(..continued)
NTN COMMUNICATIONS, INC.
5966 La Place Court
Carlsbad, California 92008
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 2, 2003
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the "Annual
Meeting") of NTN Communications, Inc. (the "Company") will be held at the
Company's corporate headquarters located at 5966 La Place Court, Carlsbad,
California 92008, at 10:00 a.m. local time, on May 2, 2003, for the following
purposes, as more fully described in the attached Proxy Statement:
1. To elect three directors to hold office until the 2006 annual meeting
of stockholders and until their respective successors are duly elected
and qualified;
2. To vote upon a proposal to amend our Restated Certificate of
Incorporation to increase the authorized number of shares of the
Company's capital stock;
3. To ratify the appointment of KPMG LLP as our independent accountants
for the fiscal year ending December 31, 2003; and
4. To consider and act upon such other matters as may properly come
before the Annual Meeting and any adjournments thereof.
The Board of Directors fixed the close of business on March 4, 2003 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting or at any adjournment thereof.
You are cordially invited to attend the Annual Meeting in person. In order
to ensure your representation at the meeting, however, please promptly complete,
date, sign, and return the enclosed proxy in the accompanying envelope. In
addition to voting by mail, you may vote by telephone or via the Internet. You
may vote via the Internet at www.proxyvote.com. Use the Internet to transmit
your voting instructions and for electronic delivery of information up until
11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in
hand when you access the web site. You will be prompted to enter your control
number to obtain your records and to create an electronic voting instruction
form. You may vote by telephone by calling (800) 776-9437. Use any touch-tone
telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time
the day before the meeting date. Have your proxy card in hand when you call. You
will be prompted to enter your control number and then follow the simple
instructions provided. You do not need to return your proxy by mail if you have
voted by telephone or via the Internet.
The prompt return of your proxy will help to save expenses incurred in
further communication. Your proxy can be revoked as described in the Proxy
Statement and will not affect your right to vote in person should you decide to
attend the Annual Meeting.
Sincerely,
James B. Frakes
Chief Financial Officer
and Secretary
Carlsbad, California
April __, 2003
NTN COMMUNICATIONS, INC.
5966 La Place Court
Carlsbad, California 92008
PROXY STATEMENT
Annual Meeting to be held May 2, 2003
SOLICITATION AND VOTING
General
The enclosed proxy is being solicited on behalf of the Board of Directors
of NTN Communications, Inc. ("NTN") for use at the annual meeting of
stockholders to be held at NTN's corporate headquarters located at 5966 La Place
Court, Carlsbad, California 92008, at 10:00 a.m., local time, on May 2, 2003,
and at any adjournment or postponement thereof (the "Annual Meeting"), for
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. We are first mailing this Proxy Statement, together with the
accompanying proxy solicitation materials, to stockholders, and posting on our
corporate website at www.ntn.com, on or about April__, 2003.
Voting Securities; Record Date
We have one class of voting stock outstanding, designated common stock,
$.005 par value ("Common Stock"). Each share of our Common Stock is entitled to
one vote for each director to be elected and for each other matter to be voted
on at the Annual Meeting. Only holders of record of Common Stock at the close of
business on March 4, 2003 are entitled to notice of and to vote at the Annual
Meeting. There were 43,040,681 shares of Common Stock outstanding as of the
record date. The presence, in person or by proxy, at the Annual Meeting, of
stockholders entitled to cast at least a majority of the votes entitled to be
cast by all stockholders will constitute a quorum for the transaction of
business at the Annual Meeting. For purposes of determining a quorum, shares
held by brokers or nominees will be treated as present even if the broker or
nominee does not have discretionary power to vote on a particular matter or if
instructions were never received from the beneficial owner. These shares are
called "broker non-votes." Abstentions will be counted as present for quorum
purposes and for the purpose of determining the outcome of any matter submitted
to the stockholders for a vote. However, abstentions do not constitute a vote
"for" or "against" any matter and will be disregarded in the calculation of the
plurality. The inspectors of election appointed for the Annual Meeting will
tabulate all votes including separate tabulation of the affirmative and negative
votes, abstentions and broker non-votes.
The proxy holders will vote all shares of Common Stock represented by a
properly completed proxy received in time for the Annual Meeting as directed in
the proxy. If no direction is given in the proxy, it will be voted "FOR"
Proposal 1, the election as directors of the nominees named in this proxy
statement, "FOR" Proposal 2, amendment to our Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock, and
"FOR" Proposal 3, ratification of the appointment of KPMG LLP as our independent
accountants for the fiscal year ending December 31, 2003. Broker non-votes will
have the same effect as negative votes for Proposal 2, but will not affect the
outcome of Proposals 1 and 3. With respect to any other item of business that
may come before the Annual Meeting, the proxy holders will vote the proxy in
accordance with their best judgment.
Revocability of Proxies
You may revoke a proxy at any time before it has been exercised by giving
written notice of revocation to our Secretary, by executing and delivering to
the Secretary a proxy dated as of a later date than the accompanying proxy, or
by attending the Annual Meeting and voting in person. If, however, your shares
of record are held by a broker, bank or other nominee and you wish to vote in
person at the Annual Meeting, you must obtain from that record holder a proxy
issued in your name. Attendance at the Annual Meeting, by itself, will not serve
to revoke a proxy.
Solicitation
We will bear the cost of soliciting proxies. This proxy statement and the
accompanying proxy solicitation materials, in addition to being mailed directly
to stockholders, will be distributed through brokers, custodians and other
nominees to beneficial owners of shares of Common Stock. We may reimburse such
parties for their reasonable expenses in forwarding solicitation materials to
beneficial owners. Our directors, officers or regular employees may follow up
the mailing to stockholders by telephone, telegram or personal solicitations,
but no special or additional compensation will be paid to those directors,
officers or employees for doing so.
Stockholder Proposals for 2004 Annual Meeting
Stockholder proposals intended to be included in our proxy materials for
the 2003 annual meeting of stockholders must be received by December __, 2003.
Such proposals should be addressed to our Secretary.
With respect to any stockholder proposals to be presented at the 2004
annual meeting which are not included in the 2004 proxy materials, such proposal
shall be considered untimely, unless the proponent notifies us of such proposal
by not later than February __, 2004. Any proposal must comply with the federal
securities laws.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees for Election for Term Expiring in 2006
Our bylaws provide that the Board of Directors is to consist of not less
than five nor more than thirteen directors, with the exact number of directors
within such range to be specified by the Board. The Board of Directors currently
consists of eight members.
Our bylaws provide that the Board of Directors is to be classified into
three classes, as nearly equal in number as possible, with each class having a
three year term. Vacancies on the Board of Directors (including vacancies
created by an increase in the authorized number of directors) may be filled by
the Board of Directors. A director appointed by the Board of Directors to fill a
vacancy would serve for the remainder of the full term of the directors of the
class in which the vacancy occurs and until his or her successor is elected and
qualified.
Three directors are subject to election at the Annual Meeting. The Board of
Directors has selected the following nominees for election as directors of the
class of directors to be elected at the Annual Meeting. If elected, the
following nominees will hold office until the annual meeting of stockholders in
2006 and until their respective successors are duly elected and qualified.
Gary H. Arlen, 58, was appointed as a Director in August 1999 and his
current term expires in 2003. Since 1980, he has been president of Arlen
Communications, Inc., a research and consulting firm specializing in interactive
information, transactions, telecommunications and entertainment. Arlen
Communications provides research and analytical services to domestic and
international organizations in entertainment, media, telecommunications and
Internet industries. In 1981, Mr. Arlen, an interactive media analyst, founded
the group now known as the Internet Alliance, an industry group representing the
interest of online content and service suppliers. Mr. Arlen is a member of the
Academy of Digital TV Pioneers.
Vincent A. Carrino, 47, was appointed as a Director in September 1999 and
his current term expires in 2003. Mr. Carrino is founder and president of
Brookhaven Capital Management, LLC, a private investment firm focusing on
technology companies, established by him in 1985. He also currently serves as
executive vice president and director of investments for Fidelity National
Financial, a title insurance and real estate services company. Prior to
establishing Brookhaven Capital Management, LLC, Mr. Carrino was an analyst with
Alliance Capital Management and was an investment banker with CitiBank in New
York.
Michael Fleming, 51, was appointed a Director in November 2001 and his
current term expires in 2003. Since May 2002, he has also served as Chairman of
the Board of our Buzztime Entertainment, Inc. subsidiary. Mr. Fleming is
currently chairman and Chief Executive Officer of the Fleming Media Group,
advising a broad range of content and technology companies on interactive
television, broadband, wireless and other convergent technology opportunities.
He is the founder and recent past-President of Game Show Network, a satellite
delivered television programming service dedicated to the world of games and
game play. Mr. Fleming has held senior executive positions at Playboy
Entertainment Group, ESPN, Turner Broadcasting and Warner Amex Satellite
Entertainment Company. He was inducted into the Cable Pioneers in 1999.
The following biographical information is furnished with respect to our
other current directors:
Directors Whose Term Expires in 2004
Robert M. Bennett, 74, has been a Director since August 1996 and his
current term expires in 2004. Since 1989, Mr. Bennett has been chairman of the
board of Bennett Productions, Inc., a production company with experience in
virtually all areas of production including syndicated sports and specialty
programming, music videos, commercial productions, home video, corporate
communications and feature films. Mr. Bennett was president of Metromedia
Broadcasting from 1982 until 1986. His career in broadcasting began at KTTV,
Metromedia's broadcast division. In 1972, Mr. Bennett joined Boston
Broadcasters, Inc. (BBI), serving as president and director from 1979 until
1982. In 1991, he acquired full ownership from his partners of Trans Atlantic
Entertainment, Inc., owner of film and video libraries. Mr. Bennett was named to
The Broadcasting and Cable Hall of Fame on November 7, 1994.
Robert B. Clasen, 58, has been a Director since November 2001 and his
current term expires in 2004. For most of the past ten years, Mr. Clasen has
been President and CEO of Clasen Associates, an advisor to a broad range of
technology and service companies who operate in the broadband, wireless and
satellite sectors. In this capacity he often has served as an interim executive.
In January 2002, he was appointed Acting Chairman and Chief Executive Officer of
Inetcam, Inc., a privately held international streaming media management
software company that develops and globally distributes high-performance
multimedia webcasting solutions where he served for five months. Since
September, 2002, Mr. Clasen has served as Interim Chief Strategy Officer and
director for Path 1 Network Technologies (PNWK), a publicly traded provider of
broadcast quality video over packet-based networks. He also serves as Chairman
for Broadband Innovations and Lightwave Solutions, two San Diego companies
providing components to the cable television industry. From 1999 until June
2001, Mr. Clasen served as Chairman and Chief Executive Officer of ICTV, an
interactive/internet television provider. From June 2001 until December 2001,
Mr. Clasen remained as Chairman of the board at ICTV and, since December 2001,
he has continued to serve as a director for ICTV. During 1997, Mr. Clasen served
as President and Chief Executive Officer of ComStream Corporation, an
international provider of digital transmission solutions for voice, data,
imaging, audio and video applications during the sale of the Company. Prior to
1997, Mr. Clasen held positions as President of each of Comcast International
Holdings, the international division of Comcast Cable Communications, and
Comcast Cable Communications, one of the country's five largest cable television
companies.
Esther L. Rodriguez, 61, has been a Director since September 1997 and her
current term expires in 2004. She served in various executive capacities since
joining General Instrument (now Motorola's Broadband Communications Division)
from 1987 until her retirement in November 1996. As vice president of worldwide
business development for General Instrument, Ms. Rodriguez was instrumental in
developing the first nationwide home satellite pay-per-view business in the
United States. She was also general manager and chief operating officer of
General Instrument's Satellite Video Center, a General Instrument-Cable Data
partnership, and was a founding member of the Partnership Council. After leaving
General Instrument, she founded and continues to serve as chief executive
officer of Rodriguez Consulting Group, a business development consulting firm.
Ms. Rodriguez has over 30 years of experience in the development and management
of consumer and commercial multi-national businesses, as well as entertainment
and educational networks and systems.
Directors Whose Term Expires in 2005
Barry Bergsman, 64, has been a Director since August 1998 and his current
term expires in 2005. He is president of Baron Enterprises, Inc., a privately
owned consulting company established in 1965. As president of Intertel
Communications, Inc., from 1985 to 1998, Mr. Bergsman pioneered the use of the
telephone and interactive technology for promotion, entertainment and
information. Prior to 1985, Mr. Bergsman was engaged in television production
and syndication and was an executive with CBS. He currently serves as a director
and member of the management team of Photogenesis, Inc., a private medical
device and biotechnology company.
Stanley B. Kinsey, 49, has served as Chairman and Chief Executive Officer
of NTN since October 1998. Mr. Kinsey was appointed as a Director in November
1997 and his current term expires in 2005. From 1980 to 1985, Mr. Kinsey was a
senior executive with the Walt Disney Company. In 1985, Mr. Kinsey left his
position as senior vice president of operations and new technologies for The
Walt Disney Studio to co-found IWERKS Entertainment, a high-technology
entertainment company. Mr. Kinsey was chairman and chief executive officer at
IWERKS from inception until 1995 when he resigned to spend more time with his
family. Mr. Kinsey began his career with Andersen Consulting (now Accenture).
Meetings and Committees
Our business affairs are managed by and under the direction of the Board of
Directors. During the fiscal year ended December 31, 2002, the Board of
Directors met on eight occasions. During 2002, each director attended at least
75% of the meetings of the Board of Directors and of each Committee of the Board
of Directors on which he or she served.
Audit Committee
The role of the Audit Committee of the Board of Directors is to assist the
Board in its oversight of our financial reporting process. The primary functions
of the Audit Committee are to periodically review our accounting and financial
reporting and control policies and procedures, to recommend to the Board of
Directors the firm of certified public accountants to be retained as our
independent auditors, and to review our policies and procedures relating to
business conduct and conflicts of interest. The Audit Committee is currently
comprised of three non-employee directors: Mr. Bennett, Mr. Bergsman and Ms.
Rodriquez. Mr. Bergsman does not meet the requirements for independence under
the Sarbanes-Oxley Act of 2002. The Audit Committee intends to appoint a
Chairman as well as an independent member to replace Mr. Bergsman. Mr. Bennett
and Ms. Rodriguez are independent under the rules of the American Stock Exchange
and the Sarbanes-Oxley Act of 2002. The Audit Committee met on four occasions in
2002.
Compensation Committee
The primary functions of the Compensation Committee, which consists of
non-employee directors, are to review and advise the Board of Directors on
salaries, bonuses and awards of stock options to our employees and other
compensation matters. The Compensation Committee consists of two non-employee
directors: Mr. Arlen and Mr. Bergsman. The Compensation Committee met on six
occasions in 2002.
Board Nominations
The Board of Directors in its entirety acts upon matters that would
otherwise be the responsibility of a nominating committee.
Director Compensation
During 2002, directors were entitled to receive cash compensation of $2,400
per month for their services as directors. Further, directors who serve on
either the audit or compensation committees or the board of directors of
Buzztime Entertainment, Inc. were entitled to receive an additional $3,000
annually. Messrs. Bennett and Carrino have elected to receive shares of Common
Stock in lieu of the cash component of director compensation. Directors are also
eligible for the grant of options to purchase Common Stock from time to time for
services in their capacity as directors. Mr. Kinsey has waived compensation for
his service as a director.
Upon the date of commencement of a director's term of service, we grant to
each director options to purchase 20,000 shares of our Common Stock. These
options are priced at the closing market price of the Common Stock on the date
of grant. As of the date of grant, 10,000 options are fully vested and
exercisable; thereafter, the remaining 10,000 options vest and become
exercisable in equal installments each month immediately subsequent to the date
of grant and up to the date of the next annual meeting of shareholders. Further,
after the initial year of a director's term of service, options to purchase an
additional 20,000 shares of Common Stock shall be granted each year on the date
of our annual meeting of shareholders during the remainder of the term of
service. The additional options shall be priced at the closing market price of
the Common Stock on the date of grant and shall vest and become exercisable as
to 1/12 of the shares each month following the date of grant, subject to the
director's continuing service. A director who is re-elected for an additional
term of service will be granted options to purchase 20,000 shares of Common
Stock, priced at the closing market price of the Common Stock on the date of our
annual meeting of shareholders, subject to monthly vesting and continued
service. Finally, all options granted to directors as compensation for service
on the Board of Directors shall expire on the earlier of ten years from the date
of grant or two years from the date the director ceases to serve on the Board of
Directors. The options provide for immediate vesting in full upon the occurrence
of a change of control event.
Required Vote
Nominees receiving the highest number of affirmative votes cast at the
Annual Meeting, up to the number of directors to be elected, will be elected as
directors. Proxies may not be voted for a greater number of persons than the
number of nominees named herein.
The nominees have indicated a willingness to serve as directors. If any of
them should decline or be unable to act as a director, however, the proxy
holders will vote for the election of another person as the Board of Directors
recommends.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED. PROXIES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES NAMED IF NO
DIRECTION IS GIVEN IN THE PROXIES.
PROPOSAL 2
AMENDMENT TO OUR RESTATED CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER
OF SHARES OF AUTHORIZED CAPITAL STOCK
The Board of Directors believes the current capital structure does not
provide sufficient flexibility for our potential future needs. Therefore, the
Board has unanimously approved an amendment to our Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
70,000,000 to 84,000,000 in the following form.
RESOLVED, that Article IV of the Restated Certificate of
Incorporation of NTN Communications, Inc. be, and it hereby is,
amended and restated in part to read as follows:
ARTICLE IV
The total number of shares of stock which the corporation shall
have authority to issue is 94,000,000 shares, of which 84,000,000
shares shall be Common Stock, par value $.005 per share, and
10,000,000 shall be Preferred Stock, par value $.005 per share.
The Board of Directors recommends such amendment for adoption. If the
amendment is adopted, it will become effective upon filing of a Certificate of
Amendment to our Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware. At March 8, 2003, approximately 43,041,000
shares were issued and outstanding, 11,965,000 shares were subject to
outstanding options, are available for future issuance pursuant to all of our
stock option plans, and are issuable upon exercise of warrants, leaving a
balance of approximately 14,994,000 authorized shares.
Purpose and Effect of the Amendment
The principal purpose of the proposed amendment is to authorize additional
shares of Common Stock which will be available in the event that the Board of
Directors determines that it is necessary or appropriate, among other things, to
raise additional capital through the sale of securities, acquire businesses or
assets for stock, issue convertible securities or equity incentive awards or
grant new awards under employee benefit plans.
If the proposed amendment is adopted, the aggregate number of authorized
shares of Common Stock will be increased from 70,000,000 shares to 84,000,000
shares. If the proposed amendment were adopted, based on the balance of
authorized shares as of March 8, 2003, 28,994,000 shares would be available for
future issuance by the Board of Directors without any stockholder approval,
except in accordance with the requirements of the American Stock Exchange or the
Delaware General Corporation Law. If the proposed amendment is not approved, the
number of authorized shares will remain the same and management will have
limited flexibility to meet our potential future needs.
There will be no change in the voting rights, liquidation rights,
preemptive rights or any other stockholder rights as a result of the proposed
amendment. The additional shares might be issued at such times and under such
circumstances as to have a dilutive effect on earnings per share and on the
equity ownership of the present holders of Common Stock.
Required Vote
Adoption of the amendment to our Restated Certificate of Incorporation to
authorize additional shares of Common Stock requires the approval of a majority
of the shares outstanding. Unless otherwise marked, all properly signed and
returned proxies will be voted FOR Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
SHARES OF AUTHORIZED CAPITAL STOCK. PROXIES WILL BE VOTED "FOR" THE AMENDMENT TO
OUR RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
AUTHORIZED CAPITAL STOCK IF NO DIRECTION IS GIVEN IN THE PROXIES.
PROPOSAL 3
RATIFICATION OF APPOINTMENT
OF KPMG LLP AS
INDEPENDENT ACCOUNTANTS
Our independent accounting firm for the fiscal year ended December 31, 2002
was KPMG LLP. KPMG LLP is a nationally recognized firm of independent
accountants and has audited our financial statements for the fiscal years ended
December 31, 1989 through December 31, 2002. Upon the recommendation of the
Audit Committee, the Board of Directors has reappointed KPMG LLP to continue as
our independent accountants for the year ending December 31, 2003. Our bylaws do
not require that the stockholders ratify the selection of KPMG LLP as our
independent accountants. However, we are submitting the selection of KPMG LLP to
the stockholders for ratification as a matter of good corporate practice. If the
stockholders do not ratify the selection, the Board of Directors and the Audit
Committee will reconsider whether or not to retain KPMG LLP. Even if the
selection is ratified, the Board of Directors and the Audit Committee in their
discretion may change the appointment at any time during the year if we
determine that such a change would be in the best interests of NTN and our
stockholders. Representatives of KPMG LLP will be present at the Annual Meeting.
They will be given an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from stockholders
present at the Annual Meeting.
Required Vote
A majority of the shares present at the meeting, either in person or by
proxy, must be voted in favor of ratifying the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP TO SERVE AS OUR INDEPENDENT ACCOUNTANTS. PROXIES WILL BE
VOTED "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP IF NO DIRECTION IS
GIVEN IN THE PROXIES.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive
officers:
Name Age(1) Position(s) Held
Stanley B. Kinsey.... 49 Chief Executive Officer and Chairman of the Board
Mark deGorter........ 45 President and Chief Operating Officer, NTN Network
V. Tyrone Lam........ 41 President and Chief Operating Officer, Buzztime
Entertainment, Inc.
James B. Frakes...... 46 Chief Financial Officer
----------
(1) As of March 8, 2003.
See "Board of Directors" for Mr. Kinsey's biography. The following
biographical information is furnished with respect to our other executive
officers:
Mark deGorter was appointed President and Chief Operating Officer of the
NTN Network in January 2001. Prior to that time, Mr. deGorter served as Vice
President of Marketing of our Buzztime subsidiary. Further, during the third
quarter of 2000, Mr. deGorter assumed the additional role of Vice President of
Marketing for the NTN Network. Prior to joining Buzztime in April 2000, Mr.
deGorter had served as Vice President of Marketing for MET-Rx USA, a sports
nutrition company, since July 1997. From June 1994 until July 1997, Mr. deGorter
was a senior manager with ProShot Golf, Inc., a global positioning
satellite-based communications and information system for the golf industry.
During his career, Mr. deGorter has held key management positions with Bally's
Total Fitness, a public company operating commercial fitness centers in North
America; L.A. Gear, a licensor of trademarks and trade names for use in
conjunction with apparel, accessory and consumer-related products; and J. Walter
Thompson/USA, a multi-media advertising agency with worldwide operations.
James B. Frakes was appointed Chief Financial Officer and Secretary of NTN
in April 2001. Prior to joining us, Mr. Frakes was chief financial officer and a
director of Play Co. Toys, a publicly held chain of retail toy stores, where he
had been since 1997. On March 28, 2001, Play Co. Toys and its majority-owned
subsidiary, Toys International.com, Inc., filed a Chapter 11 petition under
federal bankruptcy laws in the Southern District in the State of New York. From
June 1990 to March 1997, Mr. Frakes was chief financial officer and a director
of Urethane Technologies, Inc., a publicly held specialty chemical company, and
two of its subsidiaries, Polymer Development Laboratories, Inc. and BMC
Acquisition, Inc., chemical companies focused on the polyurethane segment of the
plastics industry. From 1985 to 1990, Mr. Frakes was a manager at Berkeley
International Capital Corporation, an investment banking firm specializing in
later stage venture capital and leveraged buyout transactions. Mr. Frakes serves
on the board of Shopnet.com, Inc., a designer and distributor of swimwear.
V. Tyrone Lam was appointed President of Buzztime Entertainment, Inc. in
December 1999, upon incorporation of the subsidiary. Prior to his current
appointment, Mr. Lam served as executive vice president of NTN, responsible for
sales, marketing and operations of the NTN Network. Before joining NTN in 1994,
he managed the development of iTV game and sports applications for EON
Corporation, formerly known as TV Answer, a pioneer in the interactive
television industry, from April 1992 until December 1994. Additionally, Mr. Lam
has served in sales and marketing management positions within the PC software
industry, is past chairman of the Interactive Services Association's Interactive
Television Council and is an author of articles on interactive television and
sales and marketing strategies.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows the compensation paid or
accrued as of each of the last three fiscal years to all individuals who served
as our chief executive officer during 2002 and the three other most highly
compensated executive officers who were serving as executive officers at the end
of 2002 whose salary and bonus exceeded $100,000 (collectively, the "Named
Executive Officers"):
Long-Term
Compensation
Annual Compensation Awards
Securities
Other Annual Underlying
Name and Principal Position Year Salary(1) Bonus Compensation Options
---------------------------- ---- ------------ ------------ --------------- ----------
Stanley B. Kinsey(2)........ 2002 $313,542 $24,000(3) -- 100,000
Chief Executive Officer 2001 305,386 -- -- 350,000
and Chairman of the Board 2000 295,057 -- -- --
V. Tyrone Lam............... 2002 $222,156 $15,000(3) -- 100,000
President and Chief Operating Officer 2001 223,077 -- -- --
Buzztime Entertainment, Inc. 2000 198,077 -- -- --
Mark deGorter(4)............ 2002 $222,538 $60,000(3) -- 250,000
President and Chief Operating 2001 199,038 25,382(5) -- 150,000
Officer, The NTN Network 2000 127,212 -- -- 250,000
James B. Frakes............. 2002 $159,000 $20,000(3) -- --
Chief Financial Officer 2001 111,539 10,000 -- 250,000
2000 -- -- -- --
----------
(1) Includes amounts, if any, deferred under NTN's 401(k) Plan.
(2) Mr. Kinsey waived compensation for serving as a director of NTN. Mr. Kinsey
received perquisites and personal benefits that did not exceed the lesser
of $50,000 or 10% of his annual salary and bonus.
(3) Represents bonus paid out pursuant to the 2002 performance-based bonus
program. All of Mr. Kinsey's 2002 bonus and $8,000 of Mr. Frakes' 2002
bonus have yet to be paid.
(4) Mr. deGorter joined NTN in April 2000.
(5) Represents a bonus paid to Mr. deGorter in March 2002 based upon exceeding
established targets for the NTN Network for the fiscal year ended 2001.
(6) Mr. Frakes joined NTN in April 2001.
Option Grants in Last Fiscal Year
The following table contains information concerning grants of stock options
during 2002 with respect to the Named Executive Officers:
Individual Grants
Number of % of Total
Shares Options
Underlying Granted to Grant Date
Options Employees in Exercise Expiration Present
Name Granted Fiscal Year Price Date Value(1)
----------------- ------- ------------ -------- ----------- ----------
Stanley B. Kinsey 100,000(2) 10% $0.75 10/06/12 $63,166
V. Tyrone Lam.... 100,000(3) 10% 0.79 02/18/12 67,739
Mark deGorter.... 250,000(4) 25% 0.79 02/18/12 169,349
James B. Frakes.. -- -- -- -- --
----------
(1) The present value of grant on the grant date was estimated using the Black
Scholes option-pricing model with the following weighted average
assumptions: dividend yield of 0%, risk-free interest rate of 3.92%,
expected volatility of 125.35%, and expected option life of 5 years.
(2) Represents options granted under the 1995 Stock Option Plan, which became
fully vested and exercisable as of December 31, 2002. The options were
granted to Mr. Kinsey in exchange for Mr. Kinsey's agreement to extend his
employment agreement to January 1, 2003, as it had expired and all
previously granted options had vested as of October 6, 2002.
(3) Represents options granted under the 1995 Stock Option Plan which become
exercisable as to 25% of the total shares on the first anniversary of the
date of grant and will become exercisable as to an additional 1/36 of the
remaining shares on the last day of each of the thirty-six (36) calendar
months immediately following the first anniversary of the grant date.
(4) Represents options granted pursuant to the Option Exchange Agreement, dated
as of February 19, 2002, entered into by and between Mr. deGorter and us
whereby Mr. deGorter surrendered 250,000 partially-vested options
previously granted in February 2000 in exchange for 250,000 options which
become exercisable as to 25% of the total shares on the first anniversary
of the date of grant and will become exercisable as to an additional 1/36
of the remaining shares on the last day of each of the thirty-six (36)
calendar months immediately following the first anniversary of the grant
date.
Fiscal Year-End Option Values
The following table contains information concerning stock options which
were unexercised at the end of 2002 with respect to the Named Executive
Officers. No stock options were exercised in 2002 by any Named Executive
Officer.
Number of Securities Value of Unexercised
Underlying Unexercised Options in-the-Money
at Fiscal Year-End Options at Fiscal Year-End(1)
---------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----------------- ------------- --------------- ------------- --------------
Stanley B. Kinsey 2,350,000 -- $767,500 --
V. Tyrone Lam.... 500,000 100,000 128,500 $41,000
Mark deGorter.... 71,875 328,125 50,313 157,188
James B. Frakes.. 98,958 151,042 59,375 90,625
----------
(1) Represents the amount by which the aggregate market price on December 31,
2002 of the shares of our common stock subject to such options exceeded the
respective exercise prices of such options.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of March 8, 2003 the number and
percentage ownership of Common Stock by (i) all persons known to us to own
beneficially more than 5% of the outstanding shares of Common Stock based upon
reports filed by each such person with the Securities and Exchange Commission,
(ii) each of our directors, (iii) each of the named executive officers, and (iv)
all of the named executive officers and directors as a group. Beneficial
ownership includes any shares which a person has the right to acquire within 60
days of March 8, 2003. Except as otherwise indicated and subject to applicable
community property and similar laws, each of the persons named has sole voting
and investment power with respect to the shares of Common Stock shown. Except as
otherwise indicated, the address for each person is c/o NTN Communications,
Inc., 5966 La Place Court, Carlsbad, California 92008. An asterisk denotes
beneficial ownership of less than 1%.
Number of Shares
Beneficially Percent of
Name Owned Common Stock(1)
------------------------------------------------ ----------- --------------
Gary Arlen(2).................................. 139,333 *
Robert M. Bennett(3)........................... 1,777,857 4%
Barry Bergsman(4).............................. 233,333 1%
Vincent A. Carrino(5).......................... 5,859,019 14%
Robert B. Clasen(6)............................ 48,333 *
Michael Fleming(7)............................. 38,333 *
Esther L. Rodriguez(8)......................... 201,099 *
Stanley B. Kinsey(9)........................... 2,474,333 5%
V. Tyrone Lam(10).............................. 529,722 1%
Mark deGorter(11).............................. 159,514 *
James B. Frakes(12) ........................... 153,437 *
----------- -------------
All executive officers and directors of NTN as
a Group (11 11,614,313 27%
persons)(13)...................................
=========== =============
----------
(1) Included as outstanding for purposes of this calculation are
43,040,681shares of Common Stock (the amount outstanding as of March 8,
2003) plus, in the case of each particular holder, the shares of Common
Stock subject to currently exercisable options, warrants, or other
instruments exercisable for or convertible into shares of Common Stock
(including such instruments exercisable within 60 days after March 8, 2003)
held by that person, which instruments are specified by footnote. Shares
issuable as part or upon exercise of outstanding options, warrants, or
other instruments other than as described in the preceding sentence are not
deemed to be outstanding for purposes of this calculation.
(2) Includes 138,333 shares subject to currently exercisable options held by
Mr. Arlen.
(3) Includes 138,333 shares subject to currently exercisable options and
500,000 shares subject to currently exercisable warrants held by Mr.
Bennett.
(4) Includes 138,333 shares subject to currently exercisable options and 20,000
shares subject to currently exercisable warrants held by Mr. Bergsman.
(5) Includes 238,333 shares subject to currently exercisable options held by
Mr. Carrino. Also includes 308,241 shares owned directly by Mr. Carrino and
5,312,445 shares owned, directly or indirectly, by investment advisory
clients of Brookhaven Capital Management, LLC, which in some cases has sole
voting and investment discretion over such shares. Mr. Carrino is the sole
owner and the Manager of Brookhaven Capital Management, LLC and, as such,
in some cases he may be deemed to beneficially own such shares. Mr. Carrino
disclaims such beneficial ownership. Brookhaven Capital Management is
located at 3000 Sand Hill Road, Menlo Park, CA 94205.
(6) Includes 38,333 shares subject to currently exercisable options held by Mr.
Clasen. Includes 10,000 owned by the Clasen Family Trust, of which Mr.
Clasen is co-trustee with members of his immediate family. As co-trustee,
Mr. Clasen shares voting and investment power with respect to the shares.
(7) Includes 38,333 shares subject to currently exercisable options held by Mr.
Fleming.
(8) Includes 138,333 shares subject to currently exercisable options held by
Ms. Rodriguez. Also includes 1,000 shares owned by the Rodriguez Family
Trust, of which Ms. Rodriguez is a co-trustee with members of her immediate
family. As co-trustee, Ms. Rodriguez shares voting and investment power
with respect to the shares.
(9) Includes 2,350,000 shares subject to currently exercisable options held by
Mr. Kinsey.
(10) Represents shares subject to currently exercisable options held by Mr. Lam.
(11) Represents shares subject to currently exercisable options held by Mr.
deGorter.
(12) Represents shares subject to currently exercisable options held by Mr.
Frakes.
(13) Includes 4,561,004 shares subject to currently exercisable options and
warrants held by executive officers and directors, including those
described in notes (2) through (12) above.
Equity Compensation Plans
The following table sets forth as of December 31, 2002 our compensation
plans authorizing us to issue equity securities and the number of securities
issuable thereunder.
Number of securities remaining
Number of securities to Weighted-average available for future issuance
be issued upon exercise exercise price of under equity compensation plans
of outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in colunm (a))
------------------- ----------------------- -------------------- ------------------------------
Equity compensation
plans approved by 8,212,211(1) $1.35 2,679,023(2)
security holders
Equity compensation
plans not approved by 1,377,000(4) $2.03 0
security holders
----------------------- ------------------------------
----------------------- ------------------------------
Total 9,589,211 2,679,023(3)
======================= ==============================
----------
(1) Includes 7,712,211 shares issuable upon exercise of options granted
pursuant to the NTN Communications, Inc. 1995 Employee Stock Option Plan
and 500,000 shares issuable upon exercise of options granted pursuant to
the NTN Communications, Inc. 1996 Special Stock Option Plan.
(2) Remaining available for grant under the NTN Communications, Inc. 1995
Employee Stock Option Plan.
(3) Does not include 300,000 shares of Buzztime Entertainment, Inc. common
stock available for grant under the Buzztime Entertainment, Inc. 2001
Incentive Stock Option Plan. To date, no options have been granted under
the plan.
(4) The 1,377,000 shares issuable that are not pursuant to equity compensation
plans approved by securityholdrers are all pursuant to warrants granted in
connection with consulting agreements with non-employees. Warrants to
purchase 685,000 shares were granted in 2002, 190,000 shares in 2001 and
885,000 shares in 2000. As of December 31, 2002, the range of exercise
prices and the weighted-average remaining contractual life of outstanding
warrants was $0.50 to $3.75 and 4 years, respectively.
Compensation Committee Report on Executive Compensation
During 2002, the Compensation Committee established policies and practices
relating to matters of executive compensation for action by the Board of
Directors as a whole. Our executive compensation policy is intended to foster
job satisfaction and encourage continuous service by our executive officers by
providing reasonable short-term cash compensation and long-term stock-based
incentives. Our policies apply equally to all of our executive officers. A
summary of our executive compensation policy is described below:
We have established a 401(k) Plan. We may, at the Board of Director's
discretion, make annual contributions to the 401(k) Plan, subject to applicable
limitations, but, to date, we have never made any such contributions.
Short-term cash compensation to executives for 2002 consisted primarily of
salaries, subject to any written employment agreement between us and any
executive. In 2002, the Board approved a bonus program based upon established
quantitative Company performance criteria. Accordingly, based upon our 2002
performance, the Board approved bonuses for each of Messrs. Kinsey, Frakes,
deGorter and Lam in the amounts of $24,000, $20,000, $60,000 and $15,000,
respectively.
Equity compensation, in the form of stock options, constitutes the
principal element of long-term compensation for our executive officers. The
grant of stock options increases management's potential equity ownership in NTN
with the goal of ensuring that the interests of management remain closely
aligned with those of our stockholders. Accordingly, during 2002, the Board of
Directors granted Mr. deGorter options to purchase 250,000 shares of Common
Stock at an exercise price of $0.79 per share in exchange for surrender by Mr.
deGorter of 250,000 options, exercisable at $2.50 per share, previously granted
on February 1, 2000. In February 2002, the Board also granted Mr. Lam options to
purchase 100,000 shares of Common Stock at an exercise price of $0.79 per share.
The Board granted Mr. Kinsey options to purchase 100,000 shares of Common Stock
at $0.75 per share as of October 2002 in exchange for Mr. Kinsey's agreement to
extend his employment agreement to January 1, 2003. Attaching vesting
requirements to stock options also creates an incentive for executive officers
to remain with us for the long term. In appropriate circumstances, the Board of
Directors also will consider repricing previously granted stock options if
necessary so that the options continue to afford realistic incentives to
executives. No repricings occurred in 2002.
Compensation to our executive officers is subject to a $1,000,000
compensation deduction cap pursuant to Section 162(m) of the Internal Revenue
Code, as amended. In 2002, no executive officer received aggregate compensation
of $1,000,000 or more. However, the Board is aware that the grant of stock
options to the executive officers may subject us to the deduction cap in
subsequent years. With respect to incentive stock options, the Board of
Directors does not anticipate NTN taking a deduction in the absence of a
disqualifying disposition by an executive officer. With respect to nonqualified
options, the Board of Directors is aware that any deduction that we may have at
the time of exercise will be subject to the $1,000,000 cap. The Board of
Directors does not anticipate that the compensation deduction cap will
significantly affect our executive compensation policies.
Chief Executive Officer Compensation
In October 1998, we entered into a written employment agreement pursuant to
which Mr. Kinsey was to receive a bonus under a bonus program that was to be
agreed upon by and between Mr. Kinsey and the compensation committee of our
board of directors. On October 7, 1999, we entered into an addendum to the
employment agreement with Mr. Kinsey setting forth the terms of the bonus
program. Under the bonus program, the options granted to Mr. Kinsey in October
1999 were granted at a preferred, below market, price of $0.98 per share, the
average closing price of our Common Stock during the three calendar quarters
immediately prior to the grant date. The options were granted to Mr. Kinsey
pursuant to our 1995 Employee Stock Option Plan. In January 2001, we amended the
employment agreement with Mr. Kinsey to extend the duration of the agreement by
one year until October 6, 2002 and to award options for an additional 350,000
shares of our Common Stock at an exercise price of $0.875 per share. Effective
October 7, 2002, we granted Mr. Kinsey options to purchase 100,000 shares of
Common Stock in exchange for his agreement to extend his employment agreement
from October 7, 2002 to January 1, 2003.
The foregoing report on executive compensation is provided by the
Compensation Committee: Gary Arlen and Barry Bergsman. Notwithstanding anything
to the contrary set forth in any of our filings and other documents that might
incorporate by reference this proxy statement, in whole or in part, the
foregoing report of the Compensation Committee shall not be incorporated by
reference into any such filings or documents.
Change in Control Agreements
We have entered into change of control employment agreements with certain
of our executive officers. The agreements provide that, if the executive is
terminated other than for cause within one year after a change of control of
NTN, then the executive is entitled to receive a lump sum severance payment
equal to up to one year's base salary.
We have entered into an employment agreement with Stanley B. Kinsey, our
Chief Executive Officer and Chairman of the Board. In the event Mr. Kinsey is
terminated upon a change of control of NTN, in addition to one year's base
salary, he shall receive a pro rata portion of his bonus and continuation of
employment benefits for one year.
Compensation Committee Interlocks and Insider Participation
All compensation determinations for 2002 for our executives were made by
the Board of Directors as a whole upon the recommendation of the Compensation
Committee. During the entire fiscal year 2002, both Messrs. Arlen and Bergsman
served as members of the Compensation Committee. None of our directors or
executive officers has served on the board of directors or the compensation
committee of any other company or entity, any of whose officers served either on
the Board of Directors or on the Compensation Committee.
On May 8, 2001, we entered into an advertising sales representative
agreement with Baron Enterprises, Inc., a corporation wholly-owned and operated
by Barry Bergsman, a member of our board of directors, pursuant to which Baron
provides advertising sales representation services to us under the direction of
the NTN Network's president and chief operating officer. For Baron's services
under the advertising sales representative agreement, we granted Baron a
three-year warrant to purchase 20,000 shares of Common Stock at an exercise
price of $0.50 per share. The warrant vested and became exercisable as to 1/12
of the total shares on the last business day of each of the twelve months
commencing April 2001, subject to Baron continuing to provide services to us. In
addition, Baron was to receive a commission in the amount of 35% of net
advertising revenues received by the NTN Network from any advertising contract
solicited by Baron. We paid to Baron a monthly recoverable cash advance against
commissions to be earned in the amount of $5,000 per month, not to exceed an
aggregate of $60,000 per year for the initial term of the agreement. The
advertising sales representative agreement expired on April 1, 2002. An
amendment to the agreement was entered into in October 2002, to extend the
contract to October 31, 2003, to reduce the rate of commission to 25% of net
advertising revenues received by us, to eliminate the monthly recoverable cash
advance against commissions and to include bartered advertising. Under the
amended agreement, Baron was paid $15,000 in commissions in 2002.
In May 2002, Michael Fleming was appointed Chairman of the Board of our
Buzztime subsidiary after having served, since January 8, 2002, as an
independent consultant. Pursuant to the consulting arrangement, Mr. Fleming
provided general consulting services to us in connection with Buzztime's cable
television initiatives. We paid Mr. Fleming approximately $2,000 per month for
these consulting services. Since May 1, 2002, Mr. Fleming has served as Chairman
of Buzztime Entertainment, Inc. and was paid $12,500 per month for his services,
superceding other cash compensation as both a consultant and NTN board member.
In March 2003, Mr. Fleming's compensation as Chairman of Buzztime reverted back
to standard NTN board compensation and a $2,000 per month consulting agreement.
On January 15, 2003, we issued and sold 1,000,000 shares of restricted
Common Stock through a private offering to Robert M. Bennett, one of our
directors, at a price per share of $1.00. Pursuant to the terms of the
transaction, upon receipt of $1.0 million from Mr. Bennett, we issued the
restricted shares along with fully vested warrants to purchase 500,000 shares of
Common Stock at $1.15 per share, exercisable through January 15, 2008. No
commissions or placement agent fees were paid in connection with the offering.
We have agreed to file a registration statement covering the resale of the
shares of Common Stock (including those shares underlying the warrant) within 90
days.
Performance Graph
The following graph sets forth a comparison of cumulative total returns for
NTN, the American Stock Exchange Index and an index consisting of companies
sharing the Standard Industrial Classification Code ("SIC Code").
1997 1998 1999 2000 2001 2002
------------------------------- ------ ------ ------ ------ ------ ------
NTN Communications, Inc. 100.00 56.25 368.80 62.50 90.00 120.00
------------------------------ ------ ------ ------ ------ ------ ------
AMEX Market Value 100.00 99.99 132.80 126.49 119.31 100.65
------------------------------- ------ ------ ------ ------ ------ ------
Peer Group 100.00 172.28 302.80 234.78 194.32 117.56
------------------------------- ------ ------ ------ ------ ------ ------
The Peer Group is comprised of companies sharing SIC Code 4841 - Cable, Other
Pay TV Services, as follows:
5TH AVE CHANNEL CORP COM MEDIACOM COMMUNICAITONS CORP CL A
ADELPHIA COMMUNICATIONS CORP CL A METROMEDIA INTL GROUP INC COM
ADVANCED WIRELESS SYS INC COM MPAC CORP
CABLEVISION SYS CORP CL A NY CABLVS NOSTALGIA NETWORK INC COM NEW
CIRTRAN CORP COM NOSTRAD TELECOMMUNICAITONS I COM
COMCAST HOLDINGS CORP NTN COMMUNICATIONS INC COM NEW
COX COMMUNICATIONS INC NEW CL A NUCENTRIX BROADBAND NETWORKS COM
CROWN MEDIA HLDGS INC CL A ON COMMAND CORP COM
DIRECT WIRELESS COMMUNICATIONS PEGASUS COMMUNICATIONS CORP CL A
ECHOSTAR COMMUNICATIONS NEW CL A PLAYERS NETWORK
GLOBAL TECHNOLOGIES LTD CL A RNETHEALTH INC COM NEW
HEALTHTRAC INC ROGERS COMMUNICATIONS INC CL B
HISPANIC TV NETWORK INC COM SHAW COMMUNICATIONS INC CL B CONV
INSIGHT COMMUNICATIONS INC CL A TELVUE CORP COM
INTERACTIVE NETWORK INC COM TIVO INC COM
INTERNATIONAL FIBERCOM INC COM TWO WAY TV (US) INC.
LIBERTY SATELLITE & TECHNOLO CL A UNITEDGLOBALCOM CL A
LODGENET ENTMT CORP COM USURF AMERICA INC COM
VIACOM INC
Notwithstanding anything to the contrary set forth in any of our filings
and other documents that might incorporate by reference this proxy statement, in
whole or in part, the foregoing Performance Graph shall not be incorporated by
reference into any such filings or documents.
Audit Committee Report
The Audit Committee operates pursuant to a written Charter that was adopted
by the Board of Directors in June 2000 and subsequently reviewed by the Audit
Committee in 2002. As set forth in the Charter, management is responsible for
the preparation, presentation and integrity of our financial statements, our
accounting and financial reporting principles, and internal controls designed to
assure compliance with accounting standards and applicable laws and regulations.
Our independent auditors are responsible for auditing our financial statements
and expressing an opinion as to their conformity with generally accepted
accounting principles.
In the performance of its oversight function, during 2002 the Audit
Committee reviewed and discussed the audited financial statements with
management and KPMG LLP. Discussions between the Audit Committee and KPMG LLP
included the matters required by Statement on Auditing Standards No. 61, as
currently in effect. The Audit Committee received from KPMG LLP written
disclosures and the letter regarding its independence as required by
Independence Standards Board Standard No. 1 and has discussed with KPMG LLP its
independence. The Audit Committee also considered whether the provision of audit
related services during 2002 was compatible with maintaining the independence of
KPMG LLP. The Audit Committee believes that management maintains an effective
system of internal controls that results in fairly presented financial
statements. Based on these discussions, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in our
Annual Report on Form 10-K for the year ended December 31, 2002 as filed with
the Securities and Exchange Commission.
The foregoing report is provided by the Audit Committee: Barry Bergsman,
Robert M. Bennett and Esther L. Rodriquez. Notwithstanding anything to the
contrary set forth in any our filings and other documents that might incorporate
by reference this proxy statement, in whole or in part, the foregoing report of
the Audit Committee shall not be incorporated by reference into any such filings
or documents.
Principal Accounting Firm Fees
The following table sets forth the aggregate fees billed to us for the
fiscal year ended December 31, 2002 by our principal independent accounting
firm, KPMG LLP.
Fee Category Amount of Fee
---------------
---------------
Audit Fees $128,500
Financial Information Systems Design and Implementation Fees --
All Other Fees
Audit Related Fees --
Other Non Audit Services --
---------------
---------------
Total Fees for Fiscal Year ended December 31, 2002 $128,500
===============
Indemnity Agreements
We have entered into indemnity agreements with each of our directors and
executive officers. The indemnity agreements provide that we will indemnify
these individuals under certain circumstances against certain liabilities and
expenses they may incur in their capacities as our directors or officers. We
believe that the use of such indemnity agreements is customary among
corporations and that the terms of the indemnity agreements are reasonable and
fair to us, and are in our best interests to retain experienced directors and
officers.
Certain Relationships
See "Compensation Committee Interlocks and Insider Participation."
Section 16(a) Beneficial Ownership Reporting Compliance
Under federal securities laws, our directors and officers and any persons
holding more than 10% of our Common Stock are required to report their
beneficial ownership of our Common Stock and any changes in that ownership to
the Securities and Exchange Commission. Accelerated due dates for these reports
were established in August 2002, and we are required to report any failure to
file by these dates. We believe that, based on the written representations of
our directors and officers and copies of reports filed with the Commission in
2002, our directors, officers and holders of more than 10% of our Common Stock
complied with the requirements of Section 16(a).
OTHER MATTERS
Accompanying this Proxy Statement is a letter to stockholders from Mr.
Kinsey, our Chairman and Chief Executive Officer, together with our Annual
Report for the fiscal year ended December 31, 2002.
We will furnish, without charge, to each person to whom this Proxy
Statement is being sent a complete copy of our Form 10-K (other than exhibits)
for fiscal 2002. We will furnish any exhibit to our Form 10-K upon the payment
of a fee to cover our reasonable expenses in furnishing such exhibit. Written
requests for the Form 10-K should be directed to Mr. James B. Frakes, Corporate
Secretary, at our corporate offices located at 5966 La Place Court, Carlsbad,
California 92008. Telephone requests may be directed to Mr. Frakes at (760)
438-7400.
We do not know of any matter to be acted upon at the Annual Meeting other
than the matters described above. If any other matter properly comes before the
Annual Meeting, however, the proxy holders will vote the proxies thereon in
accordance with their best judgment.
THE BOARD OF DIRECTORS
Dated: April __, 2003
Appendix
Form of Proxy
NTN COMMUNICATIONS, INC.
5966 La Place Court
Suite 100
Carlsbad, CA 92008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Darlene French-Porter and James B. Frakes,
and each or either of them, with full power of substitution, as proxy holders to
represent and vote, as designated on the reverse side, all shares of Common
Stock of NTN Communications, Inc. (the "Company") held of record by the
undersigned on March 4, 2003, at the Annual Meeting of stockholders to be held
on May 2, 2003 and at any adjournments thereof.
(Continued and to be signed on the reverse side)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
NTN COMMUNICATIONS, INC.
May 2, 2003
/~ PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED /~
|X| Please mark your
votes as in this
example.
FOR election of all
nominees WITHHOLD vote
Except as marked to from all
the contrary nominees listed
1. Election of directors:
01 Gary Arlen
02 Vincent A. Carrino
03 Michael Fleming
(Instructions: To withhold authority to vote for any individual nominee, draw a
line through such nominee's name in the list at left.)
2. Approval to amend the Company's restated certificate of incorporation to
increase the number of authorized shares of the Company's capital stock
3. Ratification of appointment of KPMG LLP as independent accountants for
fiscal year ending December 31, 2003
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Signature:------------------------- Dated:--------------------
NOTE - Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized partner.