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Exhibit 10.16
12/24/99
December 24, 1999
Xx. Xxxxx Xxxxxxx
President & CEO
Intelligent Information, Inc.
000 Xxxxxx Xxxxx, 0xx Xx.
Xxxxxxxx, XX 00000
Purchase of NBC TV Advertising Inventory
Dear Xx. Xxxxxxx:
This letter sets forth the agreement between the National Broadcasting
Company, Inc. ("NBC"), and Intelligent Information Incorporated. ("Advertiser")
with respect to NBC's agreement to provide Advertiser with the right to use
certain advertising inventory on NBC Television Network, NBC's owned and
operated television stations and on CNBC Cable Network and on any other mutually
agreed upon NBC television station or cable venture(collectively, "NBC TV") to
promote Advertiser and its wireless products and services only, subject to the
following terms and conditions:
1. Spots. (a) NBC shall provide Advertiser with the use of fifteen (15) and
thirty (30) second advertising spots (the "Spots") to be telecast on NBC TV on
the Dates, Days and Times mutually agreed by NBC and Advertiser; provided,
however, that in the event that no such agreement is reached with regard to the
number or value of Spots to be broadcast in any calendar quarter or year, NBC
may propose and implement a reasonable schedule for the broadcast of Spots in
accordance with the terms of Section 2(a) below and based upon Advertiser's
reasonable request for such schedule. An initial schedule for the first quarter
of 2000 shall be determined as soon as practicable following the date hereof.
All such Spots run by Advertiser shall be subject to NBC TV's standard terms and
conditions for such advertising which are described in the "Participating
Sponsorship Agreement" attached hereto as Exhibit A (the "Standard Terms") and
which are made a part of this Letter Agreement in their entirety; provided,
however, that in the case of a conflict between the terms of this Letter
Agreement and the terms of the Standard Terms, the terms of this Letter
Agreement shall govern. For purposes of the Standard Terms, Advertiser shall be
both the "Advertiser" and the "Agency" as such terms are used therein.
(b) The Spots shall promote Advertiser and its wireless products and
services only and may not advertise, promote or mention any other product,
service, television program, web site or third party whatsoever without the
prior written consent of NBC. In addition, with respect to the placement or
telecast of Advertiser's Spots in any particular Program, NBC may reject
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such placement or telecast if such placement or telecast would compete with or
violate the rights of any other advertiser, sponsor or supplier of such Program
or program category, as determined by NBC in its sole discretion and in good
faith; it being understood that NBC's aggregate commitments set forth in Section
2 below shall not be affected by any such rejection.
(c) On or before two weeks prior to the Advertiser's first scheduled
Spot, Advertiser shall deliver to NBC commercial material for the first of
Advertiser's Spots. Advertiser acknowledges that if it fails to deliver such
commercial material by such date, or such commercial material is rejected in
accordance with this Section 1, then NBC TV shall be deemed to have telecast
Advertiser's Spots for purposes hereof even if Advertiser's Spot is not actually
shown when the Program is telecast. If, after such date, Advertiser delivers any
new commercial material to NBC in compliance with this Section 1 and Advertiser
instructs NBC to use such new commercial material in lieu of the commercial
material previously delivered to NBC, then NBC will use reasonable commercial
efforts to telecast such new commercial material in the Spots as soon as
practicable after receipt of such commercial material but not later than 72
hours after receipt.
2. Value of Spots. NBC shall telecast Spots with a total spot value of
$2,500,000 (the "Total Spot Value") during the twenty-four (24) months
commencing on January 1, 2000 (the "Effective Date"). The value of each Spot for
purpose of this Agreement shall be calculated at 85% of the scatter market rate
in effect at the time such Spot is ordered. The parties agree that no agency
fees or other expenses may be deducted by Advertiser in any way in connection
with determining the number of shares of Series F Preferred Stock of Advertiser
to be paid to NBC pursuant to Section 3 hereof.
3. Payment for the Spots. (a) Advertiser shall deliver to NBC 631.25 shares of
the Series F Preferred Stock of Advertiser pursuant to the terms and conditions
of that certain Series F Preferred Stock Purchase Agreement dated as of the date
hereof between Advertiser and certain investors (the "Stock Purchase
Agreement").
(b) NBC shall provide Advertiser with a written report within 10
business days after the end of each calendar month after the Effective Date
during which Advertiser's Spots have been telecast and setting forth the
aggregate value of Advertiser's Spots telecast by NBC in the preceding month.
4. Representations and Warranties. NBC and Advertiser each represent and warrant
that this Letter Agreement has been duly authorized, executed and delivered by
such party and that this Letter Agreement constitutes the legal, valid and
binding obligations of such party, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
5. Termination. (a) Notwithstanding any other remedy available to NBC, in the
event that:
(i) NBC notifies Advertiser in writing (with specificity) that
Advertiser has
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materially breached this Letter Agreement and Advertiser has not cured
such alleged breach within thirty (30) days of its receipt of such
notice; or
(ii) upon the occurrence of a Change of Control (as
hereinafter defined); or
(iii) Advertiser admits in writing its inability to pay its
debts generally; makes a general assignment for the benefit of
creditors; has any proceeding instituted by or against it seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of Advertiser or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, or similar official for it or any substantial part
of its property; provided, in the case where such proceeding is
involuntarily instituted against Advertiser, such proceeding remains
undismissed after thirty (30) days,
then, in any such case, NBC shall have the right, but not the obligation, to
terminate this Letter Agreement, without prejudice to the rights of the parties
hereunder and, in the event of a termination after NBC's receipt of the Shares
pursuant to Section 3(a) hereof, NBC shall pay Advertiser a cash amount equal to
the difference, if positive, between the Total Spot Value and the value of the
Spots already telecast (or deemed telecast), as determined and calculated
pursuant to Sections 1 and 2 above. Notwithstanding the foregoing, the terms
contained in Sections 5, 6, 7 and 8 shall survive the termination hereof. Any
such termination right in connection with a Change of Control shall be
exercisable no later than the later to occur of (x) ten (10) business days prior
to the consummation of such Change of Control and (y) ten (10) business days
after receipt by NBC of notice (which notice shall identify the third party
having or acquiring Control over Advertiser, be in writing, explicitly state
that it is being delivered in accordance with this Section 5 and provide NBC
with such additional information as has been provided to the other stockholders
of Advertiser) from Advertiser of such Change of Control (which termination
shall become effective, at NBC's discretion, upon the consummation of such
Change of Control or following receipt of such notice from Advertiser). For
purposes of this Section 5, the following terms shall have the following
meanings:
"Change of Control" shall mean (A) any consolidation,
reorganization or merger of Advertiser with any third party, other than
a transaction resulting in the holders of the capital stock of
Advertiser (prior to such consolidation, reorganization or merger)
having Control over the surviving or resulting entity, (B) any third
party (other than NBC) having Control over Advertiser or (C) any sale,
transfer or other disposition by Advertiser of all or substantially all
of its assets to any third party (other than NBC); and
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of Advertiser, whether through ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
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(b) Notwithstanding any other remedy available to Advertiser, in the
event that:
(i) Advertiser notifies NBC in writing (with specificity) that NBC has
materially breached this Letter Agreement and NBC has not cured such alleged
breach within thirty (30) days of its receipt of such notice; or
(ii) NBC admits in writing its inability to pay its debts generally; makes a
general assignment for the benefit of creditors; has any proceeding instituted
by or against it seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of NBC or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or similar official
for it or any substantial part of its property; provided, in the case where such
proceeding is involuntarily instituted against NBC, such proceeding remains
undismissed after thirty (30) days,
then, in any such case, Advertiser shall have the right, but not the obligation,
to terminate this Letter Agreement, without prejudice to the rights of the
parties hereunder and, in the event of a termination after NBC's receipt of the
Shares pursuant to Section 3(a) hereof, require NBC to pay Advertiser a cash
amount equal to the difference, if positive, between the Total Spot Value and
the value of the Spots already telecast (or deemed telecast), as determined and
calculated pursuant to Sections 1 and 2 above. Notwithstanding the foregoing,
the terms contained in Sections 5, 6, 7 and 8 shall survive the termination
hereof.
6. Miscellaneous. This Letter Agreement, the Stock Purchase Agreement and the
exhibits and schedules hereto and thereto constitute the entire agreement and
understanding of the parties relating to the subject matter hereof and supersede
all prior and contemporaneous agreements, negotiations, and understandings
between the parties, both oral and written relating thereto. No waiver or
modification of any provision of this Letter Agreement shall be effective unless
in writing and signed by both parties. The terms of this Letter Agreement shall
apply to parties hereto and any of their successors or assigns; provided,
however, that this Letter Agreement may not be transferred or assigned by
Advertiser, including, without limitation, the right to receive Spots to be
telecast by NBC TV, without the prior written consent of NBC. This Letter
Agreement may be executed in counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
7. Governing Law and Jurisdiction. This Letter Agreement shall be governed by
and construed under the laws of the State of New York applicable to contracts
fully performed in New York, without regard to New York conflicts law. The
parties hereto irrevocably consent to and submit to the exclusive jurisdiction
of the federal and state courts located in the County of New York. The parties
hereto irrevocably waive any and all rights to trial by jury in any proceeding
arising out of or relating to this Agreement.
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8. Liability for Failure to Broadcast Spots. In the event that NBC does not
telecast Spots equal to the Total Spot Value during the twenty-four (24) months
after the Effective Date, then as liquidated damages and not a penalty, NBC
shall pay Advertiser in cash an amount equal to the difference, if positive,
between the Total Spot Value and the value of the Spots actually telecast, as
calculated pursuant to Section 2 above. Except for damages arising out of the
gross negligence of willful misconduct of either party hereto, no party shall be
liable to the other party or its affiliates, officers, directors, successors or
assigns for any incidental, consequential, special or punitive damages or lost
profits arising out of this Letter Agreement, whether liability is asserted in
contract or tort and irrespective of whether it has advised or been advised of
the possibility of any such loss or damage.
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below, and return one
original to me. This Letter Agreement shall be null and void if not signed
within two (2) days of the date set forth above.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
_______________________
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
ACCEPTED AND AGREED:
INTELLIGENT INFORMATION INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxx
______________________
Name: Xxxxxxx X. Xxxxxxx
Title: President Chief Executive Officer
[SIGNATURE PAGE TO INTELLIGENT INFORMATION ADVERTISING AGREEMENT]
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