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EXHIBIT 4.1
WARRANT AGREEMENT dated as of April 19, 2000 between NTN
Communications, Inc., a Delaware corporation (the "Company"), and Starr
Securities, Inc. ("Starr") and GunnAllen Financial, Inc. ("GunnAllen" and,
together with Starr, sometimes referred to as the Underwriters").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to GunnAllen warrants
("Warrants") to purchase up to an aggregate of 42,000 shares (the "Shares") of
common stock of the Company, par value $.005 per share (the "Common Stock"); and
WHEREAS, the Underwriters have agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated April 14, 2000
between the Underwriters and the Company, to act as the underwriters in
connection with the Company's proposed public offering (the "Public Offering")
of 2,000,000 shares of Common Stock at an initial public offering price of $3.00
per share of Common Stock; and
WHEREAS, the Warrants issued pursuant to this Agreement are
being issued by the Company to the Underwriters or officers, directors or
partners of the Underwriters and members of the selling group (the "Selling
Group") and/or their officers, directors or partners, in consideration for, and
as part of the Underwriters' compensation in connection with, the Underwriters
acting as the underwriters pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the foregoing premises,
the payment by the Underwriters to the Company of an aggregate of Forty-Two
Dollars and No Cents ($42.00) ($42.00 from GunnAllen), the agreements herein set
forth and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
I. GRANT. THE UNDERWRITERS, AND/OR THEIR DESIGNEES WHO ARE OFFICERS,
DIRECTORS OR PARTNERS OF THE UNDERWRITERS OR MEMBERS OF THE SELLING
GROUP IN CONNECTION WITH THE PUBLIC OFFERING, ARE HEREBY GRANTED THE
RIGHT TO PURCHASE, AT ANY TIME FROM APRIL 14, 2000 UNTIL 5:00 P.M., NEW
YORK CITY TIME, ON APRIL 14, 2005 (THE "WARRANT EXERCISE TERM"), UP TO
AN AGGREGATE OF 42,000 SHARES AT AN INITIAL EXERCISE PRICE (SUBJECT TO
ADJUSTMENT AS PROVIDED IN ARTICLE 8 HEREOF) OF $3.75 PER SHARE.
II. WARRANT CERTIFICATES. THE WARRANT CERTIFICATES (THE WARRANT
CERTIFICATES") DELIVERED AND TO BE DELIVERED PURSUANT TO THIS AGREEMENT
SHALL BE IN THE FORM SET FORTH AS EXHIBIT A ATTACHED HERETO AND MADE A
PART HEREOF, WITH SUCH APPROPRIATE INSERTIONS, OMISSIONS, SUBSTITUTIONS
AND OTHER VARIATIONS AS REQUIRED OR PERMITTED BY THIS AGREEMENT.
III. EXERCISE OF WARRANTS.
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A. Cash Exercise. The Warrants initially are exercisable at a
price of $3.75 per Share, payable in cash or by check to the
order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 8 hereof. Upon
surrender of the Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of
the Exercise Price (as hereinafter defined) for the Shares
purchased at the Company's principal offices, currently
located at The Campus, 5966 La Place Court, Suite 100,
Carlsbad, California 92008, the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the Shares so
purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder
hereof, in whole or in part (but not as to fractional shares
of the Common Stock). In the case of the purchase of less than
all the Shares purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the Shares
purchasable thereunder.
B. Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange this Warrant, in
whole or in part (a "Warrant Exchange"), into the number of
Shares determined in accordance with this Section 3.2, by
surrendering this Warrant at the principal office of the
Company or at the office of its transfer agent, accompanied by
a notice stating (i) such Holder's intent to effect such
exchange, (ii) the number of Shares to be exchanged and (iii)
the date on which the Holder requests that such Warrant
Exchange occur (the "Notice of Exchange"). The Warrant
Exchange shall take place on the date specified in the Notice
of Exchange or, if later, the date the Notice of Exchange is
received by the Company (the "Exchange Date"). Certificates
for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance
of the Shares remaining subject to this Warrant, shall be
issued as of the Exchange Date and delivered to the Holder
within five (5) business days following the Exchange Date. In
connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the number of
Shares (rounded to the next highest integer) equal to (i) the
number of Shares specified by the Holder in its Notice of
Exchange (the "Total Number") less (ii) the number of Shares
equal to the quotient obtained by dividing (A) the product of
the Total Number and the existing Exercise Price (as
hereinafter defined) by (B) the current market value of a
share of Common Stock. For purposes of this Section 3.2, the
term "current market value" shall mean the (i) last reported
sale price on the last trading day or, in case no such
reported sale takes place on such day, the average last
reported sale price for the last three (3) trading days, in
either case as officially reported by the principal securities
exchange on which the Common Stock is listed or admitted to
trading, or by the Nasdaq National Market or SmallCap Market
(referred to hereinafter as "NASDAQ") if the Common Stock is
not listed or admitted to trading on any national securities
exchange but is listed or quoted upon NASDAQ, or (ii) if the
Common Stock is not traded on a national securities exchange
or NASDAQ, the closing bid price on the last trading day, or,
in case no such reported bid takes place on such day, the
average closing bid price for the last three (3) trading days,
as furnished by NASDAQ or similar organization if NASDAQ is no
longer reporting such information, or (iii) if the Common
Stock is not listed upon a principal exchange or quoted on
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NASDAQ, but quotes for the Common Stock are available in the
OTC Bulletin Board or "pink sheets" the closing bid price on
the last trading day, or, in case no such bid takes place on
such day, the average closing bid price for the last three (3)
trading days as furnished on the OTC Bulletin Board or (iv) in
the event the Common Stock is not traded upon a principal
exchange and not listed on NASDAQ and quotes are not available
on the OTC Bulletin Board, the price as determined in good
faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
IV. ISSUANCE OF CERTIFICATES.
A. Issuance. Upon the exercise of the Warrants, the issuance of
certificates for the Shares shall be made forthwith (and in
any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the
provisions of Article 5 hereof) be issued in the name of, or
in such names as may be directed by, the Holder thereof;
provided however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates
in a name other than that of the Holder and the Company shall
not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof
shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such
tax has been paid.
B. Form of Certificates. The Warrant Certificates and
certificates representing the Shares shall be executed on
behalf of the Company by the manual or facsimile signature of
the present or any future Chairman or Vice Chairman of the
Board of Directors or president or Vice President of the
Company under its corporate seal reproduced thereon, attested
to by the manual or facsimile signature of the present or any
future Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by
the Company upon initial issuance, division, exchange,
substitution or transfer. The Warrant Certificates and, upon
exercise of the Warrants, in part or in whole, certificates
representing the Shares shall bear a legend substantially
similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be offered or sold except (i) pursuant to
an effective registration statement under the Act, (ii) to the
extent applicable, pursuant to Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the
Company of an opinion of counsel, reasonably satisfactory to
counsel to the Company, stating that an exemption from
registration under such Act is available. "
V. RESTRICTION ON TRANSFER OF WARRANTS. THE HOLDER OF A WARRANT
CERTIFICATE, BY ITS ACCEPTANCE THEREOF, COVENANTS AND AGREES THAT THE
WARRANTS ARE BEING ACQUIRED AS AN INVESTMENT AND NOT WITH A VIEW TO THE
DISTRIBUTION THEREOF, AND THAT THE WARRANTS MAY NOT BE
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SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF, IN
WHOLE OR IN PART, FOR A PERIOD OF ONE (1) YEAR FROM THE DATE HEREOF,
EXCEPT TO OFFICERS, DIRECTORS OR PARTNERS OF THE UNDERWRITERS OR TO ANY
MEMBER OF THE SELLING GROUP PARTICIPATING IN THE DISTRIBUTION TO THE
PUBLIC OF THE COMMON STOCK AND/OR THEIR RESPECTIVE OFFICERS OR
PARTNERS.
In connection with the transfer or exercise of Warrants, the
purchaser and Holder agree to execute any documents which may be reasonably
required by counsel to the Company to comply with the provisions of the Act and
applicable state securities laws.
VI. PRICE.
A. Initial and Adjusted Exercise Price. The initial exercise
price of each Warrant shall be $3.75 per Share. The adjusted
exercise price shall be the price which shall result from time
to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Article 8 hereof.
B. Exercise Price. The term "Exercise Price" herein shall mean
the initial exercise price or the adjusted exercise price,
depending upon the context.
VII. REGISTRATION RIGHTS.
A. Registration Under the Securities Act of 1933. The Warrants
and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended (the
"Act").
B. Registrable Securities. As used herein the term "Registrable
Security" means each of the Shares and any shares of Common
Stock issued upon any stock split or stock dividend in respect
of such Shares; provided, however, that with respect to any
particular Registrable Security, such security shall cease to
be a Registrable Security when, as of the date of
determination, (i) it has been effectively registered under
the Act and disposed of pursuant thereto, (ii) registration
under the Act is no longer required for the immediate public
distribution of all or any portion of such security or (iii)
it has ceased to be outstanding. The term "Registrable
Securities" means any and/or all of the securities falling
within the foregoing definition of a "Registrable Security. "
In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure
affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights
granted pursuant to this Article 7.
C. Piggyback Registration. If, at any time during the seven years
following the date of this Agreement, the Company proposes to
prepare and file any new registration statement or
post-effective amendments thereto covering equity or debt
securities of the Company, or any such securities of the
Company held by its shareholders (other than pursuant to a
Form S-4 or pursuant to a Form S-8 or comparable forms) (for
purposes of this Article 7, collectively, a "Registration
Statement"), it will, with respect to each
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such registration statement and amendment, give written notice
of its intention to do so by registered mail ("Notice"), at
least thirty (30) days prior to the filing of each such
Registration Statement, to all holders of the Registrable
Securities. Upon the written request of such a holder (a
"Requesting Holder"), made within twenty (20) days after
receipt of the Notice, that the Company include any of the
Requesting Holder's Registrable Securities in the proposed
Registration Statement, the Company shall, as to each such
Requesting Holder, use its best efforts to effect the
registration under the Act of the Registrable Securities which
it has been so requested to register ("Piggyback
Registration"), at the Company's sole cost and expense and at
no cost or expense to the Requesting Holders (other than
underwriting discounts and commissions applicable to the sale
of such Registrable Securities and the fees and disbursements,
if any, of counsel or any advisor to the Requesting Holders),
provided that, if such Registration Statement relates to an
underwritten public offering and the managing underwriter
advises the Company and the Requesting Holders that the number
of Registrable Securities which can be included in such
offering must be limited, priority will be given to any
securities proposed to be offered and sold by the Company,
and, thereafter, the Requesting Holders will agree to reduce
the number of Registrable Securities included in such
Registration Statement on a pro rata basis with any other
selling security holder on whose behalf other securities of
the Company may be included therein for registration.
Notwithstanding the provisions of this Section 7.3, the
Company shall have the right at any time after it shall have
given written notice pursuant to this Section 7.3
(irrespective of whether any written request for inclusion of
Registrable Securities shall have already been made) to elect
not to file any such proposed Registration Statement, or to
withdraw the same after the filing but prior to the effective
date thereof.
D. Demand Registration
1. At any time during the Warrant Exercise Term, any
"Demand Holder" (as such term is defined in Section
7.4(d) below) of the Registrable Securities shall
have the right (which right is in addition to the
piggyback registration rights provided for under
Section 7.3 hereof), exercisable by written notice to
the Company (the "Demand Registration Request"), to
have the Company prepare and file with the Securities
and Exchange Commission (the "Commission"), on one
occasion for all Demand Holders, at the sole expense
of the Company (other than underwriting discounts and
commissions applicable to the sale of the Registrable
Securities which are the subject of the Demand
Registration Request, and the fees and disbursements,
if any, of counsel or any advisor to the Demand
Holder), a Registration Statement and such other
documents, including a prospectus, as may be
necessary (in the opinion of both counsel for the
Company and counsel for such Demand Holder), in order
to comply with the provisions of the Act, so as to
permit a public offering and sale of the Registrable
Securities by the holders thereof, for nine (9)
consecutive months; provided, however, that the
Company shall not be required to effect such
registration if, in the opinion of counsel for the
Company, all of such Registrable Securities can be
sold publicly, pursuant to Rule 144 or otherwise,
without registration under the
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Act; provided further, that neither Underwriter
(and/or any person who may acquire Warrants and/or
Registrable Securities from such Underwriter or
transferees of such Underwriter) shall be entitled to
exercise any registration right pursuant to this
Section 7.4(a) without the prior written consent of
the other Underwriter. Any such demand request by the
Holders shall coincide with the availability of the
Company's audited financial statements, unless the
holders demanding registration agree to pay the costs
to the Company of any special audit which may be
required under the rules and regulations of the
Securities and Exchange Commission. Notwithstanding
anything to the contrary herein contained, the
Company may postpone, for not more than 90 days, the
filing of a Registration Statement under this Section
7.4(a) (or suspend the use of any Registration
Statement filed under this Section 7.4 for a period
of not more than 30 days) for valid business reasons,
including the acquisition or divestiture of assets,
public filings with the Commission, pending corporate
developments and similar events.
2. The Company covenants and agrees to give written
notice of any Demand Registration Request to all
holders of the Registrable Securities within ten (10)
days from the date of the Company's receipt of any
such Demand Registration Request. After receiving
notice from the Company as provided in this Section
7.4(b), holders of Registrable Securities may request
the Company to include their Registrable Securities
in the Registration Statement to be filed pursuant to
Section 7.4(a) hereof by notifying the Company of
their decision to have such securities included
within ten (10) days of their receipt of the
Company's notice.
3. In addition to the registration rights provided for
under Section 7.3 hereof and subsection (a) of this
Section 7.4, at any time during the Warrant Exercise
Term, any Demand Holder (as defined below in Section
7.4(d)) of Registrable Securities shall have the
right, exercisable by written request to the Company,
to have the Company prepare and file with the
Commission, on one occasion in respect of all holders
of Registrable Securities, a Registration Statement
so as to permit a public offering and sale of such
Registrable Securities for nine (9) consecutive
months; provided, however, that all costs incident
thereto shall be at the expense of the holders of the
Registrable Securities included in such Registration
Statement; and, provided further, that the Company
shall not be required to effect such registration if,
in the opinion of counsel for the Company, all of
such Registrable Securities can be sold publicly,
pursuant to Rule 144 or otherwise, without
registration under the Act; and, provided, further,
that neither Underwriter (and/or any person who may
acquire Warrants and/or Registrable Securities from
such Underwriter or transferees of such Underwriter)
shall be entitled to exercise any registration right
pursuant to this Section 7.4(c) without the prior
written consent of the other Underwriter. If a Demand
Holder shall give notice to the Company at any time
of its or their desire to exercise the registration
right granted pursuant to this Section 7.4(c), then
within ten (10) days after the Company's receipt of
such notice, the
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Company shall give notice to the other holders of
Registrable Securities advising them that the Company
is proceeding with such registration and offering to
include therein the Registrable Securities of such
holders, provided they furnish the Company with such
appropriate information in connection therewith as
the Company shall reasonably request in writing.
Notwithstanding contained herein shall require the
Company to undergo an audit of its financial
statements other than in the ordinary course of
business.
4. The term "Demand Holder" as used in this Section 7.4
shall mean any holder or any combination of holders
of Registrable Securities, if included in such
holders' Registrable Securities are that aggregate
number of Shares (including Shares already issued and
Shares issuable pursuant to the exercise of
outstanding Warrants) as would constitute 50% or more
of the aggregate number of Shares (including Shares
already issued and Shares issuable pursuant to the
exercise of outstanding Warrants) included in all of
the Registrable Securities, but in any event not less
than 30,000 Shares.
E. Covenants of the Company With Respect to Registration. The
Company covenants and agrees as follows:
1. In connection with any registration under Section 7.4
hereof, the Company shall file the Registration
Statement as expeditiously as possible, but in no
event later than forty-five (45) days following
receipt of any demand therefor (unless delayed by the
failure of a holder of Registrable Securities to
promptly furnish such information necessary to
complete such registration statement), shall use its
best efforts to have any such Registration Statement
declared effective at the earliest possible time and
shall furnish each holder of Registrable Securities
such number of prospectuses as shall reasonably be
requested.
2. The Company shall pay all costs, fees and expenses in
connection with all Registration Statements filed
pursuant to Sections 7.3 and 7.4(a) hereof (excluding
any underwriting discounts and commissions which may
be incurred in connection with the sale of any
Registrable Securities and fees of counsel or any
advisor to the Holders of Registrable Securities)
including, without limitation, the Company's legal
and accounting fees, printing expenses, and blue sky
fees and expenses.
3. The Company will take all reasonably necessary action
which may be required in qualifying or registering
the Registrable Securities included in a Registration
Statement for offering and sale under the securities
or blue sky laws of such states as are reasonably
requested by the holders of such securities, provided
that the Company shall not be obligated to execute or
file any general consent to service of process or to
qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
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4. The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any
Registration Statement and any underwriter or person
deemed to be an underwriter under the Act and each
person, if any, who controls such holder or
underwriter or person deemed to be an underwriter
within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), against all loss, claim,
damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any
of them may become subject under the Act, the
Exchange Act or otherwise, arising from such
Registration Statement to the same extent and with
the same effect as the provisions pursuant to which
the Company has agreed to indemnify the Underwriters
contained in Section 5 of the Underwriting Agreement
and to provide for just and equitable contribution as
set forth in Section 6 of the Underwriting Agreement.
5. Any holder of Registrable Securities to be sold
pursuant to a Registration Statement, and its
successors and assigns, shall severally, and not
jointly, indemnify, the Company, its officers and
directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against all
loss, claim, damage or expense or liability
(including all expenses reasonably incurred in
investigating, preparing or defending against any
claim whatsoever) to which they may become subject
under the Act, the Exchange Act or otherwise, arising
from information furnished in writing by or on behalf
of such holder, or its successors or assigns, for
specific inclusion in such Registration Statement to
the same extent and with the same effect as the
provisions contained in Section 5 of the Underwriting
Agreement pursuant to which the Underwriters have
agreed to indemnify the Company and to provide for
just and equitable contribution as set forth in
Section 6 of the Underwriting Agreement.
6. Nothing contained in this Agreement shall be
construed as requiring any Holder to exercise his
Warrants prior to the initial filing of any
Registration Statement or the effectiveness thereof.
7. The Company shall deliver promptly to each holder of
Registrable Securities participating in the offering
copies of all correspondence between the Commission
and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission
or its staff with respect to the Registration
Statement and permit each holder of Registrable
Securities and underwriters to do such investigation,
upon reasonable advance notice, with respect to
information contained in or omitted from the
Registration Statement as it deems reasonably
necessary to comply with applicable securities laws
or rules of the National Association of Securities
Dealers, Inc. ("NASD"); provided that each such
holder of Registrable Securities agrees not to
disclose such information without the prior consent
of the Company. Such investigation shall include
access to books, records and properties and
opportunities to discuss the business of the Company
with its officers and
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independent auditors, all to such reasonable extent
and at such reasonable times and as often as any such
holder of Registrable Securities or underwriter shall
reasonably request.
8. If required by the underwriter in connection with an
underwritten offering which includes Registrable
Securities pursuant to Article 7, the Company shall
enter into an underwriting agreement with one or more
underwriters selected for such underwriting, such
agreement shall contain such representations,
warranties and covenants by the Company and such
other terms as are customarily contained in
agreements of that type used by the underwriters. If
required by the underwriter, the holders of
Registrable Securities shall be parties to any
underwriting agreement relating to an underwritten
sale of their Registrable Securities and may, at
their option, require that any or all the
representations and warranties of the Company to or
for the benefit of such underwriters shall, to the
extent that they may be applicable, also be made to
and for the benefit of such holders of Registrable
Securities. Such holders of Registrable Securities
shall not be required to make any representations or
warranties to or agreements with the Company or the
underwriters except as they may relate to such
holders of Registrable Securities and their intended
methods of distribution.
VIII. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.
A. Computation of Adjusted Price. In case the Company shall at
any time after the date hereof pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock,
then upon such dividend or distribution the Exercise Price in
effect immediately prior to such dividend or distribution
shall forthwith be reduced to a price determined by dividing:
1. an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such
dividend or distribution multiplied by the Exercise
Price in effect immediately prior to such dividend or
distribution, by
2. the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
For the purposes of any computation to be made in
accordance with the provisions of this Section 8. 1,
the following provisions shall be applicable: Common
Stock issuable by way of dividend or other
distribution on any stock of the Company shall be
deemed to have been issued immediately after the
opening of business on the date following the date
fixed for the determination of stockholders entitled
to receive such dividend or other distribution.
B. Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common
Stock, the Exercise Price shall forthwith be proportionately
decreased in the case of subdivision or increased in the case
of combination.
C. Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article 8,
the number of Shares
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issuable upon the exercise of each Warrant shall be adjusted
to the nearest full Share, by multiplying a number equal to
the Exercise Price in effect immediately prior to such
adjustment by the number of Shares issuable upon exercise of
the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
D. Reclassification Consolidation Merger etc. In case of any
reclassification or change of the outstanding shares of Common
Stock (other than a change in par value to no par value, or
from no par value to par value, or as a result of a
subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company
into, another corporation (other than a consolidation or
merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the
outstanding shares of Common Stock, except a change as a
result of a subdivision or combination of such shares or a
change in par value, as aforesaid), or in the case of a sale
or conveyance to another corporation of the property of the
Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and
other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any
such events at a price equal to the product of (x) the number
of shares issuable upon exercise of the Warrants and (y) the
Exercise Price in effect immediately prior to the record date
for such reclassification, change, consolidation, merger, sale
or conveyance as if such Holders had exercised the Warrants.
E. Determination of Outstanding Shares of Common Stock. The
number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or
issuable upon the exercise of options, rights, warrants and
upon the conversion or exchange of convertible or exchangeable
securities (excluding shares issuable upon the exercise of
options and warrants outstanding on the date hereof).
F. Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time
prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of shares of Common
Stock or a cash dividend or distribution payable out of
current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences
of indebtedness, securities (other than shares of Common
Stock), whether issued by the Company or by another person or
entity, or any other thing of value, the Holder or Holders of
the unexercised Warrants shall thereafter be entitled to
receive, upon the exercise of such Warrants, in addition to
the shares of Common Stock or other securities receivable upon
the exercise thereof, the same monies, property, assets,
rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive
at the time of such dividend or distribution. At the time of
any such dividend or distribution, the Company shall make
appropriate reserves to ensure the timely performance of the
provisions of this Section 8.6.
IX. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES.
A. Exchange. Each Warrant Certificate is exchangeable without
expense,
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upon the surrender hereof by the registered Holder at the
principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the
aggregate the right to purchase the same number of Shares in
such denominations as shall be designated by the Holder
thereof at the time of such surrender.
B. Replacement. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction
or mutilation of any Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and reimbursement to the
Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrants, if mutilated,
the Company will make and deliver a new Warrant Certificate of
like tenor, in lieu thereof.
X. ELIMINATION OF FRACTIONAL INTERESTS. THE COMPANY SHALL NOT BE REQUIRED
TO ISSUE CERTIFICATES REPRESENTING FRACTIONS OF SHARES OF COMMON STOCK
AND SHALL NOT BE REQUIRED TO ISSUE SCRIP OR PAY CASH IN LIEU OF
FRACTIONAL INTERESTS, IT BEING THE INTENT OF THE PARTIES THAT ALL
FRACTIONAL INTERESTS SHALL BE ELIMINATED BY ROUNDING ANY FRACTION UP TO
THE NEAREST WHOLE NUMBER OF SHARES OF COMMON STOCK.
XI. RESERVATION AND LISTING OF SECURITIES. THE COMPANY SHALL AT ALL TIMES
RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED SHARES OF COMMON
STOCK, SOLELY FOR THE PURPOSE OF ISSUANCE UPON THE EXERCISE OF THE
WARRANTS, SUCH NUMBER OF SHARES OF COMMON STOCK AS SHALL BE ISSUABLE
UPON THE EXERCISE THEREOF. THE COMPANY COVENANTS AND AGREES THAT, UPON
EXERCISE OF THE WARRANTS AND PAYMENT OF THE EXERCISE PRICE THEREOF, ALL
SHARES OF COMMON STOCK ISSUABLE UPON SUCH EXERCISE SHALL BE DULY AND
VALIDLY ISSUED, FULLY PAID, NON-ASSESSABLE AND NOT SUBJECT TO THE
PREEMPTIVE RIGHTS OF ANY SHAREHOLDER. AS LONG AS THE WARRANTS SHALL BE
OUTSTANDING, THE COMPANY SHALL USE ITS BEST EFFORTS TO CAUSE ALL SHARES
OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS TO BE LISTED
ON OR QUOTED BY THE EXCHANGE UPON WHICH THE COMPANY'S COMMON STOCK IS
THEN LISTED OR QUOTED.
XII. NOTICES TO WARRANT HOLDERS. NOTHING CONTAINED IN THIS AGREEMENT SHALL
BE CONSTRUED AS CONFERRING UPON THE HOLDER OR HOLDERS THE RIGHT TO VOTE
OR TO CONSENT OR TO RECEIVE NOTICE AS A SHAREHOLDER IN RESPECT OF ANY
MEETINGS OF SHAREHOLDERS FOR THE ELECTION OF DIRECTORS OR ANY OTHER
MATTER, OR AS HAVING ANY RIGHTS WHATSOEVER AS A SHAREHOLDER OF THE
COMPANY. IF, HOWEVER, AT ANY TIME PRIOR TO THE EXPIRATION OF THE
WARRANTS AND THEIR EXERCISE, ANY OF THE FOLLOWING EVENTS SHALL OCCUR:
1. the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a
cash
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dividend or distribution payable otherwise than out of current
or retained earnings, as indicated by the accounting treatment
of such dividend or distribution on the books of the Company;
or
2. the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of
capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
3. a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale
of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least twenty (20) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing of the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or the issuance of
any convertible or exchangeable securities or subscription rights, options or
warrants, or any proposed dissolution, liquidation, winding up or sale.
XIII. NOTICES. ALL NOTICES, REQUESTS, CONSENTS AND OTHER COMMUNICATIONS
HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN DULY
MADE WHEN DELIVERED, TELECOPIED OR MAILED BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED:
1. If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the
Company; or
2. If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address
as the Company may designate by notice to the
Holders.
XIV. SUPPLEMENTS AND AMENDMENTS. THE COMPANY AND THE UNDERWRITERS MAY FROM
TIME TO TIME SUPPLEMENT OR AMEND THIS AGREEMENT WITHOUT THE APPROVAL OF
ANY HOLDERS OF WARRANT CERTIFICATES IN ORDER TO CURE ANY AMBIGUITY, TO
CORRECT OR SUPPLEMENT ANY PROVISION CONTAINED HEREIN WHICH MAY BE
DEFECTIVE OR INCONSISTENT WITH ANY PROVISIONS HEREIN, OR TO MAKE ANY
OTHER PROVISIONS IN REGARD TO MATTERS OR QUESTIONS ARISING HEREUNDER
WHICH THE COMPANY AND THE UNDERWRITERS MAY DEEM NECESSARY OR DESIRABLE
AND WHICH THE COMPANY AND THE UNDERWRITERS DEEM NOT TO ADVERSELY AFFECT
THE INTERESTS OF THE HOLDERS OF WARRANT CERTIFICATES.
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XV. SUCCESSORS. ALL THE COVENANTS AND PROVISIONS OF THIS AGREEMENT BY OR
FOR THE BENEFIT OF THE COMPANY AND THE HOLDERS INURE TO THE BENEFIT OF
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS HEREUNDER.
XVI. TERMINATION. THIS AGREEMENT SHALL TERMINATE AT THE CLOSE OF BUSINESS ON
APRIL 19, 2008. NOTWITHSTANDING THE FOREGOING, THIS AGREEMENT WILL
TERMINATE ON ANY EARLIER DATE WHEN ALL WARRANTS HAVE BEEN EXERCISED AND
ALL THE SHARES ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE BEEN RESOLD
TO THE PUBLIC; PROVIDED, HOWEVER, THAT THE PROVISIONS OF SECTION 7.5
SHALL SURVIVE SUCH TERMINATION UNTIL THE CLOSE OF BUSINESS ON APRIL 19,
2011.
XVII. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK WITH RESPECT TO CONTRACTS MADE AND TO BE WHOLLY
PERFORMED IN SAID STATE AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE. THE COMPANY, THE UNDERWRITERS
AND ANY OTHER REGISTERED HOLDER OR HOLDERS AGREE OF THE WARRANT
CERTIFICATES (1) AGREE THAT ANY LEGAL SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED
EXCLUSIVELY IN NEW YORK STATE SUPREME COURT, COUNTY OF NEW YORK, OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
(2) WAIVE ANY OBJECTION WHICH THE THEY MAY HAVE NOW OR HEREAFTER TO THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND (3) IRREVOCABLY
CONSENT TO THE JURISDICTION OF THE NEW YORK STATE SUPREME COURT, COUNTY
OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK IN ANY SUCH SUIT, ACTION OR PROCEDURE. THE
COMPANY, THE UNDERWRITERS AND ANY OTHER REGISTERED HOLDER OR HOLDERS OF
THE WARRANT CERTIFICATES, WARRANTS OR THE SHARES FURTHER AGREE TO
ACCEPT AND ACKNOWLEDGE SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUIT, ACTION OR PROCEEDING IN THE NEW YORK STATE SUPREME
COURT, COUNTY OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND AGREE THAT SERVICE OF PROCESS UPON
THEM MAILED BY CERTIFIED MAIL TO THEIR RESPECTIVE ADDRESSES SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THEM IN ANY
SUCH SUIT, ACTION OR PROCEEDING. IN THE EVENT OF LITIGATION BETWEEN THE
PARTIES ARISING HEREUNDER, THE PREVAILING PARTY SHALL BE ENTITLED TO
COSTS AND REASONABLE ATTORNEY'S FEES.
XVIII. BENEFITS OF THIS AGREEMENT. NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED TO GIVE TO ANY PERSON OR CORPORATION, OTHER THAN THE COMPANY
AND THE UNDERWRITERS AND ANY OTHER REGISTERED HOLDER OR HOLDERS OF THE
WARRANT CERTIFICATES, WARRANTS OR THE SHARES, ANY LEGAL OR EQUITABLE
RIGHT, REMEDY OR CLAIM UNDER THIS AGREEMENT; AND THIS AGREEMENT SHALL
BE FOR THE SOLE AND EXCLUSIVE
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BENEFIT OF THE COMPANY AND THE UNDERWRITERS AND ANY OTHER HOLDER OR
HOLDERS OF THE WARRANT CERTIFICATES, WARRANTS OR THE SHARES.
XIX. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND EACH OF SUCH COUNTERPARTS SHALL FOR ALL PURPOSES BE
DEEMED TO BE AN ORIGINAL, AND SUCH COUNTERPARTS SHALL TOGETHER
CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
[SEAL] NTN COMMUNICATIONS, INC.
By: /s/ Stanley B. Kinsey
----------------------------------
Name: Stanley B. Kinsey
Title: Chief Executive Officer and
Chairman of the Board
Attest:
/s/ Kendra S. Berger
- --------------------------------------
Name: Kendra Berger
Title: Chief Financial Officer
and Secretary STARR SECURITIES, INC.
By: /s/ Martin Vegh
----------------------------------
Name: Martin Vegh
Title: President
GUNNALLEN FINANCIAL, INC.
By: /s/ Howard Davis
----------------------------------
Name:
Title:
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EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (11) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (111) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, ______________, 200_
No. W- ________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________________ or
registered assigns is the registered holder of _______ Warrants to purchase, at
any time from ______________ until 5:00 P.M. New York City time on
______________, 200_ ("Expiration Date") up to _______ shares ("Shares") of
fully-paid and nonassessable common stock, par value $.005 per share ("Common
Stock"), of NTN Communications, Inc., a Delaware corporation (the "Company"), at
the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $_____ per Share upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of ____________ ("Warrant Agreement") between the Company,
Starr Securities, Inc. and GunnAllen Financial, Inc. Payment of the Exercise
Price may be made in cash, or by certified or official bank check in New York
Clearing House funds payable to the order of the Company, or any combination of
cash or check, or in accordance with Section 3.2 of the Warrant Agreement.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
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The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax, or
other governmental charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: NTN COMMUNICATIONS, INC.
-------------------
By:
---------------------------------
Name:
Title:
Attest:
- ----------------------------------
Name:
Title:
[SEAL]
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[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase Shares and herewith
tenders in payment for such Shares cash or a certified or official bank check
payable in New York Clearing House Funds to the order of _____________________
in the amount of $_______ all in accordance with the terms hereof. The
undersigned requests that a certificate for such Shares be registered in the
name of ____________________, whose address is _____________________ and that
such Certificate be delivered to whose address is ___________________________.
[ ] The Undersigned hereby elects to exercise of the Warrants held by it in
accordance with Section ___ of the Warrant Agreement dated ______________, 2000.
Dated: Signature: ___________________________________
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
19
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________________________ hereby
sells, assigns and transfers unto
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________,
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: Signature:
-----------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)