symphony. Symphony, on it own
------------------------------------------
behalf and on behalf of LLC, hereby represents and warrants to NTN and IWN as
follows:
(a) Authorization, Enforcement. (i) Symphony has and LLC will have
--------------------------
the requisite power and authority to enter into and perform this Agreement, the
Restated Partnership Agreement and the Other Agreements to which either is a
party and to purchase the interests in the Partnership and make the capital
contributions to be purchased and made by it (or LLC) under the Restated
Partnership Agreement, (ii) the execution and delivery by Symphony and LLC of
this Agreement, the Restated Partnership Agreement and such Other Agreements and
the consummation by them of the transactions contemplated hereby and thereby
have been or will be duly authorized by all necessary corporate or member
action, and no further consent or authorization of Symphony or LLC, their
respective Board of Directors or managers, stockholders, partners or members or
any other person or entity, is or will be required, (iii) this Agreement, the
Restated Partnership Agreement and such Other Agreements have been or will be
duly authorized, executed and delivered by Symphony and LLC and (iv) this
Agreement, the Restated Partnership Agreement and such Other Agreements
constitute or will constitute valid and binding obligations of Symphony and LLC,
as the case may be, enforceable against Symphony and LLC in accordance with
their respective terms, except as enforceability may be limited by applicable
18.
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
(b) No Conflicts. The execution, delivery and performance by
------------
Symphony and LLC, as the case may be, of this Agreement, the Restated
Partnership Agreement and the Other Agreements to which either is a party and
the consummation by Symphony and LLC of the transactions contemplated hereby and
thereby or relating hereto or thereto do not and will not (i) result in a
violation of the Symphony's Certificate of Incorporation or By-Laws or the
charter documents of LLC or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument to which Symphony or LLC
is a party. Neither Symphony nor LLC is or will be required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement, the Restated Partnership Agreement or
such Other Agreements in accordance with the terms thereof and to purchase the
interests in the Partnership and make the capital contributions to be purchased
and made in accordance with the terms of the Restated Partnership Agreement.
(c) Investment Representation. LLC will acquire the Warrant and any
-------------------------
Warrant Shares, for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(d) Restrictions or Transfer. Symphony understands and agrees that
------------------------
(i) the Warrant and (except as contemplated by the Registration Rights
Agreement) the Warrant Shares will not be registered under the Securities Act,
by reason of their issuance in transactions exempt from the registration
requirements of the Securities Act and (ii) that the Warrant and any Warrant
Shares must be held by LLC indefinitely unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from registration
thereunder. Symphony further understands and agrees that transfer of the
interests in the Partnership will be restricted in the manner provided in the
Restated Partnership Agreement.
(e) Rule 144. Symphony understands that Rule 144 (the provisions of
--------
which are known to them) promulgated under the Securities Act ("Rule 144") are
not, and will not become available with respect to the Warrant and that, with
respect to the Warrant Shares, the exemption from registration
19.
afforded by Rule 144, if applicable, depends on the satisfaction of various
conditions, and that Rule 144 may only afford the basis for sales of Warrant
Shares only in limited amounts.
(f) No Broker or Finder. Neither Symphony nor its affiliates have
-------------------
employed any broker or finder in connection with the transactions contemplated
by this Agreement.
(g) Accredited Investors. Symphony is and LLC will be an
--------------------
"accredited investors" within the meaning of Rule 501 under the Securities Act,
and are experienced in the evaluation of businesses and investments, are able to
fend for themselves in the transactions contemplated by this Agreement and the
Restated Partnership Agreement, have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
their investment in the Warrant, any Warrant Shares and the interests in the
Partnership and have the ability to bear the economic risks of such investment.
(h) Opportunity to Ask Questions. During the course of the
----------------------------
transactions contemplated hereby and prior to the purchase of the Warrant and
the interests in the Partnership, Symphony and its affiliates have had the
opportunity to ask questions of and receive answers from NTN and IWN concerning
NTN, IWN, the Partnership, NTN's and IWN's respective businesses, financial
condition and prospects, and the business, financial condition and prospects of
the Partnership.
SECTION 6. Symphony "Put" Right
--------------------
6.1 "Put" Right; Notice of Exercise. LLC shall have the right and option
-------------------------------
(the "Put Option"), subject to the terms hereof, to cause NTN to purchase, at
any time on or after April 1, 1997 and on or before December 1, 1997 (the
"Exercise Period"), all (but not less than all) right, title and interest of
Symphony, LLC and their respective assignees in and to the Partnership (the
"Partnership Interests") and all (but not less than all) of the IWN Shares for
an aggregate purchase price (the "Put Price") determined as provided in Section
6.2. The Put Option may be exercised by LLC at any time during the Exercise
Period by written notice (the "Notice of Exercise") to NTN given as provided in
this Agreement. Unless previously exercised as provided above, the Put Option
shall automatically expire at 5:00 P.M., Pacific Standard Time, on December 1,
1997.
20.
6.2 Put Price.
---------
(a) The Put Price shall be an amount, determined as of the date of
the Notice of Exercise, equal to (i) the sum of (1) $295,000.00 plus Symphony's
and LLC's aggregate "Adjusted Capital Contribution" (as defined in the Restated
Partnership Agreement) plus (2) a non-compounded return on such Adjusted Capital
Contribution determined based on a variable interest rate equal to the prime,
base or reference lending rate announced from time-to-time by Bank of America
NTSA, reduced by (ii) the "aggregate appreciated value" of the Warrant Shares.
For this purpose, the "aggregate appreciated value" per Warrant Share shall
equal (x) with respect to any Warrant Shares that have theretofore been sold or
otherwise disposed of by LLC, the difference (if a positive number) between the
gross sale price per share (which shall include any and all cash and the fair
value of any non-cash consideration received or to be received, directly or
indirectly, by or for the benefit of LLC or its affiliates in connection with
such sale or disposition) and the exercise price per share of such Warrant
Shares, and (y) with respect to any Warrant Shares as to which the Warrant has
not been exercised, the difference (if a positive number) between the average of
the closing sale price per share of Common Stock during the 60 trading-day
period ending on the date of the Notice of Exercise (the "Average Sale Price")
and the exercise price per share of such Warrant Shares. Closing sale prices
shall be as reported on the American Stock Exchange or such other principal
exchange or automated quotation service on which Common Stock is then listed. In
the event that any portion of the Partnership Interests or the IWN Shares
originally acquired by Symphony or LLC shall have been further assigned or
transferred by Symphony and LLC to one or more third parties as permitted in
this Agreement, the Stock Purchase Agreement, the Stockholders Agreement and the
Restated Partnership Agreement, the Put Option shall nonetheless remain
exercisable solely by LLC, whose election to exercise or not exercise the Put
Option, as the case may be, may be relied upon by NTN and shall be binding upon
Symphony, LLC and all such assignees of any of the Partnership Interests or IWN
Shares. In no event shall the Put Option be exercisable with respect to less
than all of the Partnership Interests and IWN Shares owned or acquired by
Symphony, LLC and all such assignees.
(b) In the event for any reason that the Put Option is terminated or
expires without being exercised, NTN shall, within five business days
thereafter, pay and deliver to LLC (or its designees) $295,000.00 in the
aggregate in immediately available funds by Federal Reserve wire transfer in
accordance with instructions provided by LLC.
21.
6.3 Closing.
-------
(a) The closing of the purchase and sale of the Partnership
Interests and the IWN Shares pursuant to the exercise of the Put Option (the
"Put Closing") shall be held as soon as practicable following the Notice of
Exercise, but in no event later than 60 days following receipt of the Notice of
Exercise. At the Put Closing, NTN shall purchase, and the holders shall sell,
all of the Partnership Interests and the IWN Shares for the Put Price, which
shall be payable, at LLC's election as stated in the Notice of Exercise, either
in cash (by certified or bank cashier's check payable to the holders) or by
NTN's issuance to the holders of shares of Common Stock, or a combination of
cash and such shares, with Common Stock being valued for this purpose at an
amount per share equal to 85% of the Average Sale Price. In the event that any
of the Partnership Interests or the IWN Shares are subject to an encumbrance at
the Put Closing (whether or not in breach of the Restated Partnership Agreement,
this Agreement or the Stock Purchase Agreement), the Put Price shall be reduced
by the amount of the encumbrance and by the reasonable costs and expenses
incurred by NTN in connection with removal of the encumbrance or NTN's
acquisition or assumption of the liability or obligation which the encumbrances
secures.
(b) NTN will use its best efforts, and will take all action,
corporate and otherwise, to make available funds necessary to effect the
purchase of the Partnership Interests and the IWN Shares at the Put Closing,
including the sale of assets of NTN or its affiliates and obtaining any
necessary consents or waivers from, inter alia, any lenders to NTN or its
affiliates; provided, however, that if as of the Put Closing NTN has determined
-------- -------
in good faith that it has insufficient funds available, NTN shall promptly so
notify LLC in writing after which LLC may, at LLC's sole option, elect to have
NTN deliver to LLC promissory notes of NTN in a form acceptable to LLC which
shall contain normal and customary terms and conditions including, without
limitation, a confession of judgment provisions, secured by substantially all
the assets of NTN, in lieu of cash, will be delivered by NTN to the holders of
the Partnership Interests and the IWN Shares in payment of the Put Price. Such
promissory notes will be non-interest bearing and will mature, at the election
of NTN, either (a) one year from the date of the Put Closing and will be payable
in a principal amount equal to one hundred twenty-seven and one-half percent
(127 1/2%) of the Put Price otherwise payable by NTN at the Put Closing; or (b)
two years from the Put Closing and will be payable in a principal amount equal
to one hundred fifty-five percent (155%) of the Put Price otherwise payable by
NTN at the Put Closing. In such event, NTN shall also execute and deliver to the
holders of the Partnership Interests and the IWN Shares a security agreement,
UCC-1 financing statements and such other documents and
22.
instruments as are reasonably necessary to perfect the security interest of such
holders.
6.4 Noncompetition Agreement. At the Put Closing, and in consideration
------------------------
for the payment of the Put Price, each of the holders of any Partnership
Interests or IWN Shares shall execute and deliver to NTN a noncompetition
agreement, substantially in the form of the Noncompetition Agreement, evidencing
their agreement not to compete with NTN, IWN or the Partnership in any territory
for a period of two years from such closing.
6.5 Compromise. The Put Price to be paid upon exercise of the Put Option
----------
shall be in complete liquidation and satisfaction of all rights and interests of
Symphony, LLC and their respective assignees (and of any and all persons
claiming by, through, or under Symphony, LLC or their respective assignees) in
and with respect to the Partnership or IWN including, without limitation, any
Partnership interest or IWN stock, any rights to specific Partnership or IWN
business, property or assets, and any rights against the Partnership or IWN
(and, insofar as the affairs of the Partnership or IWN are concerned against the
other partners or shareholders thereof and their affiliates), and shall
constitute a compromise to which Symphony, LLC and their respective assignees
agree. Symphony, on its own behalf and on behalf of LLC and such assignees,
hereby waives any right to challenge the terms of the Put Option or to contest
the sufficiency of the Put Price determined as provided herein.
SECTION 7. Additional Agreements
---------------------
7.1 Additional Agreements of NTN and IWN.
------------------------------------
(a) For so long as LLC shall hold the Warrant, NTN and IWN shall
afford to LLC and its employees, counsel and other authorized representatives
reasonable access, upon reasonable advance notice, during normal business hours
to all of the books, records and properties of NTN or IWN for any purpose
reasonably related to the transactions contemplated by LLC. LLC, its employees,
counsel and other authorized repre sentatives shall maintain the confidentiality
of any informa tion of NTN or IWN so obtained by it.
(b) Financial Reports. For so long as LLC holds the Warrant, NTN
-----------------
agrees to furnish LLC with such annual and quarterly financial statements,
annual budgets and other financial information prepared in the regular course of
business of NTN as LLC may reasonably request, as well as that information made
available by NTN to its securityholders generally.
23.
(c) No Change; IWN and the Partnership. Between the date of this
----------------------------------
Agreement and NTN's execution and delivery to LLC of the Warrant as provided
herein, NTN shall cause each of IWN and the Partnership to:
(i) carry on its business in substantially the same manner as
it has heretofore and not introduce any new method or discontinue any existing
method of management, operation or accounting;
(ii) maintain its properties and facilities in as good working
order and condition as at present, ordinary wear and tear excepted;
(iii) perform all its obligations under all agreements relating
to or affecting its assets, properties, business operations and rights;
(iv) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(v) maintain and preserve its business organization
substantially intact, retain its present key employees and maintain its
relationships with suppliers, customers and others having business relations
with it;
(vi) advise Symphony promptly in writing of any material
change or inaccuracy in any document, schedule or other information delivered
pursuant to this Agreement;
(vii) file on a timely basis all notices, reports or other
filings required to be filed with or reported to any federal, state, municipal
or other governmental depart ment, commission, board, bureau, agency or any
instrumentality of any of the foregoing, wherever located, with respect to the
continuing operations of IWN and the Partnership; and
(viii) file on a timely basis all applications or other
documents necessary to maintain, renew or extend any material permit, license,
variance or any other approval required by any governmental authority necessary
or required for the continuing operation of IWN and the Partnership; and
(ix) except as contemplated by this Agreement and the Restated
Partnership Agreement, refrain, without Symphony's prior written consent, from:
1. making any change in its charter documents, bylaws or
organizational documentation;
2. authorizing, issuing, transferring or distributing
any of its securities or partnership interests, as the case may be;
24.
3. declaring or paying any dividend or distributions or
making any distribution in respect of its stock or partnership interests, as the
case may be, whether now or hereafter outstanding, or purchasing, redeeming or
otherwise acquiring or retiring for value any shares of its stock or partnership
interests, as the case may be;
4. entering into any contract or commitment or incurring
or agreeing to incur any liability or making any capital expenditures, except
for sales and purchase orders in the ordinary course of business and except for
expenditures for machinery and equipment necessary for the continued operation
of the its business not exceeding $10,000 in the aggregate;
5. creating, assuming or otherwise permitting the
imposition of any mortgage, pledge or other material lien or encumbrance upon
any of its assets or properties;
6. selling, assigning, leasing or otherwise transferring
or disposing of any property or equipment that are fixed assets;
7. merging or consolidating or agreeing to merge or
consolidate with or into any firm, corporation or other entity;
8. waiving any rights or claims;
9. amending or terminating any contract, agreement,
permit, license or other right which it has or may have;
10. entering into any other transaction outside the
ordinary course of its business or prohibited hereunder; and
11. engaging in any Insider Transaction.
(d) No Material Change; NTN. Between the date of this Agreement and
-----------------------
NTN's execution and delivery to LLC of the Warrant as provided herein, NTN
shall:
(i) carry on its business in substantially the same manner as
it has heretofore and not introduce any material new method or discontinue any
existing material method of management, operation or accounting;
(ii) maintain its properties and facilities in as good working
order and condition as at present, ordinary wear and tear excepted;
25.
(iii) perform all its material obligations under all agreements
relating to or affecting its assets, properties, business operations and rights;
(iv) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(v) use its best efforts to maintain and preserve its
business organization substantially intact, retain its present key employees and
maintain its relation ships with material suppliers, customers and others having
material business relations with it;
(vi) advise Symphony promptly in writing of any material
change or inaccuracy in any document, schedule or other information delivered
pursuant to this Agreement;
(vii) file on a timely basis all material notices, reports or
other filings required to be filed with or reported to any federal, state,
municipal or other govern mental department, commission, board, bureau, agency
or any instrumentality of any of the foregoing, wherever located, with respect
to the continuing operations of NTN;
(viii) file on a timely basis all applications or other
documents necessary to maintain, renew or extend any material permit, license,
variance or any other approval required by any governmental authority necessary
or required for the continuing operation of NTN; and
(ix) except as contemplated by this Agreement and the Restated
Partnership Agreement, refrain, without Symphony's prior written consent, from:
1. making any change in its charter documents, bylaws or
organizational documentation;
2. authorizing, issuing, transferring or distributing
any of its securities except as described on Schedule 7.1(d)(ix)(2);
----------------------
3. declaring or paying any dividend or distributions, or
making any distribution in respect of its stock, whether now or hereafter
outstanding, or purchasing, redeeming or otherwise acquiring or retiring for
value any shares of its stock except as described on Schedule 7.1(d)(ix)(3);
----------------------
4. entering into any contract or commitment or incurring
or agreeing to incur any liability or making any capital expenditures, except
for sales and purchase orders in the ordinary course of business and except for
expenditures for machinery and equipment necessary for the
26.
continued operation of the its business not exceeding $50,000 in the aggregate;
5. creating, assuming or otherwise permitting the
imposition of any material mortgage, pledge or other material lien or
encumbrance upon any of its assets or properties;
6. selling, assigning, leasing or otherwise transferring
or disposing of any material property or equipment that are fixed assets;
7. merging or consolidating or agreeing to merge or
consolidate with or into any firm, corporation or other entity;
8. waiving any rights or claims;
9. except as described on Schedule 7.1(d)(ix)(9),
----------------------
amending or terminating any material contract, agreement, permit, license or
other right which it has or may have;
10. entering into any material transaction outside the
ordinary course of its business or prohibited hereunder; and
11. except as described in Schedule 7.1(d)(ix)(10),
-----------------------
engaging in any Insider Transaction.
(e) Litigation Update. On or before NTN's execution and delivery to
-----------------
LLC of the Warrant as provided herein, NTN shall prepare and deliver to Symphony
a written update describing the current status of all securities litigation in
which NTN is a party; and (ii) actions filed by NTN or Interactive Network, Inc
against each other. During the period from the Effective Date until NTN's
execution and delivery of the Warrant as aforesaid, NTN will not enter into any
settlement agreement with any party unless it first notifies Symphony in writing
of the possibility of a settlement at least five days prior thereto and provides
Symphony with any and all information reasonably requested by Symphony to
properly evaluate any proposed settlement agreement and NTN shall cause its
executives to be available for substantive discussions regarding any proposed
settlement prior to the date on which NTN is intending to finalize such
settlement. During such period only, Symphony shall have the right, at its sole
option, at any time to notify NTN of its objections to any such proposed
settlement if it believes that such settlement is not in the best interests of
NTN.
(f) Right of First Refusal. IWN, on its own behalf and on behalf of
----------------------
the Partnership, hereby grants to
27.
Symphony on terms set forth below the right of first refusal with respect to the
future debt or equity offerings proposed to be made by IWN or the Partnership.
If, at any time at which Symphony, LLC or their respective affiliates own
interests in the Partnership or the IWN shares, IWN or the Partnership
determines to undertake to raise funds in a debt or equity offering (other than
an "Excluded Offering" as defined below), IWN or the Partnership, as the case
may be, shall promptly furnish Symphony with a definitive written proposal
setting forth the essential terms and conditions of such offering. Symphony
shall have the first right for the 30-day period following receipt of such
proposal to negotiate in good faith to provide funding on the terms and
conditions set forth in the proposal. In the event that, despite their
respective good-faith efforts to do so, IWN or the Partnership, as the case may
be, and Symphony fail for any reason to agree within such 30-day period on the
terms on which Symphony shall provide funding, IWN or the Partnership, as the
case may be, shall be free to pursue and obtain from one or more other persons
or entities such funding on the terms and conditions set forth in the written
proposal to Symphony (or on terms and conditions that are demonstrably more
favorable to IWN or the Partnership) without restriction under this Agreement,
and neither Symphony, LLC nor any of their respective affiliates shall have any
rights or interest in or with respect to such offering.
(g) Notwithstanding the provisions of Section 7.1(f), neither IWN
nor the Partnership shall have any obligation to present to Symphony or its
affiliates any of the following proposed financings (each an "Excluded
Offering"):
(i) any offer or sale of securities to officers, directors,
employees and consultants to IWN or the Partnership primarily in exchange for
services rendered to IWN or the Partnership;
(ii) any bank or institutional loan financing not involving
any equity ownership of the lender in IWN or the Partnership; or
(iii) any joint venture or similar transaction, the principal
purpose of which is a strategic business relationship rather than financing
relationship.
Other than is expressly provided in Section 7.1(f) and in the
Noncompetition Agreement, Symphony, for itself and on behalf of LLC and their
respective affiliates, agrees that IWN and its officers, directors,
shareholders, employees, associates, agents and affiliates may engage or invest
in any activity so long as such activity does not violate the terms of the
Restated Partnership Agreement and that neither Symphony nor any other person
shall have any right in or to
28.
such other activities or the income or proceeds derived therefrom.
7.2 Additional Agreements of Symphony.
---------------------------------
(a) Restrictions on Transfer. The Warrant and any Warrant Shares
------------------------
shall not be sold, transferred, assigned, pledged, encumbered or otherwise
disposed of (each, a "Transfer") by LLC or its assignees except upon the
conditions specified in this Section 7.2, which conditions are intended to
insure compliance with the provisions of the Securities Act.
(b) The Warrant and each certificate for the Warrant Shares held by
LLC and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Sections 7.2(c) and 7.2(d) below) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION FROM SAID ACT. ADDITIONALLY, THE TRANSFER OF
THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 7 OF THE
INVESTMENT AGREEMENT, DATED AS OF DECEMBER 31, 1995, AMONG NTN
COMMUNICATIONS, INC., IWN, INC. AND SYMPHONY MANAGEMENT ASSOCIATES, INC.
AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. A COPY OF SAID AGREEMENT MAY BE INSPECTED
AT THE OFFICES OF NTN COMMUNICATIONS, INC."
(c) Prior to any Transfer of the Warrant or any such Warrant Shares,
the holder shall give written notice to NTN of the holder's intention to effect
such Transfer and to comply in all other respects with the provisions of this
Section 7.2. Each such notice shall describe the manner and circumstances of the
proposed Transfer and shall be accom panied by the written opinion, addressed to
NTN, of counsel for the holder of such shares, stating that in the opinion of
such counsel (which opinion and counsel shall be reasonably satisfactory to NTN)
such proposed Transfer does not involve a transaction requiring registration or
qualification of such shares or Warrant under the Securities Act or the
securities "blue sky" laws of any relevant state of the United States; provided,
however, that no such opinion of counsel shall be necessary for a Transfer
pursuant to Rule 144. The holder shall thereupon be entitled to Transfer the
Warrant or any Warrant Shares in accordance with the terms of the notice
delivered by it to NTN. Each certificate or other instrument
29.
evidencing the securities issued upon the Transfer of the Warrant or any such
shares (and each certificate or other instrument evidencing any untransferred
balance of the Warrant or such shares) shall bear the legend set forth in
Section 7.2(b) unless (x) in such opinion of counsel registration of any future
Transfer is not required by the applicable provisions of the Securities Act or
(y) NTN shall have waived the requirement of such legends; provided, however,
that such legend shall not be required on any certificate or other instrument
evidencing the securities issued upon such Transfer in the event such Transfer
shall be made in compliance with the requirements of Rule 144. No holder shall
Transfer the Warrant or any Warrant Shares until such opinion of counsel has
been given (unless waived by NTN or unless such opinion is not required in
accordance with the provisions of this Section 7.2(c)).
(d) Notwithstanding the foregoing provisions of this Section 7.2,
the restrictions imposed by this Section 7.2 upon the transferability of the
Warrant Shares shall cease and terminate when (i) such or Warrants Shares are
sold or otherwise disposed of pursuant to an effective registration statement
under the Securities Act or as otherwise contemplated by Section 7.2(c) and,
pursuant to Section 7.2(c) the securities so transferred are not required to
bear the restrictive legend therein noted.
SECTION 8. Indemnification.
---------------
8.1 NTN and IWN Indemnification. NTN and IWN, jointly and severally,
---------------------------
covenant and agree that they will indemnify and hold harmless Symphony and its
affiliates (including, without limitation, LLC) and their respective
shareholders (and members, if the LLC), directors, officers and employees
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties") from and after the date hereof, from and against any and all losses,
damages, liabilities, claims, deficiencies, costs, expenses or expenditures of
any kind or nature whatsoever which any of the Indemnified Parties may suffer or
incur with respect to any of the events or contingencies described below:
(a) the material breach of any representation, warranty, covenant,
or agreement contained in this Agreement or any of the Other Agreements; or
(b) any liability for any federal, state or local tax interest,
penalty or other cost, including, without limitation, reasonable attorneys' fees
(all such tax, interest, penalties and other costs being referred to herein as
"Tax Liabilities") incurred by Symphony, LLC or any subsidiary or affiliate of
Symphony or LLC, or by the Partnership to the extent Symphony's and LLC's
interest
30.
therein for any period on or after the date hereof which arises out of the
transactions contemplated hereby (other income or gain resulting from the
exercise of the Warrant or the Put Option, or from any transfers or assignments
of the Warrant, any Warrant Shares or Partnership Interests, and other than with
respect to the allocations and distributions contemplated by the Restated
Partnership Agreement), including, without limitation, any such Tax Liabilities
resulting from the failure of the Partnership or any Indemnifying Party to make
a federal, state or local tax election which would have produced a tax benefit
to an Indemnified Party or reduced an Indemnified Party's tax liability;
provided, however, that in the case of any Tax Liabilities resulting from the
failure of the Partnership or any Indemnifying Party to make a federal, state or
local tax election which would have produced a tax benefit to an Indemnified
Party or reduced an Indemnified Party's tax liability (an "election"), the
Indemnified Parties shall have jointly requested such election in writing which
is received by IWN (with ample time for the request to be considered and the
election timely made). The items covered by the first clause of this Section
8.1(b) include, but are not limited to, Tax Liabilities incurred by Symphony or
LLC by reason of the following:
(i) the Partnership is not characterized as a partnership for
federal, state or local income tax purposes and is treated as an association
taxable as a corporation, a publicly traded partnership (under Internal Revenue
Code ("I.R.C.") Section 7704) or any other form of entity as of December 31,
1995, or at any time thereafter.
(ii) the interest of Symphony and LLC in the Partnership is
not characterized for federal, state or local income tax purposes as a
partnership interest but as any other form of interest or arrangement
(including, without limitation, a debt arrangement, royalty arrangement or any
other type of arrangement) and Symphony or LLC are viewed as other than a
partner (including, without limitation, a creditor or royalty holder) or
Symphony's or LLC's distributive share of partnership income, gain, loss,
deduction and credit is characterized as other than a distributive share
(including, without limitation, a guaranteed payment under I.R.C. (S)707);
(iii) the withdrawal of CPNI and StarBet and the admission of
Symphony and/or LLC to the Partnership, or the issuance of Class B Limited
Partnership Interests pursuant to the Restated Partnership Agreement (including,
without limitation, Section 3.5 thereof), or the transfer of any interest in the
Partnership from Symphony to LLC which results in a termination of the
Partnership under to I.R.C. (S)708 (or any successor provision thereto);
31.
(iv) CPNI and StarBet not being treated, for federal, state or
local income tax purposes, as having withdrawn from the Partnership as of
December 31, 1995;
(v) the admission of Symphony and/or LLC as a partner to the
Partnership and the contributions of Symphony and LLC to the capital of the
Partnership resulting in any gain or loss to Symphony or LLC for federal, state
or local income tax purposes; or
(vi) the allocations of income, gain, loss, deduction and/or
credit pursuant to the Restated Partnership Agreement not at all times having
substantial economic effect within the meaning of I.R.C. (S)704(b) and the
Treasury Regulations promulgated thereunder, and/or Symphony's and LLC's
distributive share of such income, gain, loss, deduction and credit as
contemplated by the Restated Partnership Agreement (including the distributive
share allocated to it for all periods beginning after December 31, 1995,
including the period from January 1, 1996 through the date that Symphony and LLC
contribute funds to the capital of the Partnership) not being respected for
federal, state or local income tax purposes; and
(c) all actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses of investigation) incidental to any of the
foregoing.
If an Indemnified Party elects, in its discretion, to apply any credit or net
operating or capital loss deduction or carryback attributable to periods
beginning after the date hereof in satisfaction of all or any portion of such
Tax Liability, NTN and IWN shall nevertheless remain liable to indemnify such
Indemnified Party against the full amount of such Tax Liability without regard
to any such election or application by that Indemnified Party.
8.2 Symphony Indemnification. Symphony covenants and agrees that it will
------------------------
indemnify and hold harmless NTN, IWN and the Partnership and their respective
affiliates, shareholders, directors, officers, partners and employees
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties") from and after the date hereof, from and against any and all losses,
damages, liabilities, claims, deficiencies, costs, expenses or expenditures
which any of the Indemnified Parties may suffer or incur with respect to any
material breach of any representation, warranty, covenant or agreement of
Symphony contained in this Agreement.
32.
8.3 Notice of Indemnity Claim.
-------------------------
(a) In respect of any indemnity event as to which indemnity is
sought hereunder, an Indemnified Party shall (i) within 15 days after receipt of
written notice of commencement of any third party litigation for which indemnity
is claimed, (ii) within 20 days after receipt by such Indemnified Party of
written notice of any third party claim (i.e., invoice, notice of claim or
assessment, etc.) against such Indemnified Party, or (iii) within a reasonable
time after such Indemnified Party becomes aware of the existence of any other
indemnity event, in respect of which indemnification may be sought from an
Indemnifying Party under this Section 8, notify NTN in writing thereof.
(b) If NTN and IWN or Symphony, as the case may be, within a
reasonable time after notice of any such claim, fails to defend such claim, the
Indemnified Party will (upon further notice to NTN and IWN or Symphony, as the
case may be) have the right to undertake the defense, compromise or settlement
of such claim on behalf of and for the account and risk of the Indemnifying
Party, subject to the right of the Indemnifying Party to assume the defense of
such claim at any time prior to settlement, compromise or final determination
thereof. If there is a reasonable probability that a claim may materially and
adversely affect the Indemnified Party other than as a result of money damages
or other money payments, the Indemnified Party shall have the right, at its own
cost and expense, to defend, compromise or settle such claim. NTN and IWN or
Symphony, as the case may be, shall not, without the written consent of the
Indemnified Party, which shall not unreasonably be withheld, settle or
compromise any claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability in respect of
such claim.
8.4 Indemnity Exclusive Remedy. The sole and exclusive remedy in the
--------------------------
nature of monetary damages of the Indemnified Parties for any and all claims of
the nature described in this Section 8 shall be the indemnity set forth in this
Section 8.
SECTION 9. Miscellaneous
-------------
9.1 Fees and Expenses. The Partnership shall pay the fees and expenses of
-----------------
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by it incident to the negotiation, preparation, execution,
delivery and performance of this Agreement and also shall pay all attorneys'
fees and expenses reasonably incurred by Symphony in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
transactions contemplated hereunder; provided, however, that the aggregate
amount
33.
payable to the respective counsel to the Partnership and Symphony pursuant to
this Section 9.1 shall not exceed $75,000 each.
9.2 Specific Enforcement. The parties acknowledge and agree that
--------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
9.3 Entire Agreement. This Agreement and the documents and agreements to
----------------
be delivered hereunder contain the entire understanding of the parties with
respect to the matters covered hereby and thereby and supersedes any and all
prior understandings and agreements with respect to the same subject matter and,
except as specifically set forth herein or therein, no party makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by a written
instrument signed by the party against whom enforcement of any such amendment or
waiver is sought.
9.4 Notices. Any notice or other communication required or permitted to
-------
be given under this Agreement shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
to NTN: NTN Communications, Inc.
5966 La Place Court
Carlsbad, California 92008
Attention: Chief Executive Officer
FAX: (619) 929-5289
to IWN: IWN, Inc.
5966 La Place Court
Carlsbad, California 92008
Attention: Chief Executive Officer
FAX: (619) 930-1174
34.
in each case,
with copies to: Troy & Gould Professional
Corporation
1801 Century Park East, 16th Floor
Los Angeles, California 90067
Attention: William D. Gould, Esq.
FAX: (310) 201-4746
to Symphony and LLC: At the address set forth in the
introduction of this Agreement
Attention: Chief Financial Officer
FAX: (410) 573-5205
with copies to: Stradley, Ronon, Stevens & Young,
LLP
2600 One Commerce Square
Philadelphia, PA 19103
Attention: William R. Sasso, Esq.
FAX: (215) 564-8120
Any party hereto may from time to time change its address for notices under this
Section 9.4 by giving at least 10 days' written notice of such changed address
to the other parties hereto.
9.5 Waivers. No waiver by any party of any default with respect to any
-------
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
9.6 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
9.7 Assignment. This Agreement and the rights of NTN, IWN and the
----------
Partnership hereunder may not be assigned by any of these parties without the
prior written consent of Symphony or LLC. This Agreement shall be binding upon
and shall inure to the benefit of Symphony and successors and assigns permitted
under this Agreement and the other agreements being delivered hereunder. The
assignment by a party of this Agreement or any rights hereunder shall not affect
the obligations of such assigning party under this Agreement.
9.8 No Third-Party Beneficiaries. This Agreement is intended solely for
----------------------------
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
35.
9.9 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the internal laws of Delaware without regard to the
principles of conflict of laws.
9.10 Survival of Representations and Warranties.
------------------------------------------
(a) The parties hereto hereby acknowledge and agree that the
representations and warranties and covenants set forth in this Agreement and the
Other Agreements shall survive the Effective Date until the period ending on the
earlier of (a) March 31, 1998, or (b) the date of the Put Closing; provided,
however, that the representations, warranties and covenants of NTN and IWN set
forth in Sections 5.1(ii) and 8.1(b) shall expire concurrently with the
execution of any applicable statute of limitations with respect to the matters
set forth therein.
9.11 Execution; Facsimile Signatures. This Agreement may be executed, by
-------------------------------
original or facsimile signature, in two or more counterparts, all of which shall
be considered one and the same agreement and shall become effective when counter
parts have been signed by each party and delivered to the other party, it being
understood that all parties need not sign the same counterpart. In the event any
signature is delivered by facsimile transmission, the party using such means or
delivery shall cause four additional executed signature pages to be physically
delivered to the other party within five days of the execution and delivery
hereof.
9.12 Publicity. The parties shall consult and cooperate with each other in
---------
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby, provided the foregoing shall not interfere
with the legal obligations of any party with respect to public disclosure; and
provided further, that no party shall be required to consult with the other if
any such press release or public statement does not specifically name the other.
36.
9.13 Severability. If any provision of this Agreement or any other
------------
Agreements, or the application of such provision to any person, entity or
circumstance, is declared by a court of competent jurisdiction to be invalid for
any reason, such invalidity shall not affect the remaining provisions hereof or
the application of such provisions to persons, entities or circumstances other
than those to which it is held invalid and this Agreement and any Other
Agreements will be construed and enforced as if such invalid provisions had
never been inserted.
Very truly yours,
NTN COMMUNICATIONS, INC.
By: /s/ Patrick J. Downs
---------------------------
Name: Patrick J. Downs
Its: President
IWN, INC.
By: /s/ Daniel C. Downs
---------------------------
Name: Daniel C. Downs
Its: Chairman
AGREED AND ACCEPTED AS OF:
December 31, 1995
Symphony Management Associates, Inc.
By: /s/ Richard J. Donnelly
--------------------------------
Name: Richard J. Donnelly
Its: Treasurer and Secretary
37.