Item 1.01 Entry into a Material Definitive Agreement.
Asset Purchase Agreement
As previously announced, NTN Buzztime, Inc. ("NTN"), entered into an agreement
and plan of merger and reorganization (the "Merger Agreement") with Brooklyn
Immunotherapeutics LLC ("Brooklyn") on August 12, 2020, pursuant to which,
subject to the terms and conditions thereof, a wholly-owned subsidiary of NTN
will be merged with and into Brooklyn (the "Merger"), with Brooklyn surviving
the Merger as a wholly-owned subsidiary of NTN.
When NTN announced the signing of the Merger Agreement, NTN also announced that
it was continuing to explore the sale of substantially all of the assets
relating to its current business to provide additional capital and allow the
combined company following the closing of the Merger, if it closes, to be in a
position to focus exclusively on Brooklyn's business.
On September 18, 2020 (the "Execution Date"), NTN and eGames.com Holdings LLC
("eGames.com") entered into an asset purchase agreement (the "APA") pursuant to
which, subject to the terms and conditions thereof, NTN will sell and assign
(the "Asset Sale") all of its right, title and interest in and to the assets
relating to its current business (the "Purchased Assets") to eGames.com. The
Purchased Assets comprise substantially all of NTN's assets as of the Execution
Date. At the closing of the Asset Sale (the "Closing"), in addition to assuming
the Assumed Liabilities (as defined in the APA), eGames.com will pay NTN $2.0
million in cash. In connection with entering into the APA, the sole owner of
eGames.com absolutely, unconditionally and irrevocably guaranteed to NTN the
full and prompt payment when due of any and all amounts, from time to time,
payable by eGames.com under the APA.
On the Execution Date, an affiliate of eGames.com loaned $1,000,000 to NTN
evidenced by a promissory note, which will be applied toward the purchase price
at the Closing (see "Bridge Loan," below).
The APA contains customary representations, warranties and covenants made by the
parties, including covenants relating to both parties using their efforts to
cause the transactions contemplated by the APA to be satisfied, and covenants
regarding the conduct of NTN's business between the Execution Date and the
Closing.
Unless the parties to the APA agree to an earlier date, the Closing is expected
to occur as promptly as practicable after the conditions to closing in the APA
are satisfied or waived, and, if the conditions to closing the Merger are
satisfied or waived, immediately prior to the closing of the Merger.
The Closing is subject to the satisfaction or waiver of certain closing
conditions, including NTN obtaining, as required by Delaware law, the approval
of the Asset Sale by the holders of a majority of the outstanding shares of
common stock of NTN entitled to vote thereon. Each party's obligation to close
the Asset Sale is also subject to other specified customary conditions,
including (1) the representations and warranties of the other party being true
and correct (subject to certain materiality qualifications, including
qualifications with respect to a Material Adverse Effect (as defined in the
APA)), and (2) the performance in all material respects by the other party of
its covenants and agreements in the APA required to be performed on or before
the Closing.
Under the terms of the APA, NTN is required to file a proxy or registration
statement with the U.S. Securities and Exchange Commission (the "SEC") to
solicit the stockholder approval described above. NTN intends to satisfy this
requirement by filing a registration statement on Form S-4 with the SEC to
register the shares of its common stock issuable pursuant to the Merger
Agreement, which will constitute a prospectus of NTN and proxy statement of NTN
with respect to the special meeting of stockholders at which the Asset Sale, the
Merger and other proposals will be submitted to NTN's stockholders for approval.
Pursuant to the APA, NTN may not, among other things, solicit proposals relating
to alternative transactions or enter into discussions concerning or provide
confidential information in connection with alternative transactions (with an
exception related to the Merger) until the earlier of the termination of the APA
and the Closing. These restrictions are subject to a "fiduciary out" provision
that allows NTN under certain limited circumstances to furnish confidential
information to, enter into discussions and negotiations with, and enter into an
alternative transaction with a third party and/or to make a recommendation
change adverse to the Asset Sale, which may result in payment of the termination
fee described below.
NTN will be obligated to indemnify eGames.com against specified losses that
eGames.com may incur following the Closing, subject to the terms of the APA,
including certain thresholds and caps on liability, and $100,000 will be
deposited into an escrow account to secure any such indemnification claims.
The APA contains certain termination rights for each party, including that
either party may terminate the APA if the asset sale has not been consummated by
December 31, 2020, subject to extension under specified circumstances. The APA
also provides that, upon the termination of the APA under specified
circumstances, NTN will pay eGames.com a $275,000 termination fee.
As an inducement to eGames.com to enter into the APA, eGames.com required that,
contingent and effective upon the Closing, Allen Wolff, NTN's Chief Executive
Officer, become the Chief Executive Officer of eGames.com, and that his
employment as NTN's Chief Executive Officer terminate. Mr. Wolff entered into an
employment agreement with eGames.com on September 18, 2020, the effectiveness of
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information reported in Item 1.01 above regarding the Note is incorporated
by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(b) The information reported in Item 1.01 above regarding Mr. Wolff's
anticipated employment as the Chief Executive Officer of eGames.com and the
related termination of Mr. Wolff's employment at NTN, in each case contingent
and effective upon the Closing, is incorporated by reference herein.
(e) On September 18, 2020, NTN and Mr. Wolff entered into an amendment to his
employment agreement. Under the terms of the amendment, if Mr. Wolff is
continuously employed by NTN through the consummation of a change in control (as
defined in his employment agreement) and such transaction is consummated before
March 31, 2021 (a "Qualifying CiC"), then he is eligible to receive a cash bonus
of $162,500, subject to tax withholding and other authorized deductions and
subject to Mr. Wolff delivering a general release of claims in favor of NTN, and
NTN will pay his COBRA premiums for up to six months following the termination
of his employment with NTN or, if earlier, until he becomes eligible for medical
insurance coverage in connection with new employment. Mr. Wolff agreed that he
will not be eligible for his severance payments or benefits under the terms of
his employment agreement upon the consummation of a Qualifying CiC because his
employment with NTN will automatically terminate upon the consummation of such
Qualifying CiC due to his resignation without good reason (as defined in his
employment agreement).
The foregoing description of the amendment to Mr. Wolff's employment agreement
does not purport to be complete and is qualified in its entirety by the full
text of such amendment, a copy of which is filed as an exhibit to this report
and are incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On September 18, 2020, NTN issued a press release relating to the signing of the
APA, a copy of which is attached as Exhibit 99.1 to this report and is
incorporated by reference herein.
On September 18, 2020, NTN issued three separate question and answer sheets, one
for each of its employees, vendors and customers and players, in connection with
the matters described in Item 1.01, copies of which are attached as Exhibits
99.2, 99.3, and 99.4, respectively, to this report and are incorporated by
reference herein.
By furnishing the information in this Item 7.01 and Exhibits 99.1, 99.2, 99.3,
and 99.4 hereto, NTN makes no admission as to the materiality of any information
in this report. The information contained in this Item 7.01 and Exhibits 99.1,
99.2, 99.3, and 99.4 hereto is intended to be considered in the context of NTN's
filings with the SEC and other public announcements that NTN makes, by press
release or otherwise, from time to time. NTN undertakes no duty or obligation to
publicly update or revise the information contained in this report, although it
may do so from time to time as its management believes is appropriate. Any such
updating may be made through the filing of other reports or documents with the
SEC, through press releases or through other public disclosure.
The information furnished pursuant to this Item 7.01 and Exhibits 99.1, 99.2,
99.3, and 99.4 hereto shall not be deemed "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, regardless of any general incorporation language
in such filing.
* * * * * * * * * * * * * *
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 and Asset Sale, NTN intends to file
relevant materials with the SEC, including a registration statement on Form S-4
that will contain a proxy statement and a prospectus of NTN and a consent
solicitation statement of Brooklyn, which proxy statement/prospectus/consent
solicitation statement will be mailed or otherwise disseminated to NTN
stockholders and 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 filed with the SEC on March 19, 2020, as amended on April 27,
2020 (the "2019 Annual Report"). To the extent that holdings of NTN's securities
have changed since the amounts printed in the 2019 Annual Report, such changes
have been or will be reflected on Statements of Change in Ownership on Form 4
filed with the SEC. 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, will be included in the proxy
statement/prospectus/consent solicitation statement 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. These forward-looking statements include, but are not limited to,
statements concerning: completion of the proposed Merger and Asset Sale and the
anticipated timing thereof and potential management changes following the Asset
Sale. 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 APA, 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
2.1* Asset Purchase Agreement dated September 18, 2020 by and between NTN
Buzztime, Inc. and eGames.com Holdings LLC.
10.1 8% Promissory Note issued by NTN Buzztime, Inc. on September 18, 2020
10.2 Amendment #4 to Employment Agreement made and entered into as of
September 18, 2020 between NTN Buzztime, Inc. and Allen Wolff
10.3 Guaranty by Aram Fuchs in favor of NTN Buzztime, Inc.
99.1** Press release issued by NTN Buzztime, Inc. on September 18, 2020
99.2** Question and answer sheets for employees dated September 18, 2020
99.3** Question and answer sheets for vendors dated September 18, 2020
99.4** Question and answer sheets for customers & players dated September 18,
2020
* All schedules and exhibits to this agreement have been omitted pursuant
Instruction 4 of Item 1.01 of Form 8-K and Item 601(b)(2) of Regulation
S-K. A copy of any omitted schedule and/or exhibit will be furnished to
the SEC or its staff upon request.
** Furnished herewith
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NTN BUZZTIME, INC. 
