EXHIBIT 10.5

NTN BUZZTIME, INC.

2004 PERFORMANCE INCENTIVE PLAN

ANNUAL DIRECTOR STOCK OPTION AGREEMENT

THIS ANNUAL DIRECTOR STOCK OPTION AGREEMENT (this “Option Agreement”) dated as
of [            ], 20[    ] by and between NTN BUZZTIME, INC., a Delaware
corporation (the “Corporation”), and [                    ] (the “Grantee”)
evidences the nonqualified stock option (the “Option”) granted by the
Corporation to the Grantee as to the number of shares of the Corporation’s
Common Stock as set forth below.

 

Number of Shares of Common Stock:1       20,000    Award Date:   
[                    ], 20[    ]    Exercise Price per Share:1    $   
[            ]    Expiration Date:1,2    [                    ], 20[    ]   

Vesting1,2 The Option shall vest and become exercisable as to one-twelfth of the
total number of shares of Common Stock subject to the Option on each of the last
day of each consecutive calendar month subsequent to the Award Date.

The Option is granted under the NTN Buzztime, Inc. 2004 Performance Incentive
Plan (the “Plan”) and subject to the Terms and Conditions of Annual Director
Stock Option (the “Terms”), both of which are attached to this Option Agreement
and incorporated herein by this reference. The Option has been granted to the
Grantee in addition to, and not in lieu of, any other form of compensation
otherwise payable or to be paid to the Grantee. Capitalized terms are defined in
the Plan if not defined herein. The parties agree to the terms of the Option set
forth herein. The Grantee acknowledges receipt of a copy of the Terms, the Plan
and the Prospectus for the Plan.

 

“GRANTEE”    

NTN BUZZTIME, INC.,

a Delaware corporation

 

    Signature     By:  

 

 

    Print Name:  

 

Print Name           Title:  

 

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Subject to adjustment under Section 7.1 of the Plan.

2

Subject to early termination under Section 4 of the Terms and Section 7.4 of the
Plan.

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TERMS AND CONDITIONS OF ANNUAL DIRECTOR STOCK OPTION

 

1. Vesting; Limits on Exercise; Incentive Stock Option Status.

The Option shall vest and become exercisable in percentage installments of the
aggregate number of shares subject to the Option as set forth on the cover page
of this Option Agreement. The Option may be exercised only to the extent the
Option is vested and exercisable.

 

  •  

Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Grantee has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or
earlier termination of the Option.

 

  •  

No Fractional Shares. Fractional share interests shall be disregarded, but may
be cumulated.

 

 

•

 

Minimum Exercise. No fewer than 1001 shares of Common Stock may be purchased at
any one time, unless the number purchased is the total number at the time
remaining exercisable under the Option.

 

  •  

Nonqualified Stock Option. The Option is a nonqualified stock option and is not,
and shall not be, an incentive stock option within the meaning of Section 422 of
the Code.

 

2. Service; Continuance of Service Required; No Service Commitment.

The Grantee agrees to serve as a member of the Board in accordance with the
Corporation’s Certificate of Incorporation, bylaws, and applicable law. The
vesting schedule requires continued service through each applicable vesting date
as a condition to the vesting of the applicable installment of the Option and
the rights and benefits under this Option Agreement. Service for only a portion
of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of services as provided in
Section 4 below or under the Plan. Nothing contained in this Option Agreement or
the Plan constitutes a continued service commitment by the Corporation or
interferes with the right of the Corporation to increase or decrease the
compensation of the Grantee from the rate in existence at any time.

 

3. Method of Exercise of Option.

The Option shall be exercisable by the delivery to the Secretary of the
Corporation (or such other person as the Administrator may require pursuant to
such administrative exercise procedures as the Administrator may implement from
time to time) of:

 

  •  

a written notice stating the number of shares of Common Stock to be purchased
pursuant to the Option or by the completion of such other administrative
exercise procedures as the Administrator may require from time to time,

 

  •  

payment in full for the Exercise Price of the shares to be purchased in cash or
by check or electronic funds transfer to the Corporation;

 

  •  

any written statements or agreements required pursuant to Section 8.1 of the
Plan; and

 

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  •  

satisfaction of the tax withholding provisions of Section 8.5 of the Plan.

The Administrator also may, but is not required to, authorize a non-cash payment
alternative by notice and third party payment in such manner as may be
authorized by the Administrator.

 

4. Early Termination of Option.

4.1 Possible Termination of Option upon Change in Control. The Option is subject
to termination in connection with a Change in Control Event or certain similar
reorganization events as provided in Section 7.4 of the Plan.

4.2 Termination of Option upon a Termination of Grantee’s Services. Subject to
earlier termination on the Expiration Date of the Option or pursuant to
Section 4.1 above, if the Grantee ceases to be a member of the Board (regardless
of the reason), the following rules shall apply (the last day that the Grantee
is a member of the Board is, except as otherwise provided below, referred to as
the Grantee’s “Severance Date”):

 

  •  

other than as expressly provided below in this Section 4.2, (a) the Grantee will
have until the date that is three hundred sixty-five (365) days after his or her
Severance Date to exercise the Option (or portion thereof) to the extent that it
was vested as of the Severance Date, (b) the Option, to the extent not vested on
the Severance Date, shall terminate on the Severance Date, and (c) the Option,
to the extent exercisable for the three hundred sixty-five (365) day period
following the Severance Date and not exercised during such period, shall
terminate at the close of business on the last day of the three hundred
sixty-five (365) day period;

 

  •  

if the Grantee ceases to be a member of the Board due to the Grantee’s death or
Disability (as defined below), (a) the Grantee (or his beneficiary or personal
representative, as the case may be) will have until the date that is three
hundred sixty-five (365) days after the Grantee’s Severance Date to exercise the
Option (or portion thereof) to the extent that it was vested as of the Severance
Date, (b) the Administrator or the Board may, in its sole discretion, provide
that all or any portion of the Option, to the extent not otherwise vested on the
Severance Date, shall automatically become fully vested as of the Severance
Date, and (c) the Option, to the extent exercisable for the three hundred
sixty-five (365) day period following the Severance Date and not exercised
during such period, shall terminate at the close of business on the last day of
the three hundred sixty-five (365) day period.

For purposes of the Option, “Disability” means a permanent disability (within
the meaning of Section 22(e)(3) of the Code or as otherwise determined by the
Administrator).

Notwithstanding the foregoing, if the Grantee ceases to be a member of the Board
(regardless of the reason) but, immediately thereafter, is employed by the
Corporation or one of its Subsidiaries, the Grantee’s Severance Date shall not
be the date the Grantee ceases to be a member of the Board but instead shall be
the last day that the Grantee is either or both (1) a member of the Board and/or
(2) employed by the Corporation or a Subsidiary.

 

5. Non-Transferability.

The Option and any other rights of the Grantee under this Option Agreement or
the Plan are nontransferable and exercisable only by the Grantee, except as set
forth in Section 5.7 of the Plan.

 

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6. Notices.

Any notice to be given under the terms of this Option Agreement shall be in
writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Grantee at the address last reflected on
the Corporation’s accounting records, or at such other address as either party
may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government. Any such notice shall be given only
when received, but if the Grantee is no longer a member of the Board, shall be
deemed to have been duly given five (5) business days after the date mailed in
accordance with the foregoing provisions of this Section 6.

 

7. Plan.

The Option and all rights of the Grantee under this Option Agreement are subject
to, and the Grantee agrees to be bound by, all of the terms and conditions of
the Plan. In the event of a conflict or inconsistency between the terms and
conditions of this Option Agreement and of the Plan, the terms and conditions of
the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan
and this Option Agreement (including these Terms). The Grantee acknowledges
having read and understanding the Plan, the Prospectus for the Plan, and this
Option Agreement. Unless otherwise expressly provided in other sections of this
Option Agreement, provisions of the Plan that confer discretionary authority on
the Board or the Administrator do not and shall not be deemed to create any
rights in the Grantee unless such rights are expressly set forth herein or are
otherwise in the sole discretion of the Board or the Administrator so conferred
by appropriate action of the Board or the Administrator under the Plan after the
date hereof.

 

8. Entire Agreement.

This Option Agreement (including these Terms) and the Plan, together, constitute
the entire agreement of the Corporation and the Grantee and supersede all prior
understandings and agreements, written or oral, of the parties hereto with
respect to the subject matter hereof. The Plan and this Option Agreement may be
amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing
and signed by the Corporation. The Corporation may, however, unilaterally waive
any provision hereof in writing to the extent such waiver does not adversely
affect the interests of the Grantee, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

 

9. Governing Law.

This Option Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to conflict of
law principles thereunder.

 

10. Effect of this Agreement.

Subject to the Corporation’s right to terminate the Option pursuant to
Section 7.4 of the Plan, this Option Agreement shall be assumed by, be binding
upon and inure to the benefit of any successor or successors to the Corporation.

 

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11. Counterparts.

This Option Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

12. Section Headings.

The section headings of this Option Agreement are for convenience of reference
only and shall not be deemed to alter or affect any provision hereof.

 

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