Item 1.01 Entry into a Material Definitive Agreement.
As previously announced, NTN Buzztime, Inc. ("NTN"), and eGames.com Holdings LLC
("eGames.com") entered into an asset purchase agreement on September 18, 2020
(the "Asset Purchase Agreement"), pursuant to which, subject to the terms and
conditions thereof, NTN agreed to sell and assign all of its right, title and
interest in and to the assets relating to its current business to eGames.com
(the "Asset Sale"). At the closing of the Asset Sale, in addition to assuming
the liabilities of NTN specified in the Asset Purchase Agreement, eGames.com
will pay $2.0 million to NTN. Also as previously announced, in connection with
entering into the Asset Purchase Agreement, Fertilemind Management, LLC
("Fertilemind"), an affiliate of eGames.com, made a $1,000,000 loan (the
"Initial Bridge Loan") on behalf of eGames.com to NTN, which will be applied
against the $2.0 million payable by eGames.com at the closing of the Asset Sale,
and NTN issued an unsecured promissory note (the "First Note") evidencing such
loan to Fertilemind.
On November 19, 2020, NTN, eGames.com and Fertilemind entered into an omnibus
amendment and agreement pursuant to which, among other things: (1) eGames.com
agreed to loan, or cause Fertilemind to loan on behalf of eGames.com, an
additional $500,000 to NTN on December, 1, 2020 (the "Second Bridge Loan"), and
NTN agreed to issue an unsecured promissory note evidencing such loan (the
"Second Note"); and (2) effective as of December 1, 2020, and subject to NTN
receiving the Second Bridge Loan, the parties agreed to amend the Asset Purchase
Agreement and the First Note to provide for the application of the Second Bridge
Loan against the $2.0 million payable at the closing of the Asset Sale, to
increase the interest rate on the principal amount of the Initial Bridge Loan
from 8.0% to 10.0% per annum beginning on December 1, 2020, and to extend the
maturity date of the First Note to March 1, 2021.
The material terms of the Second Note are substantially similar to the terms of
the First Note, as amended as described above. The principal amount of the
Second Bridge Loan will accrue interest at the rate of 10% per annum (increasing
to 15% per annum upon the occurrence of an event of default), compounded
annually. The principal amount of the Second Bridge Loan and accrued interest
thereon is due and payable upon the earlier of (i) the termination of the Asset
Purchase Agreement, (ii) the closing of a Business Combination (as defined in
the Second Note), and (iii) March 1, 2021. Upon the closing of the Asset Sale,
the outstanding principal amount of the Second Bridge Loan and all accrued and
unpaid interest thereon will be applied against the purchase price under the
Asset Purchase Agreement, and the Second Note will be extinguished. NTN may use
the proceeds under the Second Note for, among other things, the payment of
obligations related to the transactions contemplated by the Asset Purchase
Agreement and other general working capital purposes. All of NTN's obligations
under the Second Note will be subordinate to the indebtedness and all other
obligations owed by NTN to Avidbank including under the loan and security
agreement, dated as of September 28, 2018 and as amended from time to time,
between NTN and Avidbank. The Second Note will include customary events of
default, including if any portion of the Second Note is not paid when due; if
NTN defaults in the performance of any other material term, agreement, covenant
or condition of either of the Second Note, subject to a cure period; if any
final judgment for the payment of money is rendered against NTN and NTN does not
discharge the same or cause it to be discharged or vacated within 90 days; if
NTN makes an assignment for the benefit of creditors, if NTN generally does not
pay its debts as they become due; if a receiver, liquidator or trustee of NTN is
appointed, or if NTN is adjudicated bankrupt or insolvent. In the event of an
event of default, the Second Note will accelerate and become immediately due and
payable at the option of the holder.
The foregoing descriptions of the omnibus amendment and agreement and the Second
Note do not purport to be complete and are qualified in their entirety by the
full text of the omnibus amendment and agreement and the Second Note, copies of
which are filed as exhibits to this report and are incorporated by reference
herein.
* * * * * * * * * * * * * *
No Offer or Solicitation
This report is not intended to and shall not constitute an offer to sell or the
solicitation of an offer to buy any securities or the solicitation of any vote
or approval, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No offer of
securities in connection with the proposed Merger shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities Act of
1933, as amended.
Additional Information and Where to Find It
In connection with the proposed merger contemplated by the agreement and plan of
merger and reorganization between NTN and Brooklyn Immunotherapeutics LLC
("Brooklyn") dated August 12, 2020 (the "Merger") and Asset Sale, NTN filed
relevant materials with the SEC, including a registration statement on Form S-4,
that will serve as a proxy statement and prospectus of NTN and a consent
solicitation statement for the beneficial holders of Brooklyn's Class A
membership units, and will be mailed or otherwise disseminated to NTN
stockholders and to the beneficial holders of Brooklyn's Class A membership
units if and when it becomes available. INVESTORS AND SECURITY HOLDERS OF NTN
AND BROOKLYN ARE URGED TO READ THESE MATERIALS CAREFULLY AND IN THEIR ENTIRETY
IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT NTN, BROOKLYN, THE PROPOSED MERGER AND ASSET SALE, AND RELATED
MATTERS. The proxy statement/prospectus/consent solicitation statement and other
relevant materials (when they become available) and any other documents filed by
NTN with the SEC, may be obtained free of charge at the SEC website at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by NTN by directing a written request to:
NTN Buzztime, Inc, 6965 El Camino Real, Suite 105-Box 517, Carlsbad, California
92009. Investors and security holders are urged to read the proxy
statement/prospectus/consent solicitation statement and the other relevant
materials when they become available before making any voting or investment
decision with respect to the proposed merger and asset sale.
Participants in the Solicitation
NTN and its directors, executive officers and certain other members of
management and employees, Brooklyn and its managers and officers, and eGames.com
and its managers and officers may, under SEC rules, be deemed to be participants
in the solicitation of proxies from the stockholders of NTN with respect to the
proposed Merger and Asset Sale and related matters. Information about the
directors and executive officers of NTN, including their ownership of shares of
common stock is set forth in NTN's Annual Report on Form 10-K for the year ended
December 31, 2019 and Amendment No. 1 thereto, which were filed with the SEC on
March 19, 2020 and April 27, 2020, respectively. Additional information
regarding the persons or entities who may be deemed participants in the
solicitation of proxies from NTN stockholders, including a description of their
interests in the proposed Merger and Asset Sale, by security holdings or
otherwise, are included in the proxy statement/prospectus/consent solicitation
statement referred to above and other relevant documents to be filed with the
SEC when they become available. As described above, these documents will be
available free of charge at the SEC's website or by directing a written request
to NTN. Neither the managers or officers of Brooklyn nor the managers or
officers of eGames.com currently hold any interests, by security holdings or
otherwise, in NTN.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange
Act, which are intended to be covered by the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
any statements that are not statements of historical fact and may be identified
by terminology such as "expect," "intend," "plan," "believe," "anticipate,"
"may," "will," "would," "should," "could," "contemplate," "estimate," "predict,"
"potential" or "continue," or the negative of these terms or other similar
words. Forward-looking statements are based on current beliefs and assumptions
that are subject to risks and uncertainties and are not guarantees of future
performance. Actual results could differ materially from those stated or implied
in any forward-looking statement as a result of various factors, including, but
not limited to: (i) risks that the conditions to the closing of the proposed
Merger and/or Asset Sale are not satisfied, including the failure of NTN and
Brooklyn to timely obtain the requisite stockholder and member approvals for the
Merger and/or Asset Sale and related matters or to meet the net cash and
capitalization requirements under the Merger Agreement, as applicable; (ii)
uncertainties as to the timing of the consummation of the proposed Merger and
Asset Sale and the ability of each party to consummate the proposed Merger and
Asset Sale; (iii) risks related to NTN's and Brooklyn's ability to manage their
respective operating expenses and expenses associated with the proposed Merger
and Asset Sale, as applicable, pending closing of the Merger; (iv) the risk
that, as a result of adjustments to the exchange ratio, NTN stockholders and
Brooklyn members could own more or less of the combined company than is
currently anticipated; (v) NTN's continued listing on the NYSE American; (vi)
uncertainties related to the impact of the COVID-19 pandemic on the business and
financial condition of NTN, Brooklyn and the combined company and the ability of
NTN and Brooklyn to consummate the Merger and NTN and eGames.com to consummate
the Asset Sale; (vii) NTN's ability to continue to operate as a going concern if
the proposed Merger or Asset Sale is not consummated in a timely manner, or at
all; (viii) Brooklyn's need for, and the availability of, substantial capital in
the future to fund its operations and research and development activities; (ix)
Brooklyn's ability to successfully progress research and development efforts
after the Merger, including its manufacturing development efforts, and to create
effective, commercially-viable products; (x) the success of Brooklyn's product
candidates in completing pre-clinical or clinical testing and being granted
regulatory approval to be sold and marketed in the United States or elsewhere;
(xi) the outcome of any legal proceedings that may be instituted against NTN,
Brooklyn, eGames.com or others related to the Merger Agreement or the Asset
Purchase Agreement, as applicable; (xii) the occurrence of any event, change or
other circumstance or condition that could give rise to the termination of
either or both of those agreements; (xiii) potential adverse reactions or
changes to business relationships resulting from the announcement or completion
of the proposed Merger or Asset Sale; and (xiv) those risks and uncertainties
discussed in NTN's reports filed with the SEC, including its 2019 Annual Report,
its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
other documents that may be filed by NTN from time to time with the SEC
available at www.sec.gov.
You should not rely upon forward-looking statements as predictions of future
events. NTN cannot assure you that the events and circumstances reflected in the
forward-looking statements will be achieved or occur, and actual results could
differ materially from those projected in the forward-looking statements. The
forward-looking statements made in this communication speak only as of the date
on which they were made. NTN does not undertake any obligation to update the
forward-looking statements contained herein to reflect events that occur or
circumstances that exist after the date hereof, except as may be required by
applicable law or regulation.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Omnibus Amendment and Agreement dated November 19, 2020 by and between NTN
Buzztime, Inc., eGames.com Holdings LLC and Fertilemind Management, LLC
10.2 10% Promissory Note to be issued by NTN Buzztime, Inc. on December 1,
2020
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