Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On August 12, 2020, NTN Buzztime, Inc. ("NTN Buzztime") entered into an
Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with
Brooklyn Immunotherapeutics LLC, a Delaware limited liability company
("Brooklyn"), and BIT Merger Sub, Inc., a Delaware corporation and wholly-owned
subsidiary of NTN Buzztime ("Merger Sub"). Pursuant to, and on the terms and
subject to the conditions of, the Merger Agreement, Merger Sub will be merged
with and into Brooklyn (the "Merger"), with Brooklyn surviving the Merger as a
wholly-owned subsidiary of NTN Buzztime.
On the terms and subject to the conditions of the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), the membership interests of
Brooklyn will convert into the right to receive an aggregate number of shares of
NTN Buzztime common stock, par value $0.005 per share (the "Common Stock"),
equal to 94.08% of the total outstanding shares of Common Stock of NTN Buzztime
immediately following such issuance, which percentage is subject to adjustment
as more particularly set forth in the Merger Agreement, but in no event shall be
greater than 96.74%. Upon completion of the Merger, the board of directors of
the combined company is expected to consist entirely of individuals designated
by Brooklyn and the officers of the combined company are expected to be members
of Brooklyn's current management team. The Merger is intended to be a
tax-deferred transaction as described in Section 351(a) of the Internal Revenue
Code of 1986, as amended.
The Merger Agreement contains customary representations, warranties and
covenants made by NTN Buzztime and Brooklyn, including covenants relating to
both parties using their commercially reasonable efforts to cause the
transactions contemplated by the Merger Agreement to be satisfied, as well as
covenants regarding the conduct of their respective businesses between the date
of signing of the Merger Agreement and the closing.
The Merger Agreement requires NTN Buzztime to file, as promptly as practicable,
a Form S-4 registration statement with the U.S. Securities and Exchange
Commission ("SEC") to register the offer and sale of the shares of Common Stock
to be issued pursuant to the Merger Agreement (the "Registration Statement"),
and to convene a special meeting of stockholders, as promptly as practicable
following the effectiveness of the Registration Statement, to vote to approve
(i) the issuance of shares of Common Stock to the members of Brooklyn pursuant
to the terms of the Merger Agreement, (ii) amendments to NTN Buzztime's
certificate of incorporation to increase the authorized number of shares of
Common Stock, change the corporate name to "Brooklyn Immunotherapeutics, Inc.",
and provide the holders of Series A Convertible Preferred Stock with voting
rights (in order to help ensure the tax-deferred nature of the transactions
contemplated by the Merger Agreement), (iii) a reverse stock split of the
outstanding shares of Common Stock in a ratio to be agreed upon by NTN Buzztime
and Brooklyn, (iv) a new stock incentive plan, which will become effective upon
the Merger and will authorize the issuance of no more than 7.5% of the
fully-diluted outstanding shares of Common Stock immediately following the
Effective Time, and (v) such other matters as may be agreed by NTN Buzztime and
Brooklyn (collectively, the "NTN Buzztime Stockholder Matters").
Consummation of the Merger is subject to certain closing conditions including,
among others, (i) the approval of the stockholders of NTN Buzztime of each of
the NTN Buzztime Stockholder Matters, (ii) the approval of the Merger and the
transactions contemplated by the Merger Agreement by the beneficial holders of
the Class A membership units of Brooklyn, (iii) the amendment of NTN Buzztime's
certificate of incorporation to provide voting rights to the holders of Series A
Convertible Preferred Stock, (iv) the receipt of tax opinions from counsel to
NTN Buzztime and Brooklyn, (v) Brooklyn having not less than $10 million in cash
and cash equivalents and not more than $750,000 of indebtedness for borrowed
money at the closing, (vi) NTN Buzztime having a deficit of "Parent Net Cash"
(as defined and calculated in the Merger Agreement) of no more than $3 million,
and (vii) the shares of Common Stock continuing to be traded on the NYSE
American until the Effective Time and the approval for listing of the shares of
Common Stock to be issued pursuant to the Merger Agreement on the NYSE American.
In addition, the obligation of each party to consummate the Merger is also
conditioned on the other party's representations and warranties being true and
correct (subject to certain materiality qualifications) and the other party
having performed in all material respects its obligations under the Merger
Agreement. Each party's obligations to consummate the Merger are further subject
to the absence of a material adverse effect with respect to the other party
since the date of the Merger Agreement.
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The Merger Agreement contains certain termination rights for each party,
including that either party may terminate the Merger Agreement if the Merger has
not been consummated by December 31, 2020, subject to extension under specified
circumstances. The Merger Agreement also provides that, upon the termination of
the Merger Agreement under specified circumstances, NTN Buzztime or Brooklyn
will be required to pay the other party a $750,000 termination fee or reimburse
the other party for up to $250,000 of its third party expenses.
The Merger Agreement requires that NTN Buzztime not solicit proposals relating
to alternative transactions and not enter into discussions concerning or provide
confidential information in connection with alternative transactions (with an
exception related to a sale of substantially all of the assets of NTN Buzztime,
the terms of any definitive agreement for which are subject to the approval of
Brooklyn, not to be unreasonably withheld, conditioned or delayed). These
restrictions are subject to a "fiduciary out" provision that allows NTN Buzztime
under certain limited circumstances to provide 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 Merger, which may result in payment of the termination fee described above.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by the full text of the Merger
Agreement, a copy of which is filed as Exhibit 2.1 to this report and is
incorporated by reference herein. The Merger Agreement has been attached to
provide investors with information regarding its terms. It is not intended to
provide any other factual information about NTN Buzztime, Merger Sub, or
Brooklyn or otherwise to modify or supplement any factual disclosures about NTN
Buzztime in its reports filed with the SEC. The representations, warranties and
covenants of each party in the Merger Agreement have been made only for the
purposes of, and were and are solely for the benefit of the parties to, the
. . .
Item 3.03 Material Modification to Rights of Security Holders.
See Item 1.01. Under the Merger Agreement, NTN Buzztime's ability to pay
dividends prior to the closing of the Merger is restricted.
Item 8.01 Other Events.
NTN Buzztime is 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 to be in a position to focus exclusively on Brooklyn's
business following completion of the Merger. NTN Buzztime currently is in
discussions with multiple parties who are interested in purchasing such assets.
No definitive agreement has been entered into and there can be no assurance that
any definitive agreement will be reached, or even if such an agreement is
reached, that such sale will be consummated before the closing of the Merger, or
at all.
* * * * * * * * * * * * * *
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, NTN Buzztime 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 Buzztime, which joint proxy
statement/prospectus will be mailed or otherwise disseminated to NTN Buzztime
stockholders and the beneficial holders of Brooklyn's Class A membership units
if and when it becomes available. INVESTORS AND SECURITY HOLDERS OF NTN BUZZTIME
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 BUZZTIME, BROOKLYN, THE PROPOSED MERGER, AND RELATED
MATTERS. The joint proxy statement/prospectus and other relevant materials (when
they become available) and any other documents filed by NTN Buzztime 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 Buzztime 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 and the other relevant materials when they become available before
making any voting or investment decision with respect to the proposed merger.
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Participants in the Solicitation
NTN Buzztime and its directors, executive officers and certain other members of
management and employees and Brooklyn and its managers and officers may, under
SEC rules, be deemed to be participants in the solicitation of proxies from the
stockholders of NTN Buzztime with respect to the proposed merger and related
matters. Information about the directors and executive officers of NTN Buzztime,
including their ownership of shares of Common Stock is set forth in NTN
Buzztime'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
Buzztime stockholders, including a description of their interests in the
proposed merger, by security holdings or otherwise, will be included in the
joint proxy statement/prospectus 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 Buzztime. The managers and officers of Brooklyn do not currently hold any
interests, by security holdings or otherwise, in NTN Buzztime.
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 Securities
Exchange Act of 1934, as amended, 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: the structure and completion of
the proposed merger, the combined company's listing on the NYSE American,
expectations regarding ownership, board of directors and management of the
combined company and the potential sale to a third party of substantially all of
the assets relating to NTN Buzztime's current business. 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
are not satisfied, including the failure of NTN Buzztime and Brooklyn to timely
obtain the requisite stockholder and member approvals for the merger and related
matters and to meet the net cash and capitalization requirements, as applicable;
(ii) uncertainties as to the timing of the consummation of the proposed merger
and the ability of each party to consummate the proposed merger; (iii) risks
related to each company's ability to manage its operating expenses and its
expenses associated with the proposed merger pending closing; (iv) the risk
that, as a result of adjustments to the exchange ratio, NTN Buzztime
stockholders and Brooklyn members could own more or less of the combined company
than is currently anticipated; (v) NTN Buzztime'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 Buzztime, Brooklyn and the combined
company and the ability of NTN Buzztime and Brooklyn to consummate the merger;
(vii) NTN Buzztime's ability to sell substantially all of the assets relating to
its current business; (viii) NTN Buzztime's ability to continue to operate as a
going concern if the proposed merger is not consummated in a timely manner, or
at all; (ix) the combined company's need for, and the availability of,
substantial capital in the future to fund its operations and research and
development activities; (x) the combined company's ability to successfully
progress research and development efforts, including its manufacturing
development efforts, and to create effective, commercially-viable products; (xi)
the success of the combined company'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; (xii) the outcome of any
legal proceedings that may be instituted against NTN Buzztime, Brooklyn or
others related to the merger agreement or any asset purchase agreement that NTN
Buzztime may enter into; the occurrence of any event, change or other
circumstance or condition that could give rise to the termination of the merger
agreement; (xiii) potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the proposed
merger; and (xiv) those risks and uncertainties discussed in NTN Buzztime's
reports filed with the SEC, including its most recent Annual Report on Form
10-K, 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 Buzztime 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. Neither NTN Buzztime nor Brooklyn
can 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 Buzztime and Brooklyn do 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.
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Item 9.01 Financial Statements and Exhibits
(d)
Exhibit No. Description
2.1 Agreement and Plan of Merger and Reorganization, dated August 12,
2020, among NTN Buzztime, Inc., BIT Merger Sub, Inc. and Brooklyn
Immunotherapeutics LLC*
10.1 Form of Support Agreement among NTN Buzztime, Inc., Brooklyn
Immunotherapeutics LLC and the officers and directors of NTN
Buzztime, Inc. (solely in their capacity as actual or potential
stockholders of NTN Buzztime, Inc.)
10.2 Form of Support Agreement among NTN Buzztime, Inc., Brooklyn
Immunotherapeutics LLC and certain beneficial holders of Class A
membership interests of Brooklyn Immunotherapeutics LLC, including
its officers and managers (solely in their capacity as actual or
potential beneficial holders of such interests)
*Certain schedules and exhibits have been omitted pursuant to 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.
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