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EXHIBIT 10.5
[INTERACTIVE MARKETING, INC. LETTERHEAD]
TO: XXXX XXXXXX, NTN COMMUNICATIONS, INC.
FROM: XXXXXX XXXXXX, XXXX X. XXXXXX
SUBJECT: ENGAGEMENT AGREEMENT
DATE: JUNE 16, 1999
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Thank for your interest in retaining Interactive Marketing Inc. (hereafter IMI)
to provide strategic and tactical Marketing services to NTN Communications,
Inc., (hereinafter, "NTN"). The following represents the terms of our
engagement:
1. Term:
a) NTN will retain Interactive Marketing Inc., to provide the
services as set forth in paragraph 3 below for a term of one (1)
year, commencing on May 15, 1999 (the "Effective Date"). However,
it is understood and agreed by the parties that both IMI and NTN
shall have the right to cancel this Agreement at the end of the
first One Hundred and Eighty (180) days of such term (the
"Term"), upon Five (5) days written notice.
2. Status of Personnel: The parties acknowledge that Interactive
Marketing Inc., (hereafter IMI) will be providing services hereunder
as a non-exclusive independent contractor. IMI shall provide the
services of Xxxxxx Xxxxxx and Xxxx Xxxxxx and such other of its
management and employees as it deems appropriate to provide the
contracted services to NTN hereunder. All such persons will be under
the specific direction and control of IMI and IMI is responsible for
their compensation and any and all other obligations of an employer or
general contractor, including but not limited to withholdings for
taxes and responsibility for any or all employee benefits. Nothing in
this agreement shall be construed to make such persons employees of
NTN for any purpose.
3. Services: IMI shall, during the first One Hundred and Eighty (180)
days of the term provide the following services under this agreement:
a) Create an overall "Interactive Strategy" for the company, which
will contain strategic and tactical business recommendations for
integrating interactive media and technologies in the company's
overall marketing mix and business development efforts. To this
end, IMI shall create an independent review of the business
operations and opportunities of NTN and prepare a "White Paper"
report presenting its conclusions as
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to the status and potential of the business. This White Paper
will address, among other issues:
o A Competitive Analysis
o A Valuation of the NTN Content Assets
o Alternative Strategies to Exploit that Asset Value
b) This White Paper will include the following deliverables and meet the
following timetables:
i) Within 45 days of commencement of our engagement, IMI will
deliver an Initial Business Review and Assessment of the
company's competitive landscape, business objectives, core
capabilities, assets, products and services, as well as its
relationships and available media platforms to be leveraged
under an integrated approach to marketing and business
development, and meet with NTN management for an Initial
Review and Assessment of our research and observations.
ii) Within 75 days of the commencement of our engagement, IMI
will present an Initial Draft and Outline of its Go to Market
plan for creating multiple revenue streams from sources such
as advertising, e-commerce and subscriptions, etc. relating
to the exploitation of NTN content, player following, and
audience reach. IMI will meet with NTN to review, prioritize
and finalize the strategies for inclusion in an Interactive
Go To Market Plan.
iii) Within 150 days following the commencement of our engagement,
IMI will deliver a detailed Interactive Go To Market Plan.
outlining strategies to create multiple revenues streams from
e-advertising, e-commerce, e-subscriptions, that leverage
interactive media and technologies as a platform to extend
the company's current capabilities, assets, products and
services. These strategies will include but not necessarily
be limited to its content, current player universe and its
audience reach and will contain our strategic and tactical
recommendations as to how NTN can maximize its consumer and
trade marketing effectiveness and generate new revenue
opportunities by leveraging its core assets and capabilities.
iv) Upon delivery of the Go To Market Plan and throughout the
term of our engagement, IMI will provide close consultation
to NTN management to oversee the implementation and execution
of the strategies and tactical approaches contained in the
Plan, and to develop additional deliverables.
v) During the course of our engagement, IMI will integrate NTN
into its deal flow and strategic contacts to extend NTN's
business model and create additional opportunities for NTN,
and meet periodically with management to insure that IMI and
Management have the same understanding of Company goals and
objectives.
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4. Compensation: It is understood and agreed by and between the parties
that in exchange for the mutual promises and undertakings contained herein
that IMI shall be compensated as follows:
a) IMI will receive a base monthly retainer fee of Seventeen
Thousand Five Hundred Dollars ($17,500.00) due and payable on
the Effective Date and thereafter on the first day of each
subsequent full month through the end of the first year of
the Term.
b) b) NTN shall, in its discretion, consider designating IMI as
an exclusive or non-exclusive Independent Sales Agent for the
Internet Market.
c) IMI shall be granted options to purchase 300,000 shares in
NTN, at a per share price of equal to the Closing Market
Price of the shares of NTN on May 15, 1999, exercisable by
IMI for a minimum period of three years from the date such
shares were granted. All such options will contain standard
provisions providing for vesting on a change of control of
NTN. It is agreed that 300,000 shares will vest at the rate
of 50,000 shares per month commencing on the last day of each
of the first six months. In addition, after the initial five
months of the term, NTN and IMI will negotiate in good faith
a set of milestones related to overall revenue or
distribution goals of the products and services of NTN during
the remaining term of IMI's engagement. If these milestones
and goals are exceeded, IMI will be granted options to
purchase up to 300,000 additional shares of NTN at the Market
Price of NTN shares on the date that the parties agree to the
milestones. Upon exercise, IMI shall have full "piggyback"
registration rights with respect to the shares represented by
said Options. For purposes of this section "Market Price"
shall mean the closing price of NTN as reflected on the
American Stock Exchange for the trading day corresponding to
the applicable event.
d) IMI shall be entitled to reimbursement of all reasonable,
necessary and pre-approved travel, entertainment and business
expenses incurred in furtherance of NTN business and pursuant
to this undertaking, upon submission of reasonable
documentation and receipts. NTN will designate an executive
to be available to make timely approval of requests by IMI to
incur reimbursable expenses on NTN's account. IMI will be
guided by NTN policy relating to business entertainment and
travel expenses, and will submit requests for reimbursement
on forms acceptable to NTN. Reimbursement will be made to IMI
not later than Thirty (30) days after submission of
documentation. However, it is understood and agreed that NTN
corporate policy notwithstanding, Air Travel of a duration of
more than Three (3) hours, undertaken at the request of NTN,
will be booked at the lowest competitive coach rate for a
non-stop flight, if such is available (i.e. IMI employees
will not be required to take a one-stop flight if it is more
expensive, as is NTN's policy). In addition, NTN will pay the
cost of upgrade coupons to allow IMI employees to move to the
next highest level of service, if possible.
e) In the event that during the terms of this Agreement NTN
sells equity securities to Xxxxx.xxx. or Xxxxx.xxx, NTN shall
pay to IMI upon the closing of such sale of equity
securities, a fee equal to 4% of the 1st million of the net
sales price of such securities, 3% of the second million, 2%
of the third million and 1% of any excess thereof.
5. Limitation of Liability: In the event of any breach of this Agreement
by either party, the limitation of any claim of loss by the
non-breaching party shall be no greater than the proven financial loss
sustained by the non-breaching party by virtue of such breach. In no
event
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shall either party be liable hereunder for incidental or consequential
damages for any breach of this Agreement.
6. Basis for Engagement: NTN acknowledges that IMI has been retained
because of its experience and knowledge in the field of Internet and
Interactive marketing, and that IMI will be providing its opinions and
consultations based on its accumulated knowledge and experience and
that of its principals and employees. NTN is free to accept or reject
any such advice, opinions and consultations offered, and to use,
modify or reject any such written materials prepared by IMI.
7. No Rights to Marks: Each party acknowledges that it is not being
granted or vested with any right or interest, ownership or otherwise,
in or to any of the other party's trademarks, trade- names, service
marks or logos by virtue of or pursuant to this Agreement.
8. Joint Ownership of Information: IMI and NTN shall jointly own any and
all general market data, developed from programs or initiatives
jointly conducted by IMI and NTN, but specifically not individual user
information or information relating to NTN customers, collected during
the Term, which shall remain the sole property of NTN.
9. Termination: In the event of any material breach of this Agreement by
a party, the other party may terminate this Agreement at any time upon
3 days notice to the other party if the breaching party fails to cure
such breach during such three day period.
10. Entire Agreement: This written Agreement constitutes the sole and only
agreement of the parties relating to the matters covered hereby. Any
prior or contemporaneous agreements, promises, negotiations or
representations not expressly set forth in the Agreement are of no
force or effect. This Agreement supercedes any and all existing
contracts and agreements by the parties with respect to the subject
matter covered herein. Any and all notices made or required hereunder
shall be delivered in writing to each party at their corporate
address, attention of their respective Chief Executive Officers.
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If this Agreement, consisting of Five (5) pages including this signature page,
accurately states the terms of our Agreement, please sign below where
indicated, and return to IMI together with the payment specified in section 5
a).
NTN Communications, Inc.
By /s/ XXXX XXXXXX Date 6/29/99
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Name and Title Xxxx Xxxxxx, CEO
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Interactive Marketing, Inc.
By /s/ XXXXXX XXXXXX Date 6/29/99
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Name and Title Xxxxxx Xxxxxx
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