<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 2000
REGISTRATION NO. 333-94191
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
i3 MOBILE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7373 51-0335259
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
181 HARBOR DRIVE
THIRD FLOOR
STAMFORD, CONNECTICUT 06902
(203) 428-3000
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEPHEN G. MALONEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
i3 MOBILE, INC.
181 HARBOR DRIVE
THIRD FLOOR
STAMFORD, CONNECTICUT 06902
(203) 428-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MICHAEL HIRSCHBERG, ESQ. MORRIS DEFEO, JR., ESQ.
PAUL J. POLLOCK, ESQ. LORRAINE MASSARO, ESQ.
PIPER MARBURY RUDNICK & WOLFE LLP MORRISON & FOERSTER LLP
1251 AVENUE OF THE AMERICAS 1290 AVENUE OF THE AMERICAS
NEW YORK, NY 10020 NEW YORK, NY 10104
(212) 835-6000 (PHONE) (212) 486-8000 (PHONE)
(212) 835-6001 (FACSIMILE) (212) 468-7900 (FACSIMILE)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practical after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
- ------------------------------
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION,
DATED APRIL 3, 2000
[I3 MOBILE, INC. LOGO]
- --------------------------------------------------------------------------------
i3 MOBILE, INC.
4,400,000 SHARES
COMMON STOCK
- --------------------------------------------------------------------------------
This is the initial public offering of i3 Mobile, Inc. We are offering
4,400,000 shares of our common stock. We anticipate that the initial public
offering price will be between $14.00 and $16.00 per share.
Our common stock has been approved for listing on the Nasdaq National Market
under the symbol "IIIM."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS I3 MOBILE, INC.
<S> <C> <C> <C>
Per Share $ $ $
Total $ $ $
</TABLE>
We have granted the underwriters the right to purchase up to an additional
660,000 shares to cover any over-allotments.
DEUTSCHE BANC ALEX. BROWN
CHASE H&Q
CREDIT SUISSE FIRST BOSTON
The date of this prospectus is , 2000
<PAGE> 3
Inside Front Cover
[Description of Artwork:
FRONT COVER:
The front cover will be a single page with the i3 Mobile, Inc. logo centered
towards the upper middle section of the page. The logo is in the center of an
imaginary circle with seven arrows pointing at its top and seven sound waves
emanating from its bottom towards the bottom half of the page. At the top of
the page, on the other end of the arrows is the following text forming the top
half of the imaginary circle: ENTERTAINMENT, E-COMMERCE & ADVERTISING, NEWS,
FINANCIAL INFORMATION, SPORTS, INTERNET & INTRANET, WEATHER.
Behind the text is a graphic complementary to it:
- - a cloud with rain behind WEATHER;
- - a computer behind INTERNET & INTRANET;
- - sports equipment behind SPORTS;
- - stock chart behind FINANCIAL INFORMATION;
- - newspaper behind NEWS;
- - clenched fist behind E-COMMERCE & ADVERTISING; and
- - theater mask behind ENTERTAINMENT.
The seven sound waves lead to seven oval pictures of different men and women
using wireless devices (pagers, cell phones) in various situations (in the
office, in the car, in the park, on the street), forming the bottom half of the
imaginary circle.
In the lower third of the page, there are three pictures of wireless devices
lined up next to each other (a Nokia cell phone, a personal digital assistant,
and a NeoPoint cell phone) with different text messages on each one (horoscope,
stock quote, and sports score, respectively). Below that is the following text:
CONNECTING CONSUMERS, CONTENT & COMMERCE.
Centered at the bottom of the page is the "Powered by i3 Mobile" logo.
INSIDE OF GATEFOLD OF FRONT COVER:
The inside of the gatefold of the cover features some of the same graphics
(cloud with rain; newspaper; sports equipment; computer; stock chart). There are
also graphics of a wireless phone and a personal digital assistant in the
background as well. The i3 Mobile, Inc. corporate logo and the company name are
in the top left corner of the page. The bottom left corner has the following
text:
CONNECTING CONSUMERS, CONTENT & COMMERCE.
The page is divided into three sections by three large ovals with text in the
right side and graphics in the left side of each oval. On the top outer layer
of each oval box is the text:
INTEGRATION, PERSONALIZATION, DISTRIBUTION.
All three ovals are linked by sound waves.
The text of the INTEGRATION oval: i3 Mobile offers a wide range of content and
e-commerce services for distribution to small-screen wireless devices from over
50 third party content providers.
To the left of the text are 11 content provider logos (Dow Jones; Sports Ticker;
Associated Press; The Weather Channel; Los Angeles Times; The Canadian Press;
Comtex; FOX News; 1-800-flowers.com; infoUSA; cnbc.com).
The text of the PERSONALIZATION oval:
i3 Mobile has created proprietary systems to parse, filter and format data
based on personal preferences specified by our customers through the more than
20 interactive wireless portals we have built for wireless network operators and
Web sites.
To the left of and under the text are four screen shots of various
Web-provisioning sites that i3 has built (Omnipoint Communications; The
Weather Channel; Bell Mobility; Southwestern Bell Wireless).
The text of the DISTRIBUTION oval:
i3 Mobile has developed a network of distribution relationships with more than
15 wireless carriers in North America, who offer our services under the
"Powered by i3 Mobile" brand.
To the left of and under the text are logos of business partners through whom i3
Mobile distributes its services (Omnipoint Communications; Bell Mobility;
CellularOne; Southwestern Bell Wireless) and our "Powered by i3 Mobile"
logo.
Emanating from this oval are four sound waves that connect to pictures of
devices to which i3 delivers content: Nokia mobile phone, Neopoint phone,
PalmPilot, and pager.]
<PAGE> 4
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus and may
not contain all the information that is important to you. To learn about this
offering and our business, you should carefully read the entire prospectus,
including the risk factors and our financial statements and related notes.
Unless otherwise indicated, we present information in this prospectus
assuming:
- the conversion of all outstanding shares of preferred stock into an
aggregate of 11,316,765 shares of common stock upon the closing of this
offering;
- our common stock will be sold at $15.00 per share, which is the mid-point
of the range shown on the cover of this prospectus; and
- the underwriters have not exercised their over-allotment option to
purchase additional shares of common stock.
OUR BUSINESS
We provide timely personalized information to users of wireless devices
such as mobile phones, pagers and personal digital assistants to address their
media content and electronic commerce needs. We currently deliver information
content in a variety of categories, including finance, news, weather, sports,
entertainment, traffic and travel, from over 50 content sources. We have also
begun to offer additional products and services, including advertising sales,
wireless electronic commerce, e-mail and personal information management
applications. We believe that our technical knowledge, business relationships
and experience will enable us to capitalize on the growth of the wireless data
medium.
We provide our products and services primarily through our distribution
relationships with wireless network operators. We currently provide personalized
wireless information services developed for, and provided under agreements with,
more than 15 wireless network operators, collectively representing approximately
48 million wireless phone subscribers at September 30, 1999, or more than 55% of
the North American market of wireless phone users. We have also developed
wireless message delivery systems for four Internet media networks and corporate
enterprises. At December 31, 1999, we had over 450,000 users of our products and
services, of which approximately 100,000 were paying subscribers and 350,000
were complimentary users.
OUR HISTORY OF OPERATING LOSSES
We incurred net losses of approximately $1.3 million for the year ended
December 31, 1996, approximately $2.4 million for the year ended December 31,
1997, approximately $2.9 million for the year ended December 31, 1998 and
approximately $10.3 million for the year ended December 31, 1999, resulting in
an accumulated deficit of approximately $45.0 million at December 31, 1999, of
which $26.6 million represents non-cash charges related to dividends on and
redemptions of our preferred stock in 1999. We expect to continue to operate at
a significant net loss and have negative operating cash flows as we incur costs
related to product development, sales and marketing and administrative expenses.
1
<PAGE> 5
PRODUCTS AND SERVICES
We market our products and services using the established distribution
channels of our distributors and the combined brand names of our distributors
and our own brand name. Our products and services are offered on both a
complimentary and subscription basis. Our complimentary service allows users to
select from a limited number of content categories, such as sports, weather or
finance, to receive a daily message at no cost to the user. Our subscription
service allows users to select from a larger number of content categories to
receive multiple personalized messages throughout the day for a fee. We have
proprietary technology and systems that have been designed to provide a network
and device independent platform for the creation and delivery of our products
and services.
In addition, we offer wireless network operators a package of services,
including personal profiling, content aggregation, content parsing, application
development, message delivery, billing and customer service, for the delivery of
customized content and information through their networks. We also offer any one
or more of these services to Internet media networks and corporate enterprises.
RISK FACTORS
Investing in our shares of common stock involves a high degree of risk. We
face a number of risks that you should consider before you decide to invest in
our common stock, including:
- our reliance on third parties to market and distribute our products and
services;
- our reliance on a limited number of wireless network operators for a
significant portion of our revenues;
- our ability to anticipate and respond to market competition and operate
in an industry with a growing number of competitors;
- our ability to attract and retain users; and
- the challenge of operating in a new and rapidly evolving industry that
may not gain market acceptance.
A number of these risks may make it more difficult for us to achieve our
objectives and execute our strategy. See the section entitled "Risk Factors"
which starts on page 7.
MARKET OPPORTUNITY
We believe that wireless mobile data is emerging as a powerful new medium,
uniquely capable of creating value through the ability to deliver highly
personalized, local, timely and interactive content and services to wireless
devices. According to DataQuest, wireless data subscribers will grow at a
compound annual growth rate of 82% from 3 million subscribers in 1999 to 36
million subscribers in 2003, creating a market with more than $3 billion in
annual revenue. The emergence of the mobile data medium is being driven by the
convergence of four major trends:
- growth in wireless communications;
- growth in internet services;
- evolution of media; and
- development of technology, applications and standards.
2
<PAGE> 6
The emergence of the Internet has significantly increased consumer demand
for access to information. As a group, on-line consumers are increasingly using
new methods, including wireless technologies, to access information typically
available on the Internet. International Data Corporation predicts that the
worldwide annual sales of Internet handheld devices, such as wireless phones and
personal digital assistants, will grow at a compound annual rate of 62% from
$1.2 billion in 1998 to $8.2 billion in 2002. The convergence of the Internet
and digital wireless technologies presents new opportunities for consumers to
access real-time information while away from their desktop computers. We believe
that, by using our platform, wireless network operators, Internet media networks
and corporate enterprises can differentiate their services to retain and
strengthen their existing customer relationships and attract new customers.
STRATEGY
Our objective is to be the leading provider of personalized wireless data
products and services that provide information, entertainment and electronic
commerce. The key elements of our strategy are to:
- position i3 Mobile as the single-source wireless portal for wireless
network operators, Internet media networks and corporate enterprises;
- continue to build innovative products;
- grow our user base and build i3 Mobile brand awareness;
- expand and diversify our distribution relationships;
- develop advertising and transactional revenue; and
- advance our technology and content delivery systems.
OUR OFFICES AND HISTORY
We were incorporated as Intelligent Information Incorporated under the laws
of the State of Delaware on June 28, 1991. On January 4, 2000, we changed our
name to i3 Mobile, Inc. Our principal executive office is located at 181 Harbor
Drive, Stamford, Connecticut, and our telephone number at that office is (203)
428-3000. In addition, we maintain offices at One Dock Street, Suite 500,
Stamford, Connecticut; 1237 Southridge Court, Suite 100, Hurst, Texas; and 305
N.E. Loop, Hurst, Texas. Our Web site is located at www.i3mobile.com.
Information contained on our Web site does not constitute part of this
prospectus.
3
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by i3 Mobile..... 4,400,000 shares.
Common Stock to be outstanding after
this offering....................... 21,487,265 shares.
Use of Proceeds....................... For expansion of sales and marketing,
further development of systems
infrastructure, working capital and
general corporate purposes, including
the development of technology
alliances. See Use of Proceeds for
more detailed information.
Proposed Nasdaq National Market
Symbol.............................. "IIIM"
</TABLE>
- -------------------------
The outstanding share information shown in the table above excludes:
- 1,939,084 shares of common stock issuable upon the exercise of warrants
at a weighted average exercise price of $3.53 per share;
- an aggregate of 1,005,300 shares of common stock issuable upon the
exercise of outstanding stock options under our 1995 Stock Incentive Plan
at a weighted average exercise price per share of $3.18;
- 252,600 shares of common stock issuable upon the exercise of outstanding
stock options under our 2000 Stock Incentive Plan at a weighted average
exercise price per share of $9.39; and
- 8,700 shares of common stock available for future grant under our 1995
Stock Incentive Plan and 997,400 shares of common stock available for
future grant under our 2000 Stock Incentive Plan.
4
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes our consolidated statement of operations
data for each of the years ended December 31, 1995, 1996, 1997, 1998 and 1999,
and our consolidated balance sheet data as of December 31, 1999. The data for
the year ended December 31, 1995 is unaudited. This information should be read
along with the consolidated financial statements and the related notes included
elsewhere in this prospectus.
The pro forma net loss per share data below for the year ended December 31,
1999, reflects the conversion of all of our outstanding shares of preferred
stock into 11,316,765 shares of common stock upon the completion of this
offering as though this event occurred as of their issuance date.
The pro forma summary consolidated balance sheet data below reflects the
conversion of all of our outstanding shares of preferred stock into 11,316,765
shares of common stock upon the completion of this offering as though this event
occurred as of December 31, 1999.
The pro forma as adjusted balance sheet data below adjusts the pro forma
information to give effect to the sale of 4,400,000 shares of common stock
offered by us in this offering, at an assumed initial public offering price of
$15.00 per share, after deducting underwriting discounts and commissions and
estimated offering expenses, and the application of the estimated net proceeds.
See Use of Proceeds.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1995 1996 1997 1998 1999
----------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue..................................... $ 387 $ 645 $ 825 $ 1,405 $ 1,734
Cost of revenue................................. 190 465 700 1,081 1,302
------ ------- ------- ------- --------
Gross profit.................................... 197 180 125 324 432
Operating expenses.............................. 966 1,507 2,492 2,890 6,962
------ ------- ------- ------- --------
Operating loss.................................. (769) (1,327) (2,367) (2,566) (6,530)
Interest (income) expense - net................. (22) (8) 81 329 326
------ ------- ------- ------- --------
Loss before extraordinary item.................. (747) (1,319) (2,448) (2,895) (6,856)
Extraordinary loss on extinguishment of debt.... - - - - (3,434)
------ ------- ------- ------- --------
Net loss........................................ $ (747) $(1,319) $(2,448) $(2,895) $(10,290)
Dividends on and redemptions of preferred
stock......................................... - (8) (76) (274) (26,580)
====== ======= ======= ======= ========
Loss applicable to common stock................. $ (747) $(1,327) $(2,524) $(3,169) $(36,870)
====== ======= ======= ======= ========
Net loss per share -- basic and diluted:
Loss before extraordinary item.................. $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (5.83)
Extraordinary item.............................. - - - - (0.60)
------ ------- ------- ------- --------
Net loss........................................ $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (6.43)
====== ======= ======= ======= ========
Shares used in computing net loss per share..... 7,282 7,552 7,554 7,554 5,736
====== ======= ======= ======= ========
Pro forma net loss per share -- basic and
diluted:......................................
Pro forma loss before extraordinary item........ $ (0.57)
Extraordinary item.............................. (0.29)
--------
Net pro forma loss.............................. $ (0.86)
========
Shares used in computing pro forma net loss per
share......................................... 11,948
========
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 28,241 $28,241 $87,904
Working capital............................................. 29,468 29,468 89,131
Total assets................................................ 36,241 36,241 95,441
Mandatorily redeemable convertible preferred stock.......... 55,338 - -
Total stockholders' equity (deficit)........................ (22,696) 32,642 91,842
</TABLE>
- -------------------------
The outstanding share information shown in the table above excludes:
- 1,939,084 shares of common stock issuable upon the exercise of warrants at
a weighted average exercise price of $3.53 per share, of which 1,929,084
shares were issuable upon the exercise of warrants issued as of December
31, 1999 at a weighted average exercise price of $3.50 per share and
10,000 shares were issuable upon the exercise of warrants issued after
December 31, 1999 at an exercise price of $10.00 per share;
- an aggregate of 1,005,300 shares of common stock issuable upon the
exercise of outstanding stock options under our 1995 Stock Incentive Plan
at a weighted average exercise price per share of $3.18, of which 914,000
shares were issuable upon the exercise of outstanding stock options issued
as of December 31, 1999 at a weighted average exercise price of $2.71 and
91,300 shares were issuable upon the exercise of outstanding stock options
issued after December 31, 1999 at an exercise price of $7.92;
- 252,600 shares of common stock issuable upon the exercise of outstanding
stock options issued after December 31, 1999 under our 2000 Stock
Incentive Plan at a weighted average exercise price per share of $9.39;
and
- 8,700 shares of common stock available for future grant under our 1995
Stock Incentive Plan and 997,400 shares of our common stock available for
future grant under our 2000 Stock Incentive Plan.
6
<PAGE> 10
RISK FACTORS
You should carefully consider the following risks and other information in
this prospectus before you decide to buy our common stock. An investment in our
common stock involves a high degree of risk. Our business, financial condition
or operating results may suffer if any of the following risks actually occur.
Additional risks and uncertainties not currently known to us may also adversely
affect our business, financial condition or operating results. If any of these
risks or uncertainties occurs, the trading price of our common stock could
decline.
RISKS RELATED TO OUR BUSINESS
BECAUSE WE OPERATE IN A NEW AND RAPIDLY EVOLVING MARKET, OUR FUTURE
PROFITABILITY IS UNCERTAIN.
Although we were founded in 1991, the increased growth in digital wireless
capabilities and Internet use has occurred only recently and, as a result, the
focus of our business changed significantly. Due to changes in technology and
the emergence of wireless digital telephone networks, our business has expanded
from providing limited content to pagers to our current arrangements with
distributors who offer our products and services to many users and a wide
variety of wireless devices. When making your investment decision, you should
consider the risks, expenses and difficulties that we may encounter or incur in
a new and rapidly evolving market. We face a number of risks encountered by
companies in the rapidly evolving wireless telecommunications market. Our
business strategy may not be successful, and we may not successfully address
these risks.
BECAUSE WE HAVE A HISTORY OF LOSSES AND EXPECT TO CONTINUE TO INCUR SIGNIFICANT
EXPENSES, WE EXPECT TO CONTINUE TO INCUR LOSSES.
We have incurred annual operating losses each year since our inception and
we expect to incur further losses for the foreseeable future. We have incurred
net losses of $10,290,000 for the year ended December 31, 1999, $2,895,000 for
the year ended December 31, 1998, $2,448,000 for the year ended December 31,
1997, and $1,319,000 for the year ended December 31, 1996. As of December 31,
1999, our accumulated deficit was $45,001,000, of which $26,580,000 represents
non-cash charges for dividends on and redemption of our preferred stock during
1999. Because we expect to continue to incur significant product development,
sales and marketing, and administrative expenses, we will need to generate
significant revenues to become profitable and sustain profitability on a
quarterly or annual basis. We may not achieve or sustain our revenue or profit
goals, and our ability to do so depends on a number of factors outside of our
control, including the extent to which:
- there is market acceptance of commercial services utilizing our products;
- our competitors announce and develop, or lower the prices of, competing
products; and
- our distributors dedicate resources to selling our products and services.
As a result, we cannot predict if we will ever achieve profitability. In
addition, our failure to achieve profitability within the time frame expected by
our investors may adversely affect the market price of our common stock.
7
<PAGE> 11
BECAUSE BOTH OUR BUSINESS MODEL AND THE USE OF WIRELESS DEVICES FOR DELIVERY OF
DATA SERVICES ARE EVOLVING AND UNPROVEN, WE CANNOT PREDICT WHETHER OUR PRODUCTS
AND SERVICES WILL GENERATE SUFFICIENT REVENUES.
Our business model is relatively new, unproven and likely to continue to
evolve. Accordingly, our business model may not be successful, and we may have
to adjust it. In addition, our future success depends on the continued increase
in wireless device use and the continued development of wireless devices as a
viable medium for the delivery of products and services. In particular, our
success depends on commercial acceptance of wireless telephones and other
wireless devices, and the Internet, to obtain timely personalized information.
We cannot predict whether demand for our products and services will continue to
develop, particularly at the volume or prices that we need to become profitable.
IF WIRELESS DEVICES ARE NOT WIDELY ACCEPTED FOR MOBILE DELIVERY OF CONTENT
SERVICES AND INTERNET-BASED SERVICES, OUR BUSINESS WILL SUFFER MATERIALLY.
Our future success depends upon the acceptance of wireless communications
for delivery of content and Internet-based services. Most mobile individuals
currently use portable computers to access the Internet, conduct electronic
commerce transactions and remotely retrieve real-time information and e-mail.
Computers are generally designed for the visual presentation of data, whereas
wireless telephones and pagers historically have been limited to messaging by
letters, numbers and a finite number of symbols. If users do not accept
text-based messages instead of a computer image to conduct electronic commerce
using wireless devices, our electronic commerce business may not develop as
expected. We cannot assure you that wireless users will accept the use of
handheld devices to receive content or Internet-based services.
BECAUSE WE DEPEND UPON WIRELESS NETWORKS OWNED AND CONTROLLED BY OTHERS FOR
ACCESS TO SUFFICIENT CAPACITY AND LEVEL OF SERVICE QUALITY, WE MAY BE UNABLE TO
DELIVER OUR PRODUCTS AND SERVICES AND OUR USER BASE AND REVENUE COULD DECREASE.
Our ability to grow and achieve profitability partly depends on our ability
to access sufficient capacity on the networks of wireless carriers such as AT&T
Wireless Services and Omnipoint Communications Services, and on the reliability
and security of their systems. All of our products and services are delivered
using transmission services provided by third parties. We depend on these
companies to provide uninterrupted and quality service and would not be able to
satisfy our users' needs if our wireless network operators fail to provide the
required capacity or level of service.
BECAUSE WE DEPEND ON THIRD PARTIES TO MARKET AND DISTRIBUTE OUR PRODUCTS AND
SERVICES, IF THEIR EFFORTS ARE NOT SUFFICIENT OR EFFECTIVE, WE MAY NOT ACHIEVE
PROFITABILITY.
We rely substantially on the efforts of others to actively market and
distribute our wireless data services. In order to increase the value of our
products and services to our users and encourage demand for content delivery via
wireless devices, we must successfully promote our products and services to
distributors. If our distributors fail to create sufficient interest in content
delivery services via
8
<PAGE> 12
wireless devices, we may be unable to attract new users and our business could
suffer materially. We may not be able to control how those who distribute and
market our products and services perform and we cannot be certain that their
marketing efforts are or will be satisfactory. If the marketing and/or
distribution efforts of wireless network operators, Internet media networks or
corporate enterprises fail to attract new users, we may be unable to acquire new
subscribers and our revenue could be adversely affected.
BECAUSE THREE OF OUR WIRELESS NETWORK OPERATORS ACCOUNTED FOR APPROXIMATELY 70%
OF OUR REVENUE FOR THE YEAR ENDED DECEMBER 31, 1999, A LOSS OF ANY OF THEM AS
DISTRIBUTORS OF OUR PRODUCTS AND SERVICES WOULD SIGNIFICANTLY REDUCE OUR
REVENUE.
To date, the largest distributors of our products and services in terms of
revenue generated have been Omnipoint Communications Services, SBC
Communications, Inc. and Bell Mobility Cellular, Inc. Subscription revenues
generated by users of these wireless networks together accounted for
approximately 70% of our revenue for the year ended December 31, 1999 and 52%
for the year ended December 31, 1998. In addition, Omnipoint Communications
Services alone accounted for over 41% of our total revenue for the year ended
December 31, 1999 and 41% for the year ended December 31, 1998. We expect that
we will generate a significant portion of our revenue from a small number of
wireless network operators for the foreseeable future. Our growth depends on
maintaining our relationships with these and our other wireless network
operators and developing distribution relationships with additional wireless
network operators. If we lose any of these wireless network operators our
revenue would be significantly reduced, which would harm our business.
BECAUSE OUR BUSINESS HAS GROWN RAPIDLY, WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE
OUR GROWTH.
Our growth has placed, and any further growth is likely to continue to
place, considerable strain on our management team and other personnel, our
internal accounting and management information systems and the third-party
systems on which we depend. If we fail to manage our growth effectively our
business would be adversely affected. In addition, we intend to use the net
proceeds of this offering to develop additional products and services and to
accelerate our growth. Our growth plans are likely to continue to place a
significant strain on our personnel, and we believe that our current accounting
and management information systems are inadequate to handle our anticipated
growth. Our failure to hire additional personnel or to improve our systems
increases the risk that we will not be able to achieve our growth objectives or,
if achieved, we will not be able to manage our operations effectively.
BECAUSE WE HAVE NON-EXCLUSIVE AGREEMENTS WITH THE WIRELESS NETWORK OPERATORS WHO
DISTRIBUTE OUR PRODUCTS AND SERVICES, OUR COMPETITORS MAY BE ABLE TO OBTAIN
ARRANGEMENTS SIMILAR TO OURS.
Our existing agreements with our wireless network operators are non-
exclusive. Some or all of our wireless network operators may decide to establish
relationships with our competitors. In addition, some of these wireless network
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operators are, or could become, our competitors by offering the same or similar
products and services. If the wireless network operators who distribute our
products and services began competing directly with us or offering our
competitors' products and services, our business and growth prospects would
suffer.
OUR EXPENSES WOULD INCREASE AND OUR PROFITABILITY COULD BE MATERIALLY ADVERSELY
AFFECTED IF OUR WIRELESS NETWORK OPERATORS CHANGE THEIR CURRENT FEE STRUCTURES.
Currently, we pay our wireless network operators a distribution fee for
allowing us to use their networks to deliver content to our direct subscribers
and for delivery of advertising and electronic commerce-enabling messages. If
the wireless network operators increase these fees or begin to charge additional
fees, our expenses would increase and our profitability could be materially
adversely affected. Further, if the wireless network operators require us to
lower the subscription rates we charge their customers for our products and
services, our revenues would also decrease, which would also affect our
profitability adversely.
BECAUSE OUR OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS, WE MAY
NOT MEET EXPECTATIONS OF INVESTORS AND OUR STOCK PRICE MAY DECLINE.
Our operating results are likely to fluctuate from period to period due to
a variety of factors, including the following:
- continued growth in the use and quality of wireless communications
products;
- the rate at which we are able to acquire new users;
- our ability to generate subscriptions among our user base;
- changes in our revenue arrangements with wireless network operators;
- timing of introduction of new products and services;
- changes in pricing policies and product offerings by us or our
competitors;
- continued growth in Internet usage;
- our ability to enter into revenue generating relationships with content
and electronic commerce providers;
- costs associated with advertising, marketing and promotional efforts to
acquire subscribers;
- changes in our fee arrangements with advertisers, electronic commerce
providers and content providers; and
- capital expenditures and other costs and expenses related to improving
our business, expanding our operations and adapting to new technologies
and changes in subscriber preferences.
In addition, our operating expenses are based on our expectations of the
future demand for our products and services. Moreover, we frequently will incur
expenses in connection with the integration and offering of new content, which
are likely to be incurred substantially in advance of related revenues. We may
be
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unable to adjust spending quickly enough to offset any unexpected demand
shortfall or delay in offering our products and services. Any shortfall in
revenues would have a direct impact on operating results for a particular
quarter, and these fluctuations could affect the market price of our common
stock. If we do not meet expectations of investors in a particular quarter, the
price of our common stock could decline.
IF WE LOSE KEY MANAGEMENT OR OTHER PERSONNEL, WE MAY EXPERIENCE DELAYS IN OUR
PRODUCT DEVELOPMENT AND OUR GROWTH PROSPECTS.
We believe that our success depends upon the continued efforts of our
senior management and key technical personnel, including Stephen G. Maloney, our
president and chief executive officer. Our growth and success also depend on our
ability to attract, hire and retain additional highly qualified management,
technical, marketing and sales personnel. These individuals are in high demand
and we may not be able to attract the staff we need. The hiring process is
intensely competitive, time consuming and may divert the attention of our
management from our operations. Competitors and other companies may attempt to
recruit our employees. If we lose the services of any of our senior management
or key technical personnel, or if we fail to continue to attract qualified
personnel, our business could suffer.
BECAUSE OUR BUSINESS DOES NOT GENERATE SUFFICIENT CASH TO FUND OUR OPERATIONS,
IF WE DO NOT OBTAIN ADDITIONAL CAPITAL ON ACCEPTABLE TERMS, WE MAY NOT BE ABLE
TO CONTINUE TO GROW OUR BUSINESS.
In the past, we have met our capital needs through private sales of
securities. In order to implement our strategy, we expect to spend significant
amounts of money to:
- advertise, market and promote our products and services;
- expand our technical infrastructure;
- secure agreements with content and electronic commerce providers;
- create advanced customer care and operations centers; and
- fund operating losses and working capital.
If additional funds are raised through a bank credit facility or the
issuance of debt securities, the holders of this indebtedness would have rights
senior to the rights of the holders of our common stock, and the terms of this
indebtedness could impose restrictions on our operations. We may not be able to
raise additional capital in the future on terms acceptable to us, or at all. If
alternative sources of financing are insufficient or unavailable, we will be
required to modify our growth and operating plans in accordance with the extent
of available funding.
IF WE ARE UNABLE TO MAINTAIN, IMPROVE AND DEVELOP OUR PRODUCTS AND SERVICES, WE
MAY NOT ACHIEVE PROFITABILITY.
We may not be able to develop and introduce new products, services and
enhancements that respond to technological changes, evolving industry standards
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or customer needs and trends on a timely basis, in which case our business would
suffer. We believe that our future business prospects depend in part on our
ability to maintain and improve our current products and services and to develop
new ones on a timely basis. Our products and services will have to achieve
market acceptance, maintain technological competitiveness and meet an expanding
range of customer requirements. As a result of the complexities inherent in our
offerings, major new wireless data services and service enhancements may require
long development and testing periods. We may experience difficulties that could
delay or prevent the successful development, introduction or marketing of new
products and services and service enhancements. Additionally, our new products,
services and enhancements may not achieve market acceptance. Also, our
competitors may develop alternative technologies that gain broader market
acceptance than our products and services. If we cannot effectively maintain,
improve and develop products and services we may not be able to recover our
fixed costs or otherwise become profitable.
BECAUSE THE ADOPTION PERIOD FOR OUR PRODUCTS AND SERVICES BY THE CUSTOMERS OF
THE WIRELESS NETWORK OPERATORS, INTERNET MEDIA NETWORKS AND CORPORATE
ENTERPRISES WHO DISTRIBUTE OUR PRODUCTS AND SERVICES IS LONG, OUR STOCK PRICE
COULD DECLINE IF REVENUES ARE DELAYED.
We cannot predict the rate of adoption by wireless users of our services or
the price they may be willing to pay for our products and services in the
future. Fluctuations in our operating performance are exacerbated by the length
of time between our first contact with a wireless network operator, Internet
media network or corporate enterprise and the first revenue from sales of
products and/or services to the end-user.
IF WE ARE UNABLE TO MIGRATE OUR COMPLIMENTARY USERS TO OUR SUBSCRIBER SERVICES,
OR GENERATE SUFFICIENT ADVERTISING REVENUE TO SUPPORT THESE COMPLIMENTARY USERS,
WE MAY NOT ACHIEVE PROFITABILITY.
At December 31, 1999, 22% of our users were paying subscribers. We intend
to migrate our complimentary users to paying subscribers through direct and
cooperative marketing efforts with our distributors, including advertising
messages describing the products and services attached to complimentary
messages, direct mail pamphlets included with wireless telephone invoices and
Internet-based promotions on distributors' Web sites. If a wireless network
operator limits the use of the complimentary service to the user to a limited
period and these complimentary users fail to become subscribers, our user base
may decline and we may not generate sufficient revenues to become profitable.
IF WE DO NOT CONTINUE TO OFFER DESIRED CONTENT, WE MAY NOT BE ABLE TO ATTRACT
AND RETAIN SUBSCRIBERS AND ADVERTISERS.
Currently, we rely on third parties, such as news, sports, weather and
financial information companies, to provide the content we offer our users. It
is important to our business that we maintain our existing relationships with
these content providers and enter into new relationships giving our users access
to content they find useful. Our content agreements frequently are for one-year
terms and are non-exclusive. Our content providers may choose not to renew their
agreements
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with us or may terminate their agreements early if we do not fulfill our
contractual obligations. If that occurs, we would need to establish new
relationships with other content providers, and we would face the prospect of
losing users. In addition, we cannot assure you that our content providers will
not raise the prices they charge for content. If the pricing terms with our
content providers change, our revenues and profitability would be affected. Our
failure to provide useful content could result in decreased numbers of users,
which, in turn, would result in decreased revenue.
IF COMPETITION FOR OUR PRODUCTS AND SERVICES INCREASES, IT COULD REDUCE OUR
MARKET SHARE AND DECREASE OUR REVENUE.
We face competition from a wide variety of businesses that provide products
and services that compete with some or all of our products and services. We also
face competition from new products which could affect our business. Generally,
our agreements with wireless network operators, wireless handheld device
manufacturers and content providers are non-exclusive. As a result, our
competitors may establish relationships that allow them to use the same products
and services. With time and capital, it would be possible for competitors to
replicate our services. Competition could reduce our market share or force us to
lower prices to unprofitable levels.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST COMPETITORS THAT HAVE
SIGNIFICANTLY GREATER RESOURCES THAN WE DO WHICH COULD CAUSE US TO LOSE USERS
AND IMPEDE OUR ABILITY TO ATTRACT NEW USERS.
The business of providing wireless information services is highly
competitive and is affected by the introduction of new services by, and the
market activities of, major industry participants. Several of our competitors
are substantially larger and have greater financial, technical and marketing
resources than we do. In particular, larger competitors have certain advantages
over us which could cause us to lose our wireless network operators or users and
impede our ability to attract new users, including:
- brand recognition with distributors and users;
- financial, technical, marketing, personnel and other resources
substantially greater than ours;
- more established relationships with our targeted distributors;
- more funds to deploy services; and
- ability to lower prices of competitive products and services.
Furthermore, some competitors have and others may develop a different
approach to marketing the products and services we provide in that they may not
require subscribers to pay for the wireless information provided. As a result,
we may not be able to compete successfully in our market.
IF WE FAIL TO OBTAIN CONSENT FROM WIRELESS NETWORK OPERATORS TO PROVIDE
ADDITIONAL PRODUCTS AND SERVICES TO USERS, INCLUDING ADVERTISING AND ELECTRONIC
COMMERCE, WE MAY NOT BE ABLE TO SELL NEW AND EXISTING PRODUCTS AND SERVICES AT A
PROFIT.
We generally must obtain the consent of the wireless network operators in
order to offer additional products and services to our users on their networks.
If
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wireless network operators limit our product and service offerings to their
subscribers, including advertising and electronic commerce, our revenue may not
increase.
BECAUSE OUR DISTRIBUTORS MAY EXPERIENCE A HIGH RATE OF CUSTOMER TURNOVER, OUR
COST OF OPERATIONS COULD INCREASE AND OUR REVENUE COULD DECREASE.
Many providers in the wireless services industry have experienced a high
rate of customer turnover. The rate of customer turnover may be the result of
several factors, including network coverage, reliability issues such as blocked
and dropped calls, handset problems, non-usage of phones, change of employment,
affordability and customer care concerns. Price competition and other
competitive factors could also increase customer turnover rates. When a user
chooses a new wireless services provider, he or she may or may not have the
opportunity to receive our products and services. We have little or no control
over customer turnover of our wireless network operators, and a high rate of
customer turnover could adversely affect our competitive position, results of
operations and our costs of obtaining new subscribers, including increased
marketing costs needed to attract new customers.
BECAUSE WE DO NOT RECONCILE OUR USER AND SUBSCRIBER COUNTS WITH THOSE OF OUR
DISTRIBUTORS MORE FREQUENTLY THAN ON A QUARTERLY BASIS, THESE COUNTS MAY NOT
REFLECT THE ACTUAL NUMBER OF OUR USERS AND SUBSCRIBERS AT ANY PARTICULAR POINT
IN TIME.
We maintain a database of user profiles created by each user at the time
they register for our services and we derive our user and subscriber counts from
this database. This database is a component of our message delivery system and
is not a part of our financial reporting systems. Our experience indicates that
each month a number of users of our products and services cancel their
agreements with us for a variety of reasons, including termination of their
subscriptions to our distributors' services. We continually update our database
of users and subscribers and generally reconcile our user and subscriber counts
with those of our distributors on a quarterly basis. Accordingly, the number of
users contained in our database at a particular point in time may not reflect
users or subscribers that have recently cancelled their service with their
wireless network operator. As a result, we cannot assure you that the user and
subscriber counts in our database are accurate at any particular date. Because
investors may value our company based on the number of users and subscribers of
our services, our stock price may fluctuate accordingly.
BECAUSE WE MAY LOSE SOME OF OUR WIRELESS NETWORK OPERATOR RELATIONSHIPS DUE TO
CONSOLIDATION IN THE INDUSTRY, WE COULD LOSE A SIGNIFICANT PORTION OF OUR USER
BASE.
The wireless communications industry has experienced significant
consolidation among service providers. If one or more of the wireless network
operators that distribute our products and services were to consolidate with
another entity, the newly consolidated entity may choose to discontinue its
relationship with us or select one of our competitors to provide them with
products and services. This could have a significant negative impact on our
ability to generate revenues.
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BECAUSE WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS OR AVOID CLAIMS
THAT WE INFRINGED THE PROPRIETARY RIGHTS OF OTHERS, WE MAY INCUR SUBSTANTIAL
COSTS TO DEFEND OR PROTECT OUR BUSINESS AND INTELLECTUAL PROPERTY.
Our success and competitive position depend, in large part, upon our
ability to develop and maintain the proprietary aspects of our technology. We
have filed applications to register the marks "i3 Mobile," and "Powered by i3
Mobile" and "Powered by III" in the United States but we cannot be certain that
we will be granted this registration. We have registered the marks "Eyes on the
Web," "Village Square," "News Alert Service," "Sports Alert Service," and
"Intelligent Information Incorporated" on the Principal Register of the United
States Patent and Trademark Office. We have filed a patent application for our
information messaging and advertising tagging system, Advanced Data Mining
Advertising Tagging and Transaction system. We also have a license agreement
with Portel Services Network, Inc. for Portel's patented process for transacting
some types of electronic commerce. If we fail to protect our intellectual
property, we may be exposed to expensive litigation or risk jeopardizing our
competitive position. We may have to litigate to enforce our intellectual
property rights, to protect our trade secrets or to determine the validity and
scope of the proprietary rights of others. This litigation could result in
substantial costs and the diversion of our management and technical resources
that would harm our business.
In addition, we joined the Wireless Application Protocol Forum Ltd., which
is an industry association of wireless service, wireless equipment and software
companies that has developed worldwide standards for wireless information and
telephone services on digital mobile phones and other wireless devices. As a
result of our affiliation with this association we have agreed to license our
intellectual property to other members on fair and reasonable terms to the
extent that the license is required to develop non-infringing products under the
specifications promulgated by the Wireless Application Protocol Forum Ltd. Each
other member of this association has entered into reciprocal agreements.
Although these agreements provide protections to prevent divulgence or
unauthorized use of such information, we cannot assure you that the other
members will take the steps necessary to protect our proprietary information.
Any claim of infringement could cause us to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
our management from our business. A party making a claim could secure a judgment
that requires us to pay substantial damages.
BECAUSE WE MAY NOT DEVELOP SIGNIFICANT REVENUES FROM ADVERTISING AND ELECTRONIC
COMMERCE, OUR BUSINESS MAY NOT GROW AS PLANNED.
We anticipate increasing our revenues from advertising and electronic
commerce transactions through our wireless portals. To generate additional
revenues from advertising and electronic commerce, we will have to continue to:
- increase our user base;
- attract users who purchase goods and services;
- obtain licenses, patents and other proprietary rights to use other
parties' intellectual property; and
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- develop relationships with advertisers and electronic commerce companies.
BECAUSE WE INTEND TO EXPAND INTERNATIONALLY, WE WILL BE SUBJECT TO RISKS OF
CONDUCTING BUSINESS IN FOREIGN COUNTRIES.
If, as we anticipate, we expand our operations outside North America, we
will be subject to the risks of conducting business in foreign countries,
including:
- our inability to adapt our products and services to local cultural
traits, customs and mobile user preferences;
- our inability to locate qualified local employees, partners and
suppliers;
- the potential burdens of complying with a variety of foreign laws, trade
standards and regulatory requirements, including the regulation of
wireless communications and the Internet and uncertainty regarding
liability for information retrieved and replicated in foreign countries;
and
- general geopolitical risks, such as political and economic instability
and changes in diplomatic and trade relations.
If we fail to overcome any of the foregoing risks, or if we fail to
increase our revenues from advertising and electronic commerce transactions, we
will not grow as anticipated.
IF WE ACQUIRE OR INVEST IN ANOTHER COMPANY, THIS MAY DISRUPT OUR BUSINESS OR
DISTRACT OUR MANAGEMENT.
We have limited experience in acquiring businesses, technologies, services
or products. From time to time, we engage in discussions and negotiations with
companies regarding our acquiring or investing in these companies' businesses,
products, services or technologies. If we acquire or invest in another company,
we could have difficulty assimilating that company's personnel, operations,
products, services, technology and software. In addition, the key personnel of
the acquired company may decide not to work for us. These difficulties could
disrupt our ongoing business, distract our management and employees, increase
our expenses and adversely affect our results of operations. The issuance of
equity securities would be dilutive to our existing stockholders. As of the date
of this prospectus, we have no agreement to enter into any material investment
or acquisition transaction.
RISKS RELATED TO OUR TECHNOLOGY
IF WE DO NOT RESPOND EFFECTIVELY AND ON A TIMELY BASIS TO RAPID TECHNOLOGICAL
CHANGE, OUR PRODUCTS AND SERVICES MAY BECOME OBSOLETE AND WE MAY LOSE USERS.
The wireless and data communications industries are characterized by
rapidly changing technologies, industry standards, customer needs and
competition, as well as by frequent new product and service introductions. Our
products and services must also be compatible with the data networks of wireless
carriers. We must respond to technological changes affecting both our users and
suppliers. We may not be successful in developing and marketing, on a timely and
cost-effective
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basis, new products and services that respond to technological changes, evolving
industry standards or changing customer requirements. Our research and
development efforts may require significant capital and other resources. In
addition, major enhancements or improvements to our technology may require long
development and testing periods. If we fail to develop products and services in
a timely fashion, or if we do not enhance our products and services to meet
evolving user needs and industry standards, we may not remain competitive.
BECAUSE OUR NETWORK MAY BE VULNERABLE TO SECURITY RISKS, WE MAY INCUR
SIGNIFICANT COSTS TO PROTECT AGAINST THE THREAT OF SECURITY BREACHES OR TO
ALLEVIATE PROBLEMS CAUSED BY ANY BREACHES.
A significant barrier to the growth of wireless data services or
transactions on the Internet or by other electronic means has been the need for
secure transmission of confidential information. Unauthorized access, computer
viruses and other accidental or intentional actions could disrupt our systems.
We may incur significant costs to protect against the threat of security
breaches or to alleviate problems caused by such breaches. If a third party were
able to misappropriate our users' personal or proprietary information, we could
be subject to claims, litigation or other potential liabilities that could
materially adversely impact our revenue and may result in the loss of
subscribers.
IF WE EXPERIENCE ANY TYPE OF SYSTEMS FAILURE, IT COULD RESULT IN LOWER REVENUES,
INCREASED COSTS OR CLAIMS OF LIABILITY.
Our products and services depend on real-time, continuous information feeds
from our content providers including the Nasdaq Stock Market, Inc., The New York
Stock Exchange, Inc. and others. Our business strategy is focused on subscribers
that typically require timely receipt of information. Any disruption from our
satellite transmissions or backup landline transmissions could result in delays
in our subscribers' ability to receive information. We currently maintain a
backup generator system to deliver messages during power outages. We cannot
assure you that our systems will operate effectively if we experience a hardware
or software failure or if there is an earthquake, fire or other natural
disaster, a power or telecommunications failure, an act of God or an act of war.
A failure in our systems could cause delays in transmitting data, and as a
result we may lose subscribers and users or face litigation that could involve
material costs and distract management from operating our business. In July
1999, we experienced a systems failure due to a facility air conditioning outage
at our Stamford, Connecticut location for approximately six hours. The costs
related to the failure were less than $10,000.
RISKS RELATED TO REGULATION OF THE INTERNET, WIRELESS TELEPHONE
AND SERVICES PROVIDERS
IF NEW LAWS AND REGULATIONS ARE ENACTED OR THE APPLICATION OR INTERPRETATION OF
EXISTING LAWS AND REGULATIONS CHANGES WE COULD INCUR COSTS IN ORDER TO COMPLY.
The wireless network operators who distribute our products and services are
subject to regulation by the Federal Communications Commission and regulations
that affect them could increase our costs or reduce our ability to continue
distributing our products and services. In addition, there is an increasing
number
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of laws and regulations pertaining to wireless telephones and the Internet under
consideration in the United States and elsewhere. These current and potential
laws or regulations relate to, among other things:
- liability of information providers for the transmission of indecent,
obscene or offensive content over the Internet; and
- liability of information for user privacy in respect of the collection,
distribution, disclosure, security, accuracy and other use of personal
information obtained from individuals accessing Internet sites.
Moreover, the applicability to the Internet of existing laws governing
issues such as intellectual property ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment and personal privacy is
uncertain and developing. Any new legislation or regulation, or the application
or interpretation of existing laws, may have a material and adverse effect on
our business, results of operations and financial condition.
CHANGES IN GOVERNMENT REGULATIONS WHICH SUBJECT US TO SALES AND OTHER TAXES FOR
ELECTRONIC TRANSACTIONS COULD DECREASE THE DEMAND FOR OUR PRODUCTS AND SERVICES
AND NEGATIVELY IMPACT OUR RESULTS.
We do not currently collect sales tax or other similar taxes for electronic
commerce transactions executed using a wireless device. A number of legislative
proposals are under consideration by federal, state, local and foreign
governmental organizations that would impose additional taxes on the sale of
goods and services over the Internet. One or more local, state or foreign
jurisdictions may require that companies located in other jurisdictions collect
sales taxes when engaging in electronic commerce in those jurisdictions.
Imposition of new taxes or fees by one or more states, the Federal government of
the United States or foreign governments on Internet transactions or on the use
of the Internet as a means of communication could adversely affect us.
IF WE ARE HELD LIABLE FOR ONLINE CONTENT PROVIDED BY THIRD PARTIES, OUR
INSURANCE COVERAGE MAY NOT BE ADEQUATE TO PROTECT US AND WE MAY INCUR
SUBSTANTIAL COSTS.
As a distributor of content, we may be liable for claims against us based
on a variety of grounds, including defamation, obscenity, negligence, copyright
or trademark infringement or other grounds based on the nature, publication and
distribution of this content. These types of claims have been brought, sometimes
successfully, against providers of Internet services in the past. It is also
possible that if any information provided through our wireless portals contains
errors or false or misleading information or we fail to provide information to
subscribers on a timely basis, third parties could make claims against us for
losses incurred in reliance on such information or our failure to provide
information on a timely basis. Although we generally require that our content
providers indemnify us for liability based on their content and we carry general
liability insurance, our insurance may not cover potential claims of this type
or the indemnity or insurance limits may not be adequate to cover all costs
incurred in defense of potential claims or to indemnify us for all liability
that may be imposed. If we are found liable in excess of the amount of indemnity
or of our insurance coverage, we could be liable for substantial damages and our
reputation and business may suffer.
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We require our users to accept the terms and conditions of our online
contracts by executing agreements in order to receive our products and services.
Most of the agreements are executed through the use of an electronic signature,
meaning that each subscriber answers a number of questions in which he or she
agrees to be bound by the terms of the subscription agreement. Although
contracts containing electronic signatures have generally been enforced, this
area of the law is relatively new and may be subject to change. Accordingly, if
the law should develop in this area to hold that electronic signatures are not a
valid method of contract execution, we could lose the protections afforded to us
in the limitation of liability and disclaimer of liability provisions contained
in our subscription agreements.
RISKS RELATED TO THIS OFFERING
BECAUSE WE WILL HAVE BROAD DISCRETION IN USING THE NET PROCEEDS OF THIS
OFFERING, WE MAY NOT USE THE PROCEEDS TO THE SATISFACTION OF INVESTORS.
Our management will have broad discretion over the allocation of the net
proceeds from this offering as well as over the timing of their expenditure
without stockholder approval. We intend to use the net proceeds from this
offering for expansion of our sales and marketing operations, further
development of our systems infrastructure, funding operating losses, working
capital and other general corporate purposes, including the development of
technology alliances. In addition, we may use a portion of the proceeds for
acquisitions or other investments. It is likely, however, that our spending
patterns will change following this offering. As a result, you will be relying
upon management's judgment with only limited information about its specific
intentions for the use of the net proceeds of this offering. Our failure to
apply these proceeds effectively could cause our business to suffer.
BECAUSE OUR COMMON STOCK PRICE, LIKE THAT OF MANY TECHNOLOGY COMPANIES, IS
LIKELY TO BE HIGHLY VOLATILE, THE MARKET PRICE OF OUR COMMON STOCK MAY BE LOWER
THAN YOU EXPECTED.
The market price of our common stock is likely to be highly volatile,
because the stock market in general, and the market for technology companies in
particular, has experienced significant volume and price fluctuations. You may
not be able to resell your shares during or following periods of volatility. The
trading prices of many technology companies' stocks have reached historical
highs within the last year and have reflected relative valuations substantially
above historical levels. However, during the same period, these companies'
stocks have also been highly volatile and several companies' stocks have
recorded lows well below their historical highs. We cannot assure you that our
stock will trade at the same levels as other technology stocks.
Factors that could cause volatility in our common stock price include,
among other things:
- actual or anticipated variations in quarterly operating results;
- the introduction of new products or services or customer and/or
distributor discontent with our existing products or services;
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- conditions or trends generally affecting the wireless services and
Internet industry;
- changes in the market valuations of other wireless services and Internet
companies;
- announcements by us or our competitors of technological developments,
significant acquisitions, or joint ventures;
- capital commitments;
- additions or departures of key personnel; and
- sales of common stock or other equity securities.
These factors may materially and adversely affect the market price of our
common stock, regardless of our operating performance.
BECAUSE OUR EARLY INVESTORS PAID SUBSTANTIALLY LESS THAN THE INITIAL PUBLIC
OFFERING PRICE WHEN THEY PURCHASED THEIR SHARES, NEW INVESTORS WILL INCUR
IMMEDIATE AND SUBSTANTIAL DILUTION OF $10.73 IN THE BOOK VALUE OF THEIR
INVESTMENT.
Investors purchasing shares in this offering will incur immediate and
substantial dilution of $10.73 in net tangible book value per share because the
price that investors pay will be substantially greater than the net tangible
book value per share of the shares acquired. This dilution figure assumes an
initial public offering price of $15.00 per share and is calculated on a pro
forma basis assuming conversion of all of our outstanding shares of preferred
stock and no exercise of the underwriters' over-allotment option and deducts the
estimated underwriting discounts and commissions and estimated offering expenses
payable by us. This dilution is due in large part to the fact that our earlier
investors paid substantially less than the initial public offering price when
they purchased their shares. In addition, there are currently options and
warrants for the purchase of 3,196,984 shares of common stock outstanding. To
the extent such options and/or warrants are exercised in the future, there will
be further dilution to new investors.
THE SALE OF ADDITIONAL SHARES OF OUR COMMON STOCK AFTER THIS OFFERING COULD
ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK, AND STOCKHOLDERS WILL
INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.
In the event that we require additional capital to fund our operating
needs, we may need to raise funds through public or private equity financings.
As a result of these equity offerings and the increased number of outstanding
shares of common stock, the demand for our common stock could decrease and cause
the market price of our common stock to decline. If funds are raised through the
issuance of equity securities, the percentage ownership of our then-current
stockholders may be reduced and the holders of new equity securities may have
rights, preferences or privileges senior to those of the holders of our common
stock. Furthermore, we may issue equity securities within the next 12 months to
pay for any future acquisitions.
20
<PAGE> 24
BECAUSE WE EXPECT APPROXIMATELY 11,290,232 SHARES OF COMMON STOCK TO BECOME
AVAILABLE FOR SALE 180 DAYS FROM THE DATE OF THIS PROSPECTUS, OUR SHARE PRICE
MAY BE LOWER THAN YOU EXPECT.
After this offering, we will have 21,487,265 shares of common stock
outstanding. Sales of a substantial number of our shares of common stock in the
public market following this offering or the expectation of such sales could
cause the market price of our common stock to decline. All the shares sold in
this offering will be freely tradable. The remaining shares of common stock
outstanding after this offering will be available for sale in the public markets
as follows:
<TABLE>
<CAPTION>
DATE OF AVAILABILITY FOR SALE NUMBER OF SHARES
- ----------------------------- ----------------
<S> <C>
, 2000 (180 days after the date of
this prospectus)................................. 11,290,232
At various times thereafter upon the expiration of
one-year holding periods......................... 5,088,485
</TABLE>
Of these shares, 10,069,756 shares are subject to a limitation on the
number of shares that can be sold in any three-month period. We are required,
however, to register the resale of substantially all of these shares upon demand
beginning six-months after the date of this prospectus. We also intend to file a
registration statement after consummation of this offering to register all
shares of common stock that we may issue to our employees under our stock option
plan. After this registration statement is effective, these shares will be
eligible for resale in the public market without restriction. In addition,
stockholders that own shares available for sale 180 days after the date of this
prospectus following the expiration of lock-up agreements with the underwriters
described in the above table may be released by Deutsche Bank Securities Inc.
from these arrangements at any time and without notice. This would allow for the
earlier sale of shares in the public market.
WE HAVE ANTI-TAKEOVER DEFENSES THAT COULD OR PREVENT AN ACQUISITION AND COULD
ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.
We are a Delaware corporation. Anti-takeover provisions of Delaware law and
provisions contained in our certificate of incorporation and by-laws could make
it more difficult for a third party to acquire control of us, even if a change
in control would be beneficial to stockholders. These provisions include the
following:
- authorizing the board to issue preferred stock;
- prohibiting cumulative voting in the election of directors;
- limiting the persons who may call special meetings of stockholders; and
- establishing advance notice requirements for nominations for election of
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.
These provisions could have the effect of delaying, deterring or preventing
a change in the control of our company, could deprive our stockholders of an
opportunity to receive a premium for their common stock as part of a sale of our
company or may otherwise discourage a potential acquirer from attempting to
obtain control of us, which in turn could materially adversely affect the market
price of our common stock.
21
<PAGE> 25
FORWARD LOOKING STATEMENTS
Many of the statements included in this prospectus contain forward-looking
statements and information relating to our company. We generally identify
forward-looking statements by the use of terminology such as "may," "will,"
"expect," "intend," "plan," "estimate," "anticipate," "believe," or similar
phrases. We base these statements on our beliefs as well as assumptions we made
using information currently available to us. Because these statements reflect
our current views concerning future events, these statements involve risks,
uncertainties and assumptions. Our actual future performance could differ
materially from these forward-looking statements. These forward-looking
statements involve a number of risks and uncertainties. Important factors that
could cause actual results to differ materially from our expectations include
those risks identified in the foregoing "Risk Factors," as well as other matters
not yet known to us or not currently considered material by us.
We caution you not to place undue reliance on these forward-looking
statements. All written and oral forward-looking statements attributable to us
or persons acting on our behalf are qualified in their entirety by those
cautionary statements.
22
<PAGE> 26
USE OF PROCEEDS
We estimate that we will receive approximately $59.2 million in net
proceeds from this offering, or $68.4 million if the underwriters'
over-allotment option is exercised in full, based on an assumed initial public
offering price equal to $15.00 per share and after deducting the underwriting
discounts and commissions and estimated expenses payable by us.
We expect to use the net proceeds from this offering as follows:
- approximately $15.0 million for expansion of our sales and marketing
operations;
- approximately $5.0 million for further development of our systems
infrastructure, including $1.2 million for expansion of our data center;
- approximately $39.2 million for working capital and other general
corporate purposes, including the development of technology alliances.
In addition, we may use a portion of the net proceeds for acquisitions or other
investments. However, as of the date of this prospectus, we have no agreement
relating to any material acquisition or investment. Further, changing business
conditions and unforeseen circumstances could cause the actual amounts used for
these purposes to vary from these estimates.
Management will have significant flexibility in applying the net proceeds
of the offering. Pending their use, we intend to invest the net proceeds of the
offering in short-term, investment grade interest-bearing instruments.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
intend to retain our earnings for use in the operation of our business and do
not anticipate paying any cash dividends on our common stock in the foreseeable
future.
23
<PAGE> 27
CAPITALIZATION
The following table shows our capitalization as of December 31, 1999, on an
actual basis, a pro forma basis and a pro forma as adjusted basis.
The pro forma information below reflects the conversion of all of our
outstanding preferred stock into 11,316,765 shares of common stock upon the
completion of this offering as though this transaction occurred as of December
31, 1999.
The pro forma as adjusted information adjusts the pro forma information to
give effect to the sale of 4,400,000 shares of common stock offered by us in
this offering, at an assumed initial public offering price of $15.00 per share,
after deducting underwriting discounts and commissions and estimated offering
expenses, and the application of the estimated net proceeds. See Use of
Proceeds.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 28,241 $ 28,241 $ 87,904
======== ======== ========
Mandatorily redeemable preferred stock:
Series B mandatorily redeemable preferred stock, $.01 par
value; 1,705 shares authorized; 1,705 shares issued and
outstanding, actual; no shares issued and outstanding,
pro forma and pro forma as adjusted.................... 1,460 - -
Series D mandatorily redeemable preferred stock, $.01 par
value; 843 shares authorized; 843 shares issued and
outstanding, actual; no shares issued and outstanding,
pro forma and pro forma as adjusted.................... 1,292 - -
Series E mandatorily redeemable preferred stock, $.01 par
value; 9,643.2 shares authorized; 9,643.2 shares issued
and outstanding, actual; no shares issued and
outstanding, pro forma and pro forma as adjusted....... 17,104 - -
Series F mandatorily redeemable preferred stock, $.01 par
value; 8,248.33 shares authorized; 8,248.33 shares
issued and outstanding, actual; no shares issued and
outstanding, pro forma and pro forma as adjusted....... 35,482 - -
-------- -------- --------
Total mandatorily redeemable preferred stock........... $ 55,338 $ - -
-------- -------- --------
Stockholders' equity:
Series C convertible preferred stock at par value, $.01
par value; 2,194 shares authorized; 2,194 shares issued
and outstanding, actual; no shares issued and
outstanding, pro forma and pro forma as adjusted....... - - -
-------- -------- --------
Common stock at par value, $.01 par value; 50,000,000
shares authorized; 7,655,500 shares issued and
outstanding, actual; 18,972,265 shares issued, pro
forma; 23,372,265 shares issued, pro forma as
adjusted............................................... 77 190 234
Additional paid-in capital.................................. 27,253 82,478 141,634
Notes receivable from stockholders.......................... (31) (31) (31)
Deferred compensation....................................... (764) (764) (764)
Accumulated deficit......................................... (45,001) (45,001) (45,001)
Treasury stock at cost, 1,885,000 shares.................... (4,230) (4,230) (4,230)
-------- -------- --------
Total stockholders' equity (deficit)...................... (22,696) 32,642 91,842
-------- -------- --------
Total capitalization...................................... $ 32,642 $ 32,642 $ 91,842
======== ======== ========
</TABLE>
24
<PAGE> 28
- -------------------------
The outstanding share information shown in the table above excludes:
- 1,939,084 shares of common stock issuable upon the exercise of warrants
at a weighted average exercise price of $3.53 per share, of which
1,929,084 shares were issuable upon the exercise of warrants issued as of
December 31, 1999 at a weighted average exercise price of $3.50 per share
and 10,000 shares were issuable upon the exercise of warrants issued
after December 31, 1999 at an exercise price of $10.00 per share;
- an aggregate of 1,005,300 shares of common stock issuable upon the
exercise of outstanding stock options under our 1995 Stock Incentive Plan
at a weighted-average exercise price per share of $3.18 of which 914,000
shares were issuable upon the exercise of outstanding stock options
issued as of December 31, 1999 at a weighted average exercise price of
$2.71 and 91,300 shares were issuable upon the exercise of outstanding
stock options issued after December 31, 1999 at an exercise price of
$7.92;
- 252,600 shares of common stock issuable upon the exercise of outstanding
stock options issued after December 31, 1999 under our 2000 Stock
Incentive Plan at a weighted average exercise price per share of $9.39;
and
- 8,700 shares of common stock available for future grant under our 1995
Stock Incentive Plan and 997,400 shares of our common stock available for
future grant under our 2000 Stock Incentive Plan.
25
<PAGE> 29
DILUTION
Our pro forma net tangible book value at December 31, 1999 was $32.5
million or $1.90 per share of common stock. "Pro forma net tangible book value"
per share represents the amount of our pro forma total tangible assets reduced
by the amount of our total liabilities, divided by the number of pro forma
shares of common stock outstanding as of December 31, 1999. Our pro forma as
adjusted net tangible book value at December 31, 1999, assuming no changes in
our pro forma net tangible book value other than the sale of 4,400,000 shares of
common stock in this offering at an assumed initial offering price of $15.00 per
share and application of estimated net proceeds of $59.2 million from such sale
after deducting the underwriting discounts and commissions and estimated
offering expenses, would have been approximately $91.7 million or $4.27 per
share. This represents an immediate increase in pro forma net tangible book
value of $2.37 per share to existing stockholders and an immediate dilution of
$10.73 per share to new investors. Immediate dilution is the difference between
the purchase price per share paid by a new investor and the net tangible book
value of each share immediately after this offering. The following table
illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........... $15.00
Pro forma net tangible book value per share as of
December 31, 1999..................................... $1.90
Increase per share attributable to new investors....... 2.37
-----
Pro forma as adjusted net tangible book value per share
after this offering.................................... 4.27
------
Dilution per share to new investors....................... $10.73
======
</TABLE>
If the underwriters' over-allotment option is exercised in full, our pro
forma as adjusted net tangible book value at December 31, 1999 would have been
approximately $4.70 per share, representing an immediate increase in net
tangible book value of $2.80 per share to existing stockholders and an immediate
dilution in net tangible book value of $10.30 per share to new investors.
The following table summarizes at December 31, 1999:
- the number of shares of common stock purchased by existing stockholders,
the total consideration and the average price per share paid to us for
those shares;
- the number of shares of our common stock purchased by new investors, the
total consideration and the price paid by them for these shares; and
- the percentage of shares purchased by the existing stockholders and new
investors and the percentages of consideration paid to us for these
shares.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 17,087,265 79.5% $ 52,956,929 45% $ 3.10
New investors.................. 4,400,000 20.5% 66,000,000 55% $15.00
----------- ---- ------------ ---- ------
Total..................... 21,487,265 100% $118,956,929 100% $ 5.54
=========== ==== ============ ==== ======
</TABLE>
In the event that the underwriters' over-allotment option is exercised in
full, the New Investors line in the above table would include: 5,060,000 shares
purchased or 22.8%, $75,900,000 of total consideration paid or 58.9% and a
$15.00 average price per share and the Total line would include: 22,147,265
shares purchased, $128,856,929 of total consideration paid and a $5.82 average
price per share.
26
<PAGE> 30
- -------------------------
The outstanding share information shown in the table above excludes:
- - 1,939,084 shares of common stock issuable upon the exercise of outstanding
warrants at a weighted average exercise price per share of $3.53, of which
1,929,084 shares were issuable upon the exercise of warrants issued as of
December 31, 1999 at a weighted average exercise price of $3.50 per share and
10,000 shares were issuable upon the exercise of warrants issued after
December 31, 1999 at an exercise price of $10.00 per share;
- - an aggregate of 1,005,300 shares of common stock issuable upon the exercise of
outstanding stock options under our 1995 Stock Incentive Plan, at a
weighted-average exercise price per share of $3.18, of which 914,000 shares
were issuable upon the exercise of outstanding stock options issued as of
December 31, 1999 at a weighted average exercise price of $2.71 and 91,300
shares were issuable upon the exercise of outstanding stock options issued
after December 31, 1999 at an exercise price of $7.92;
- - 252,600 shares of common stock issuable upon the exercise of outstanding stock
options issued after December 31, 1999 under our 2000 Stock Incentive Plan at
a weighted average exercise price per share of $9.39; and
- - 8,700 shares of common stock available for future grant under our 1995 Stock
Incentive Plan and 997,400 shares of our common stock available for future
grant under our 2000 Stock Incentive Plan.
27
<PAGE> 31
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data set forth below as of
December 31, 1998 and 1999 and for the fiscal years ended December 31, 1997,
1998 and 1999 are derived from the audited consolidated financial statements
which are included elsewhere in this prospectus. The selected consolidated
financial data as of December 31, 1997 and as of and for the year ended December
31, 1996 is derived from the audited consolidated financial statements not
included in this prospectus. The selected consolidated financial data as of and
for the fiscal year ended December 31, 1995 is derived from our unaudited
consolidated financial statements.
The selected consolidated financial data should be read along with such
consolidated financial statements and the related notes and the section of the
prospectus entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
------------------------------------------------
1995 1996 1997 1998 1999
------ ------- ------- ------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue................................................. $ 387 $ 645 $ 825 $ 1,405 $ 1,734
Cost of revenue (excluding $14 of stock compensation)....... 190 465 700 1,081 1,302
------ ------- ------- ------- --------
Gross profit................................................ 197 180 125 324 432
------ ------- ------- ------- --------
Operating expenses:
Sales and marketing (excluding $94 of stock
compensation)........................................... 110 180 234 584 1,938
General and administrative (excluding $145 of stock
compensation)........................................... 856 1,327 2,258 2,306 4,771
Stock compensation........................................ - - - - 253
------ ------- ------- ------- --------
Total operating expenses.................................. 966 1,507 2,492 2,890 6,962
------ ------- ------- ------- --------
Operating loss.............................................. (769) (1,327) (2,367) (2,566) (6,530)
Interest expense (income) - net............................. (22) (8) 81 329 326
------ ------- ------- ------- --------
Loss before extraordinary item.............................. (747) (1,319) (2,448) (2,895) (6,856)
Extraordinary loss on extinguishment of debt................ - - - - (3,434)
------ ------- ------- ------- --------
Net loss.................................................... $ (747) $(1,319) $(2,448) $(2,895) $(10,290)
Dividends on and redemptions of preferred stock............. - (8) (76) (274) (26,580)
====== ======= ======= ======= ========
Loss applicable to common stock............................. $ (747) $(1,327) $(2,524) $(3,169) $(36,870)
====== ======= ======= ======= ========
Net loss per share - basic and diluted...................... $(0.10) $ (0.18) $ (0.33) $ (0.42) $ (6.43)
====== ======= ======= ======= ========
Shares used in computing net loss per
share..................................................... 7,282 7,552 7,554 7,554 5,736
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
------ ------- ------- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 139 $ 1,168 $ 215 $ 166 $ 28,241
Working capital.......................................... 229 756 (533) (687) 29,468
Total assets............................................. 262 1,343 375 682 36,241
Long-term debt, less current portion..................... - 646 573 455 -
Mandatorily redeemable preferred stock................... - 1,138 1,412 2,500 55,338
Total stockholders' equity (deficit)..................... 201 (916) (2,488) (3,578) (22,696)
</TABLE>
28
<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of our financial condition and results of
operations should be read together with the financial statements and the related
notes included in another part of this prospectus and which are deemed to be
incorporated into this section. This discussion contains forward-looking
statements that involve risks and uncertainties.
OVERVIEW
i3 Mobile, Inc. provides timely personalized information to users of
wireless communications devices in North America. We were founded in February
1991 as Intelligent Information Incorporated and began operations in 1992 with
the launch of our Quote Alert Service, a stock quote and related financial
information service offered directly to our subscribers. A subscriber is a user
who pays for our products and services and a user is an individual who receives
our products and services either at no cost or as a subscriber. Between 1992 and
1996, the primary distribution channel for our products and services was paging
carriers. During this period, we entered into distribution agreements with a
number of the leading paging carriers to distribute our personalized content
services and on-demand products on their networks. In late 1996, we expanded our
product and service focus and signed our first distribution agreement with a
wireless network operator and launched our products and services on the digital
personal communication services network of Omnipoint Communications Services.
The Omnipoint launch included both alert products, which are messages sent to a
subscriber when our network detects that a specific event has occurred based on
that individual's personal profile, and on-demand content products, which are
messages sent to a subscriber shortly after information is requested. A
subscriber can request information from a two-way wireless device, such as a
pager or wireless digital telephone, by sending a text message containing a
request for information, such as a stock quote for a specific company or a
weather forecast for a specific zip code. The request is processed by our
systems and the requested information is sent back to the subscriber via a
wireless network.
Our Omnipoint launch was followed in 1997 by our introduction of tiered
subscription service offerings on the PrimeCo PCS network. Tiered subscription
service offerings are product packages that are differentiated by both price and
service offerings. A higher monthly subscription fee is charged as more services
are included in the package. In 1997, we also deployed our first wireless
microbrowser-based products on AT&T's PocketNet platform in conjunction with
Phone.com. A microbrowser is similar to an Internet browser but runs on data-
capable wireless devices. A microbrowser retrieves information from Web site
servers in a format that conforms to the smaller viewing screens of wireless
devices. Microbrowser-based products allow users to access specially formatted
Web sites to obtain content and to conduct transactions from their wireless
devices. In 1998, we expanded our distribution network by entering into
agreements with other digital wireless network operators such as Bell Mobility
Cellular, Inc. (Canada), US Cellular and SBC Communications, Inc., including its
subsidiaries Pacific Bell, Southwestern Bell Mobile Systems, Inc. and its
Cellular One properties in Baltimore, Boston and Washington, D.C. In 1999, we
entered
29
<PAGE> 33
into distribution agreements with AirTouch Cellular, Clearnet PCS, MTT Mobility
(Canada), US West Wireless and AT&T Wireless Services. Under these non-
exclusive distribution agreements, we provide the wireless network operators
with personalized content products and services which are marketed to their
subscribers and generally charge them a monthly fee based on the number of
subscribers. In 1999, we also introduced electronic commerce through 1-800-
FLOWERS and advertising-supported services through Omnipoint, and we began
offering corporate enterprise services with The Weather Channel through its
Weather.com Internet site. Revenue generated from electronic commerce,
advertising-supported services and corporate enterprise services during 1999 was
minimal.
We develop highly personalized, local, timely and interactive wireless
content products and services that meet the needs of our users. We currently
distribute these products and services primarily through wireless network
operators, and, to a lesser extent, through Internet media networks and
corporate enterprises. Our strategy is to position us as the single-source
wireless portal supplier for our distributors by building innovative products
and continually enhancing our proprietary technology. We intend to diversify our
distribution relationships, to further expand our user and subscriber bases and
to develop advertising and transaction revenue streams. We work closely with our
distributors to develop specific content applications and marketing plans and
build and host user provisioning interfaces such as Web sites, telephone systems
and device-based wireless portals. Our distributors typically provide us with
some or all of the following services: marketing, planning and support, Internet
promotion, local sales force and point of sale promotion, and delivery of
messages over their networks.
Our distribution agreements generally are non-exclusive, have terms of one
to three years and may be terminated by either party, with or without cause. We
believe that our distribution model gives us the opportunity to substantially
increase the number of both users and subscribers while minimizing our sales and
marketing expenses. As revenue is generated from non-subscription sources such
as advertising and electronic commerce, we believe that sales and marketing
costs will become a smaller percentage of our total revenue per user.
We believe that our future success will depend on our ability to deliver a
variety of wireless content, advertising and electronic commerce products and
services through our distributors. Our objectives will require significant
capital expenditures and increased operating expenses in the next several years.
Accordingly, we expect to continue operating at a substantial loss for the
foreseeable future. Our objectives include:
- expanding our network of distributors to include additional wireless
network operators, Internet media networks and corporate enterprises,
such as airlines, package delivery companies, banking and financial
services companies, or any company with a need to deliver information to
its employees or customers via wireless devices;
- expanding our product development, sales, marketing and technology staffs
to support emerging demand, opportunities and technologies;
- expanding our focus to include additional international markets;
30
<PAGE> 34
- expanding our product offerings in content, commerce and technology;
- expanding our advertising and promotional activities; and
- further developing our technology platforms, operational capabilities and
infrastructure.
RESULTS OF OPERATIONS
Our products and services are offered to subscribers on a monthly basis
based on pricing models designed to attract a large number of subscribers. We
recognize subscriber revenue when products and services are provided. Since we
sell information service products that are provided to our users, these products
are not considered tangible products for financial reporting purposes. Deferred
revenue is comprised of payments received from our distributors in advance of
wireless information services being provided.
We derive the majority of our revenue from monthly subscription fees for
personalized news and information products and services delivered to users via
wireless devices, such as digital wireless phones, pagers and personal digital
assistants. Our content services include:
- tiered packages offering users choices from a wide range of news and
information selections to create a personalized content delivery profile,
typically billed on a monthly subscription basis. An example of tiered
packages is AT&T Wireless Services Personal News where all digital
subscribers can receive one complimentary service for free, select an
additional three services for $3.99 per month or select a package of
eight services for $7.99 per month;
- on-demand information products offering users the ability to request
information from and receive information on their wireless devices,
typically billed on a per-request basis;
- complimentary services offering users the ability to receive daily
information on their wireless devices from a limited range of content
providers; and
- wireless portal applications offering users with Internet-enabled devices
the ability to both create personalized content delivery profiles and
receive content on demand, which is billed partially on a subscription
basis and partially on a per-request basis.
We billed wireless network operators directly for over 75% in 1997, 82% in
1998 and 98% in 1999 of our subscription revenues. Our more recent agreements,
that were signed in 1999, with wireless network operators require that we bill
the user directly. In these cases, the user would receive one bill from the
wireless network operator for phone services, and we would bill the user's
credit card directly for information services. We expect our individual service
offerings to continue to decline in price from current levels, but expect per
subscriber revenue to increase over time as the number of our products and
services purchased by subscribers increases. In 1997, subscription services
accounted for approximately 94% of our revenues. In each of 1998 and 1999,
subscription services accounted for 98%. We may also generate revenue from other
sources including software development services, advertising-supported services
and processing of electronic commerce transactions although revenue to date for
such services has been nominal.
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<PAGE> 35
We offer complimentary services to build awareness of our products and
services and to generate revenue. We believe that by offering selected products
and services to users on a complimentary basis we will accelerate the awareness
and usage of our services and migrate users to pay for subscription-based
products and services. We provide content to wireless network operators who, in
turn, offer this content to their wireless customer base. The prices we charge
to the wireless network operators for this service varies by wireless network
operator based upon, among other things, geography, size, subscriber growth
considerations, and the specific content offering. The wireless network
operators are responsible for determining the price, if any, to be charged to
their customers for this service. Where wireless network operators have
expressed an interest in providing their customers with a complimentary product
offering, we have offered these wireless network operators a limited product
offering at a correspondingly reduced sales price. Under these agreements with
reduced pricing terms, we recognize revenue, albeit at reduced rates, at the
time these services are provided. Since our inception, we have entered into only
one agreement where we agreed to provide a wireless network operator's customers
with our product at no cost to the user. This agreement, which was executed in
November 1998, automatically renews for a one year period unless specifically
terminated by either party. Since we provide our product to this wireless
network operators' customers at no cost to the user, we have not, at any time,
recognized any revenue under this agreement.
As a result of our entry into the personal communications services
marketplace in late 1996 and the expansion of our wireless network operator
distribution base in 1998, we have experienced accelerating user growth. The
number of users of our products and services was approximately 29,000 as of
December 31, 1997, 107,000 as of December 31, 1998 and 450,000 as of December
31, 1999. For the periods ending December 31, 1997 and 1998, the number of
complimentary users
was less than 5% of the total number of users. For the period ending December
31,
1999, the number of complimentary users was over 350,000 or 78% of our total
users.
Cost of revenues consists primarily of costs associated with purchasing our
content, direct labor costs, royalty payments, network operations expenses and
distribution fees. We pay our content providers either a flat monthly fee, a fee
based on the number of users requesting the content, a fee based on a percentage
of our revenues generated from the content they provide, a fee based on the
number of on-demand messages requested or a combination of these arrangements.
Distribution fees, which were approximately $197,000 for the year ended December
31, 1999, $103,000 for the year ended December 31, 1998 and $169,000 for the
year ended December 31, 1997, are paid to wireless network operators for
allowing us to use their network to deliver advertising and electronic
commerce-enabling messages and for delivery of content to our direct
subscribers. Management believes that the cost of revenues and gross margin on
our related party revenues are not significantly different from the cost of
revenues and gross margins we earned on our third party revenues.
Sales and marketing expenses consist primarily of advertising and
promotions, sales and marketing personnel, travel and entertainment, and brand
management. Additionally, we pay some of our distributors a marketing fee for
the acquisition and retention of their subscribers. We believe that this is a
cost-effective way to acquire new customers while limiting our sales and
marketing costs. These fees are based
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<PAGE> 36
on a flat fee per subscriber or on a percentage of revenue generated from that
subscriber. We believe that sales and marketing expenses will increase as we
develop new markets and implement programs to increase awareness of our products
and services.
General and administrative expenses consist primarily of employee
compensation and related costs for customer care, general corporate and business
development personnel, along with rent, travel and other infrastructure costs.
Depreciation and amortization expenses consist primarily of depreciation
expenses arising from our operations centers and other property and equipment
purchases and amortization of a license agreement with Portel Services Network,
Inc.
Stock compensation represents non-cash charges related to the issuance of
stock options and stock purchase warrants for our common stock. In 1999, we
recognized $253,000 of stock compensation costs and at December 31, 1999 we had
deferred compensation included in our balance sheet of $764,000. We have also
recorded additional deferred compensation of approximately $1,704,000 related to
options and warrants issued since December 31, 1999. These deferred charges
represent future stock compensation expense that will be recognized over the
remaining vesting period of the related options or the remaining agreement term
for the related warrants. Deferred compensation will be amortized to the
statement of operations in the amount of $690,000 for 2000, $695,000 for 2001,
$668,000 for 2002 and $415,000 for 2003.
Net interest expense is comprised primarily of interest on our indebtedness
to the Connecticut Development Authority and Intelligent Investment Partners,
Inc. Both notes were retired in the fourth quarter of 1999 with proceeds
received from the sale of Series F convertible preferred stock. Interest income
consists primarily of interest earned on cash equivalents.
Our expense levels are based, in part, on our expectations regarding future
revenues. As a result, any changes in revenues relative to our expectations
could cause significant changes in our operating results. We face a number of
risks and uncertainties encountered by companies in the rapidly evolving
wireless telecommunications market and the Internet industries. Due to the
foregoing factors, the following period to period comparisons of our revenue
levels and operating results may not be meaningful and should not be relied on
to predict our future performance.
YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1999
Net Revenue. Net revenues increased 23% from $1,405,000 for the year ended
December 31, 1998 to $1,734,000 for the year ended December 31, 1999. This
increase was primarily due to the recognition of revenues from the successful
1998 launches of PrimeCo PCS, Bell Mobility, and SBC Communications and the
growth of our subscriber base as a result of our agreements with other wireless
network operators. The percentage increase in revenue lagged substantially
behind the percentage increase in users due to an increase in users receiving
our new complimentary services and a decrease in the price of individual
subscription services. Subscription fees decreased in 1999 from 1998 levels due
to management's decision to increase market penetration by reducing prices for
our basic and advanced services. Revenue generated by subscribers of Omnipoint
Commu-
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nications Services, SBC Communications and Bell Mobility together accounted for
approximately 70% of our total revenue for the year ended December 31, 1999 and
52% for the year ended December 31, 1998. In addition, Omnipoint Communications
Services alone accounted for 41% of our total revenue for the years ended
December 31, 1999 and 1998. Net revenues from SkyTel Communications, Inc., a
related party, decreased from $160,000 for the year ended December 31, 1998 to
$106,000 for the year ended December 31, 1999. Only $23,000 of the net revenues
from SkyTel in 1999 is included as net revenues from related parties. In
February 1999, SkyTel liquidated its ownership of our common stock and Series A
preferred stock and relinquished its seat on our board of directors. Subsequent
to these actions it was no longer considered a related party.
Cost of Revenue. Cost of revenue increased by 20% from $1,081,000 for the
year ended December 31, 1998, to $1,302,000 for the year ended December 31,
1999. Approximately $55,000 of the increase was related to an increase in the
delivery of stock quote information and an increase in minimum fees associated
with the acquisition of additional general news content. Network operations
costs also increased by approximately $100,000 in the year ended December 31,
1999 compared to the year ended December 31, 1998 as a result of increased labor
costs to provide 24 hour customer care and operations support. The increases in
content-related costs and network operations costs were offset by a $64,000
reduction during this period in distribution fees payable primarily to paging
carriers as a result of our elimination of unprofitable two-way paging services
during the fourth quarter of 1998.
Sales and Marketing Expenses. Sales and marketing expenses increased by
232% from $584,000 for the year ended December 31, 1998 to $1,938,000 for the
year ended December 31, 1999. This increase during 1999 was attributable to
increased compensation expenses, including the hiring of additional sales and
marketing personnel, and the expansion of our marketing programs to increase
market awareness of our company and our products and services.
General and Administrative Expenses. General and administrative expenses
increased by 107% from $2,306,000 for the year ended December 31, 1998 to
$4,771,000 for the year ended December 31, 1999. This increase was primarily due
to increased compensation costs from the addition of corporate and business
development personnel, increased professional fees, rent and other related
infrastructure expenses.
Interest Expense (Income), Net. Net interest expense of $329,000 for the
year ended December 31, 1998 was comparable to net interest expense of $326,000
for the year ended December 31, 1999. The increased interest expense on the
$5,000,000 note payable to Intelligent Investment Partners, Inc. for the year
ended December 31, 1999 was offset by one-time interest charges of $210,000 in
the year ended December 31, 1998 for the issuance of warrants to purchase shares
of common stock in connection with debt obligations.
Extraordinary Loss. In December 1999, we converted two notes into shares
of Series F mandatorily redeemable preferred stock. This debt extinguishment
resulted in an extraordinary loss on redemption of $3,434,000.
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Net Loss. We incurred net losses of $2,895,000 for the year ended December
31, 1998 and $10,290,000 for the year ended December 31, 1999. The net loss for
the year ended December 31, 1999 reflects a non-recurring charge of $3,434,000
for a one time loss on the early extinguishment of debt.
YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1998
Net Revenue. Net revenue increased from $825,000 for the year ended
December 31, 1997 to $1,405,000 for the year ended December 31, 1998. The
increase in 1998 was primarily attributable to new distribution agreements with
personal communications services wireless network operators and the further
development of our Omnipoint Communications Services relationship. In 1998, we
received 40% of our revenues from Omnipoint Communications Services. Net revenue
from SkyTel Communications, Inc., a related party, was $149,000 for the year
ended December 31, 1997 and $160,000 for the year ended December 31, 1998.
Throughout these periods the prices of subscription services have decreased as a
result of competitive pressures in the marketplace. However, the impact of these
price decreases has been offset by increases in service offerings and increased
subscribers counts.
Cost of Revenue. The cost of revenue of providing our products and
services increased from $700,000 for the year ended December 31, 1997, to
$1,081,000 for the year ended December 31, 1998. The increase in cost of revenue
for 1998 was attributable to higher subscriber volume partially offset by
reduced content costs as we terminated our higher-cost content agreements.
Sales and Marketing Expenses. Sales and marketing expenses increased from
$234,000 for the year ended December 31, 1997, to $584,000 for the year ended
December 31, 1998. The increase for the year ended December 31, 1998 was
attributable to the initiation of an aggressive marketing program to attract new
users and subscribers and the addition of sales and marketing personnel.
General and Administrative Expenses. General and administrative expenses
increased from $2,258,000 for the year ended December 31, 1997 to $2,306,000 for
the year ended December 31, 1998. This increase was the result of increased
personnel and higher infrastructure costs, including expenditures for network
systems and software.
Interest Expense, Net. Net interest expense increased from $81,000 for the
year ended December 31, 1997 to $329,000 for the year ended December 31, 1998 as
a result of a one-time interest charge of $210,000 in 1998 for the issuance of
warrants to purchase shares of common stock in connection with debt obligations.
Net Loss. We incurred losses of $2,448,000 for the year ended December 31,
1997 and $2,895,000 for the year ended December 31, 1998. Our net loss for each
of these three years increased primarily as a result of increased operating
expenses in those years.
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LIQUIDITY AND CAPITAL RESOURCES
Since our inception we have financed our operations primarily through sales
of our equity securities and the issuance of long-term debt, which has resulted
in aggregate cash proceeds of $46,400,000 through December 31, 1999.
Net cash used in operating activities was $2,381,000 for the year ended
December 31, 1997, $2,644,000 for the year ended December 31, 1998 and
$4,589,000 for the year ended December 31, 1999. The principal use of cash in
each of these periods was to fund our losses from operations.
Net cash provided by financing activities was $1,446,000 for the year ended
December 31, 1997, $2,652,000 for the year ended December 31, 1998, and
$34,464,000 for the year ended December 31, 1999. Cash provided by financing
activities in each of these periods was primarily attributable to proceeds from
sales of our equity securities and the issuance of debt.
In February 1999, we sold, 7,714.56 shares of Series E mandatorily
redeemable convertible preferred stock for $12,000,000 to a private investor
group. As the equivalent conversion price per share of common stock related to
the February 1999 issuance is equal to or greater than the estimated fair value
of our shares of common stock at the time of issuance no beneficial conversion
charge is applicable to the February issuance. On November 23, 1999, the same
private investor group, in accordance with its contract with us, purchased an
additional 1,928.64 shares of Series E mandatorily redeemable convertible
preferred stock for $3,000,000. We recognized a $3,000,000 deemed dividend as a
charge to additional paid-in capital and an increase to net loss available to
common stockholders for the beneficial conversion feature, calculated as the
difference between the per share conversion price and the estimated fair value
of the common stock into which the preferred stock is convertible, measured at
the commitment date. This beneficial conversion feature is limited to the amount
of the proceeds received, or $3,000,000. The Series E preferred stock is
convertible into 4,821,600 shares of common stock at an equivalent price per
common share of $3.11.
In February 1999, we repurchased 1,885,000 shares of our common stock and
3,770 shares of our Series A preferred stock from a stockholder for $8,000,000
in cash and notes and issued a warrant to purchase 500,000 shares of our common
stock at an exercise price of $3.00 per share. In connection with this
repurchase, we paid $3,000,000 in cash and delivered a $5,000,000 promissory
note. This note was converted into Series F mandatorily redeemable preferred
stock in December 1999.
On December 22, 1999, we issued 8,248.33 shares of Series F mandatorily
redeemable convertible preferred stock at a price of $3,960.40 per share to
private investor groups. The proceeds include $24,850,000 of cash investments,
including $3,000,000 from a related party stockholder, the conversion of a
$5,000,000 outstanding note payable, the conversion of a $317 five-year
convertible note payable and future television advertising rights. In connection
with this issuance we recorded a beneficial conversion charge of $17,504,000, an
extraordinary loss on the redemption of the two notes payable of $3,434,000 and
deferred advertising value of $4,261,000. These charges are calculated as the
difference between the
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per share value of the conversion feature and the estimated fair value of the
common stock at the commitment date multiplied by the applicable equivalent
shares of common stock. The Series F mandatorily redeemable preferred stock is
convertible into 4,124,165 shares of common stock at an equivalent price per
share of common stock of $7.92.
Upon completion of this offering, each of our shares of preferred stock
will convert into 500 shares of common stock. We believe that the net proceeds
from this offering, together with funding from private financings and our
current cash and cash equivalents, will be sufficient to meet our anticipated
cash needs for working capital and capital expenditures for at least the next 24
months. Additionally, we have sufficient cash to fund operations for the next 12
months without the offering proceeds.
Cash used in investing activities was $17,000 for the year ended December
31, 1997, $57,000 for the year ended December 31, 1998, and $1,800,000 for the
year ended December 31, 1999. Cash used in investing activities relates
primarily to cash purchases of fixed assets. Additionally, we entered into a
license agreement for a technology patent for which we paid $100,000 during
1999.
As of December 31, 1999, our estimated capital expenditures for the next 12
months consist of approximately $3,500,000 for the expansion of our operation
centers in Connecticut and Texas and approximately $1,500,000 for a consulting
project to upgrade our internal billing system and data warehousing system. We
also plan to increase our sales and marketing and general and administrative
expenses by over $20,000,000 in 2000. We also expect to expend significant
capital resources on operating expenses for day-to-day operations,
infrastructure, general corporate and business development personnel, sales and
marketing personnel and programs and other working capital needs to grow our
business domestically and internationally. The amounts and timing of these
expenditures may vary depending on a number of factors, including the amount of
cash generated by our operations, competitive and technological developments,
the nature of any acquisitions identified and the rate of growth of our
business.
We cannot assure you that the assumptions of revenue and expense on which
our forecasts are based will prove to be accurate. In addition, we are
continually reviewing acquisition opportunities, however, we have no present
understanding or agreement relating to any material acquisition. Our financial
results may vary as a result of a number of factors, many of which are beyond
our control and any of which could cause our business to suffer. In addition,
because the market for wireless data products and services is new and evolving,
it is difficult to predict future financial results. Our expenses are based in
part on our expectations regarding future revenues. As a result, if our revenues
do not meet our expectations, our financial results will likely suffer.
If additional funding is required, we may seek such funding through public
or private financings or other arrangements. Adequate funds may not be available
when needed or may not be available on terms favorable to us. If additional
funds are raised by issuing equity securities, dilution to existing stockholders
may result. If funding is insufficient at any time in the future, we may be
unable to develop or enhance our services, take advantage of business
opportunities, respond to competitive pressures or grow our business as we hope.
This could have a material adverse effect on our business, financial condition
and results of operations.
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YEAR 2000 COMPLIANCE ISSUES
Many currently installed computer systems and software products are coded
to accept or recognize only two digits rather than four digits to define the
year in the date code field. These systems and software products will need to
accept four digit year entries to distinguish 21st century dates from 20th
century dates. Systems and products that are not corrected to do this could
cause a disruption of operations including a temporary inability to deliver
messages, process transactions, send invoices or engage in other normal business
activities.
We maintain a significant number of computer software systems and operating
systems across our company that are potentially subject to year 2000 problems.
We have taken extensive steps to prepare for the year 2000 transition. We
believe that we have run all of our applications on hardware and operating
systems that we have determined are year 2000 compliant. We believe that all of
our computer hardware has been inventoried and checked against the
manufacturers' year 2000 compliance declarations. We believe that all
non-compliant hardware has been upgraded, if possible, or replaced. We believe
that all third-party software, including operating systems and applications,
have been inventoried and checked against the manufacturers' compliance
statements. We believe that we have upgraded and corrected software as
recommended and provided by the manufacturers.
We are also continuing to seek assurances from third parties on whom we
rely and whose potential year 2000 problems could affect our business. We have
been advised by our data providers, communications providers, device
manufacturers, wireless network operators, and Internet media networks and
corporate enterprises that their systems that might impact our own systems are
year 2000 compliant. We have developed a contingency plan to deal with failures
that may occur during the year 2000 transition which involves alternate ways of
providing mission-critical functions if they fail. The most likely worst case
scenario would be the failure of the landline or wireless networks that carry
data to us or from us to our distributors and users. If this happens, we would
not be able to deliver our products and services to our distributors and users
and we may lose revenue. Although we have taken the steps described above to
make our systems year 2000 compliant, we may experience material problems and
expenses associated with year 2000 compliance that could adversely affect our
business, results of operations and financial condition. If the assurances that
we have received from third parties are false or inaccurate, we may experience
disruption resulting in additional expense and loss of revenue.
We are also subject to outside forces that might generally affect industry
and commerce, such as year 2000 compliance failures by utility or transportation
companies. If our distributors and customers experience disruptions related to
our services and systems, they may initiate litigation against us even if the
disruptions were caused by their own systems or software provided by others.
We have purchased most of our equipment within the last four years, which
has kept the costs of year 2000 compliance efforts to a minimum. All non-
compliant software and equipment has been upgraded or replaced and our total
costs relating to year 2000 compliance have been less than $100,000. Based on
our review of compliance to date, we do not expect any future costs related to
year 2000 compliance to be material.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have limited exposure to financial market risks, including changes in
interest rates. We do not currently transact business in foreign currencies and,
accordingly, are not subject to exposure from adverse movements in foreign
currency exchange rates. Our exposure to market risks for changes in interest
rates relates primarily to corporate debt securities. We place our investments
with high credit quality issuers and, by policy, limit the amount of the credit
exposure to any one issuer. Our general policy is to limit the risk of principal
loss and ensure the safety of invested funds by limiting market and credit risk.
All highly liquid investments with a maturity of less than three months at the
date of purchase are considered to be cash equivalents.
As of December 31, 1999 we had no debt outstanding. We currently have no
plans to incur debt during the next 12 months. As such, changes in interest
rates will only impact interest income. The impact of potential changes in
hypothetical interest rates on budgeted interest income in 2000 has been
estimated at approximately $500,000 or 2% of budgeted net loss for each 1%
change in interest rates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use (SOP 98-1). SOP 98-1 provides guidance
for determining whether computer software is internal-use software, and guidance
on accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. The impact of adopting SOP 98-1, which
was adopted for our fiscal year ending December 31, 1999, was minimal.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 137 which delays the effective date of
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133, as amended, is to be effective for us beginning in 2001. SFAS No. 133
establishes accounting and reporting standards for derivative financial
instruments and hedging activities related to those instruments, as well as
other hedging activities. Because we do not currently hold any derivative
financial instruments and do not engage in hedging activities, the adoption of
SFAS No. 133 is not expected to have any impact on our consolidated financial
position, results of operations or cash flows.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition(SAB 101) which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the Securities and Exchange Commission. SAB 101 outlines
the basic criteria that must be met to recognize revenue and provides guidance
for disclosures related to revenue recognition policies. We believe that SAB 101
has no material effect on our financial position, results of operations or cash
flows.
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OUR BUSINESS
COMPANY OVERVIEW
We provide timely personalized information to users of wireless
communications devices, such as mobile phones, pagers and personal digital
assistants, in North America. Personalized information means that our systems
enable a user to provide us with their content preferences and to identify those
services they want to receive and when they want to receive them. We currently
provide individually customized data services such as the delivery of stock
quotes and other financial information, news, weather, sports, entertainment,
traffic and travel information, and, depending on a user's type of wireless
device and network, sending and receiving e-mail, personal calendar and wireless
electronic commerce applications.
We believe that the convergence of the growth in the use of digital
wireless communication devices and the rapidly increasing demand for and
availability of real-time content over the Internet provides us with significant
business opportunities. At December 31, 1999 we had over 450,000 users of our
products and services, consisting of approximately 100,000 paying subscribers
and 350,000 complimentary users. The Internet has generally increased the demand
for access to relevant real-time information and services. We believe that
individuals will want that same information and service when away from their
computers. Our products can fulfill those needs on a wireless basis. Therefore,
as the number of individuals using the Internet increases, we expect the
potential market for our services will also increase.
We offer our products and services primarily through co-branded
distribution relationships with wireless network operators that offer our
products and services to their users on both a complimentary and subscription
basis. Co-branded distribution relationships are arrangements where the brand
names of the distributor and i3 Mobile are displayed together prominently on the
marketing materials and the distributor's Web sites. We are currently providing
personalized wireless information services, such as "AT&T Personal News" and
Omnipoint's "InfoServices," under agreements with more than 15 wireless network
operators, collectively representing approximately 48 million wireless phone
subscribers at September 30, 1999, or more than 55% of the total North American
market of wireless phone users. These wireless network operators include Bell
Mobility Cellular, Inc. (Canada), Omnipoint Communications Services, and SBC
Communications, including its subsidiaries Southwestern Bell Mobile Systems,
Inc., Pacific Bell and Cellular One properties in Boston, Baltimore and
Washington D.C., all of which, as a group, accounted for 70% of our revenues for
the year ended December 31, 1999. In addition, we have distributor agreements
with AirTouch Cellular and AT&T Wireless Services, Inc. who have the two largest
wireless telephone subscriber bases in North America. In 1999 these agreements
represented less than 1% of our revenues.
We provide wireless network operators a package of products and services to
enable them to deliver personalized information to their customers through their
networks. This package of products and services consists of technology,
including the systems and communications capabilities, as well as customer
support and other services. We also offer a similar package of products and
services to Internet media networks and corporate enterprises seeking to expand
their Internet- or intranet-based services through wireless communications
networks.
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Currently, we generate most of our revenue from subscriptions for our
products and services, and we expect to generate additional revenue in the
future from advertising sales and wireless electronic commerce transactions. We
believe that distribution capabilities and name recognition of our distributors
will allow us to rapidly develop our business and brand name recognition with
lower capital requirements than would be possible on a direct-to-user basis.
Since we capitalize on the market acceptance of our distributors, we do not need
to establish our own distribution channels or to invest heavily in market
awareness programs. Our distributors have integrated our products with their
other service offerings, enabling a faster and broader distribution of our
products and services than we can realize on a direct-to-user basis.
INDUSTRY BACKGROUND
MARKET OPPORTUNITY: EMERGENCE OF A NEW MEDIUM
We believe that wireless mobile data is emerging as a powerful new medium,
uniquely capable of creating value through the ability to deliver highly
personalized, local, timely and interactive content and services to wireless
devices. According to DataQuest, wireless data subscribers will grow at a
compound annual growth rate of 82% from 3 million subscribers in 1999 to 36
million subscribers in 2003, creating a market with more than $3 billion in
annual revenue. The emergence of the mobile data medium is being driven by the
convergence of four major trends:
- GROWTH IN WIRELESS COMMUNICATIONS
The wireless telephone services market worldwide has grown
significantly in recent years and this growth is expected to continue.
According to International Data Corporation, the number of wireless phone
subscribers in the United States is expected to grow at a compound annual
growth rate of 13.4% from 64.4 million at the end of 1998 to 120.7 million
at the end of 2003. On a global basis, International Data Corporation
expects the number of wireless phone subscribers to increase at a compound
annual growth rate of 28.9%, from 303.4 million at the end of 1998 to 1.08
billion at the end of 2003.
As wireless network coverage has expanded, the availability and
functionality of wireless service has increased significantly. At the same
time, falling prices of wireless services and increased functionality of
handsets have made wireless services widely available for new wireless
users in general. New handsets and other handheld computing devices
designed specifically to manage data applications and access the Internet
have also improved the ease of use of wireless data services.
- GROWTH IN INTERNET SERVICES
The Internet marketplace is also experiencing rapid growth as a medium
for sharing information and conducting business transactions. International
Data Corporation estimates that the number of worldwide Web users reached
approximately 142 million at the end of 1998 and is forecasted to grow at a
compound annual growth rate of 29% to approximately 398 million by the end
of 2002. By 2001, International Data Corporation expects the total value of
transactions conducted over the Web to exceed $398 billion.
With the expanding acceptance of the Internet as a vital personal
resource, there is increased competition among Web sites for users. This
has prompted Internet companies to seek innovative means to increase the
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number of subscribers and subscriber retention. In addition, corporate
intranets have become a vital business communications tool and source of
information for mobile workers. We believe that since individuals and
businesses have become accustomed to and reliant upon accessing various
categories of information easily and immediately through the Internet and
corporate intranets, they are now demanding this information when not
connected to a computer.
- EVOLUTION OF MEDIA
Media is the creation of information and entertainment content
distributed to those who have a need to use it. We believe economic value
has been and will continue to be created by companies that acquire, create
and aggregate information and by companies that distribute it to end-users.
As the number of channels for content distribution has increased, creators
and distributors of content need to distinguish their services from those
of their competitors. As a result, media content has become more targeted
to specific audiences and delivers more specialized information. Now the
Internet offers content to appeal to even more targeted audiences.
We believe that one of the principal drivers of the growth of the
Internet as a commercial medium is its ability to create value through the
delivery of highly specialized, interactive, local and personally relevant
content to users. We also believe that advertisers, businesses and
individuals benefit from the ability to communicate and transact with each
other in more direct and efficient ways on the Internet. With existing
Internet technology, advertising can be directed to specific individuals
based on their demographic profiles. We believe significant additional
value for advertisers, businesses and individuals can be created through
the extension of targeted advertising by utilizing wireless
telecommunications technology.
- TECHNOLOGY, APPLICATIONS AND STANDARDS DEVELOPMENT
New software developments in the area of wireless content delivery
have made it possible for users to demand, retrieve and interact with
personalized content and an expanding range of applications over wireless
devices. The development of standards such as the Wireless Application
Protocol and specific applications and content designed for the wireless
environment have enabled the critical link between information available on
the Internet and wireless networks. The Wireless Application Protocol,
which is commonly referred to as WAP, is a universal technology standard
for wireless devices which enables users to easily access Internet-based
information and services from the screens of their wireless devices, such
as e-mail, news, sports, financial information services, entertainment,
travel and electronic commerce transactions. New generations of wireless
transmission technologies promise to increase the capacity and speed of
wireless networks and expand the functionality and the range of text, audio
and video applications available in the wireless data medium to levels
equal to or exceeding those available from wireline networks.
THE I3 MOBILE OFFERING
As dependence on access to information, e-mail services, corporate
intranets and other Internet-based services increases, we believe that mobile
individuals will
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continue to seek many of the same benefits provided by the Internet on hand-held
wireless devices. We believe our products and services combine the most useful
features of Internet and wireless telephone technologies to enable the
distribution of personalized information through this new mobile data medium. We
believe that we provide comprehensive product and service offerings for each of
the following groups.
MOBILE INDIVIDUALS
As individuals become more reliant on mobile communications, we believe
their demand for timely access to local, regional, national and global
information of personal value or interest will increase. They will also seek to
receive this information in a convenient manner and on their choice of wireless
device through any wireless network.
Our technology and products and services allow the mobile individual to
demand and receive relevant, personalized information through a wireless device.
Our users create personal profiles when they register for our services on co-
branded Web sites or by telephone. A personal profile containing relevant
information provided to us by the user, such as the user's wireless phone
number, region and content preferences, is created as part of the user
registration process and is stored in our database. We believe that creating
personal profiles for individual users, our ability to monitor data streams and
identifying and delivering information based on those personal profiles provide
substantial value to mobile individuals.
WIRELESS NETWORK OPERATORS
Wireless network operators are seeking to offer data services in addition
to voice telephone in order to increase revenue per unit generated by additional
billable services, differentiate their service offerings from their competitors,
increase customer loyalty and increase minutes of use. To offer these new data
services, carriers need wireless data service expertise, simple implementation
with minimal capital investment, and access to aggregated content and
applications that are tailored to wireless devices and networks. In order to
deliver personalized information and Internet-based services to their wireless
subscribers, wireless network operators must provide personalized data products
as well as customer service and billing.
We offer wireless network operators content aggregation, applications
development and integration, content filtering and parsing, systems for personal
profiling, billing services, customer care services, and delivery of messages in
volume. This allows wireless network operators to outsource these services,
thereby minimizing their time and capital expenditures required to provide these
services. We have agreements with over 50 providers of news, financial, weather,
sports and other sources of information and can bundle these products and offer
them in packages customized for wireless network operators.
Effective wireless data systems must function seamlessly over diverse
networks, devices and operating systems. We support and develop applications for
a wide variety of wireless protocols that allow wireless devices to display
Internet-based information, including applications for Wireless Application
Protocol. Further, because our technology allows messaging to devices using new
technologies, we provide wireless network operators with a migration path to
Internet browsing
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capabilities as equipment, content availability, and networks evolve to support
this new functionality.
INTERNET MEDIA NETWORKS AND CORPORATE ENTERPRISES
Internet media networks and corporate enterprises need to deliver the
content they provide through new distribution channels in order to create
enhanced value for existing Web services to generate additional revenue. In
order to create this new revenue and enhanced value, Internet media networks and
corporate enterprises need access to wireless distribution channels and the
ability to publish their content on multiple wireless data platforms. We provide
digital content providers with access to our distribution relationships with
wireless network operators. Our technology can deliver a message initiated by
any of our Internet media networks or corporate enterprise distributors to any
digital handset capable of receiving Short Message Service, commonly referred to
as SMS. Short Message Service is a globally accepted wireless service that
enables the transmission of alpha-numeric messages between mobile users and
wireless networks, such as e-mail, paging and voice mail systems. We also
provide digital content providers with the means to repackage their content for
delivery through a wide variety of wireless data protocols such as Short Message
Service applications, Wireless Application Protocol, browser applications and
various voice applications.
ADVERTISERS AND ELECTRONIC COMMERCE COMPANIES
Advertisers and electronic commerce companies are seeking additional
channels to market their products and/or services. We believe that advertisers
will benefit from the wireless data medium's ability to expand their
distribution reach and to target specific advertisements and product messages to
specific users. We also believe that electronic commerce companies will benefit
as the increased convenience and ease of use of wireless devices results in
higher transaction volume.
We provide advertisers and electronic commerce companies with the ability
to target messages to large numbers of individuals based on their specific user
profiles. Prior to the Internet, this could not be accomplished on such a large
scale without considerable cost and expense. According to the 1999 Yankee Group
Mobile User Survey, more than half of the respondents indicated that they would
accept advertisements and promotions in order to receive complimentary wireless
content. We have developed a patent-pending engine system, Advanced Data Mining
Advertising Tagging and Transaction system, that matches personal profile and
demographic data with advertising targeting information. In addition, we are
developing electronic commerce applications and have licensed patented
technology that will allow mobile users to conduct electronic commerce
transactions on a secure, interactive basis. In the future, we expect our
advertising and electronic commerce applications to be enhanced with location
specific applications, which are offerings that deliver content or services
specifically targeted to the user's location.
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The following diagram illustrates how our technology creates a bridge
between content providers and wireless network operators to deliver personalized
information to the mobile individual:
[i3 Mobile, Inc. FLOW CHART]
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STRATEGY
Our objective is to be the leading provider of personalized wireless data
products and services that provide information, entertainment and electronic
commerce. The key elements of our strategy are:
POSITION I3 MOBILE AS THE SINGLE-SOURCE WIRELESS PORTAL FOR OUR DISTRIBUTORS
We intend to become our distributors' principal data services provider and
the integrator of content services to the distributors' customer base. Our
distribution relationships allow us to access our distributors' customers,
leverage the name recognition of our distributors in local markets and deliver
value to advertisers, Internet media networks and corporate enterprises through
our large base of established users. We intend to provide our users and
distributors with the ability to migrate to new technologies as they develop,
including Wireless Application Protocol and Internet browsing capabilities.
CONTINUE TO BUILD INNOVATIVE PRODUCTS
We will continue to build innovative products by aggregating and delivering
relevant content to the mobile user in a manner that is cost effective and
beneficial to our distributors. In order to satisfy the needs of the mobile
individual, we will continue to develop our product offerings in a variety of
personal and commercial information categories that are appealing, relevant and
personalized to mobile individuals and that address the local and regional
interests of individual users. We intend to continue to develop innovative,
interactive and electronic commerce applications that enhance the functionality
of the wireless data medium for our users.
GROW OUR USER BASE AND BUILD I3 MOBILE BRAND AWARENESS
We will continue to leverage our distribution relationships and diversify
our marketing initiatives to increase our user base and build awareness of our
services and our brand. As users become accustomed to and realize the benefit of
receiving information on their wireless devices, we believe they will subscribe
for additional services. We actively seek to migrate our complimentary users to
subscription services through direct and co-operative marketing efforts with our
distributors. We also intend to increase our brand awareness independently and
by capitalizing on our co-branding "Powered by i3 Mobile" marketing strategy
which leverages the extensive marketing and advertising resources and efforts of
our wireless network operator and Internet media network and corporate
enterprise distributors.
EXPAND AND DIVERSIFY OUR DISTRIBUTION RELATIONSHIPS
We will continue to seek to expand and diversify our distribution
relationships in order to increase our user base and develop diversified
distribution channels. We believe that we can leverage our relationships with
our existing distributors to migrate our products and services to other
distribution channels. We believe that our capabilities and relationships
provide us with industry credibility when we market our products and services to
other distribution channels. In this regard, we believe that both Internet media
and corporate enterprises will utilize our proprietary technologies, know-how
and services to enable wireless delivery of their content. We currently have
agreements with four enterprises and engage in
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ongoing discussions with additional enterprises, including banking and financial
services, portal and stock-trading Web sites, air travel and package delivery
services, that have expressed an interest in offering our services. We believe
that we can enable these businesses to communicate and interact with their
customers via wireless devices. We will also continue to seek to increase the
number of our distribution relationships in North America and begin to establish
distribution relationships in Europe, Latin America and the Pacific Rim in the
second half of 2000.
DEVELOP ADVERTISING AND TRANSACTIONAL REVENUE
We believe that advertising and wireless electronic commerce transactions
represent a significant revenue generating opportunity. We currently have the
capacity to deliver in excess of 12 million targeted advertising impressions per
month through the use of our patent-pending wireless advertising engine. As the
wireless mobile data medium matures with technological advances and increased
user awareness, we believe that users will desire to transact business on a
wireless basis. We intend to continue to develop and license technology to offer
users access to a wide variety of electronic commerce opportunities. We have an
exclusive license with Portel Services Network whereby we have exclusive rights
to its process patent enabling selected three-party wireless electronic commerce
transactions. We have a non-exclusive license from Diversinet Corp. that enables
us to use Diversinet's technology to serve as an authentication site for
wireless electronic commerce transactions. The technologies underlying these
licenses include security and authentication capabilities.
ADVANCE OUR TECHNOLOGY AND CONTENT DELIVERY SYSTEMS
We will continue to invest in our underlying proprietary filtering
capabilities and content delivery abilities to ensure that we are capable of
meeting the growing demand for our products and services. Our strategy is to
continue to maintain our platform's compliance with all major data standards for
delivery of our products and services on wireless networks and devices. We
believe that our technology enables us to rapidly adapt our platforms to new
technology, devices and protocols. We have dedicated resources in anticipation
of and to capitalize on the emergence of these new technologies, including
Wireless Application Protocol based Internet browsing. In this regard, we
utilize our own research and development efforts as well as the research and
development performed by many of our business relationships, including handset
manufacturers, wireless network operators and content and electronic commerce
companies.
PRODUCTS AND SERVICES
We create products and services targeted to the mobile individual. We are
focused on providing personalized content, advertising and electronic commerce
services to the wireless users' devices such as mobile phones, pagers and
personal digital assistants. Our products and services are offered on both a
one-way and interactive basis. Interactive products and services are available
on both digital telephones and two-way pagers that operate on wireless networks
that are enabled for two-way messaging or browsing. For example, a user can
request information by sending a text-message containing a request to complete
an electronic commerce transaction. The request is processed by our systems and
a
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text message response is sent back to the user upon confirmation of the
transaction. Through our distribution relationships we offer individual wireless
subscribers the ability to determine the type, amount and frequency of
information they desire. We have developed a portfolio of products and services
that allow our distributors to add value to their businesses and customer
relationships by providing personalized content and information to mobile
individuals through wireless devices.
CURRENT PRODUCTS AND SERVICES
Our interactive wireless portals are designed to provide mobile individuals
with personalized information regardless of the type of wireless device, network
infrastructure or protocol chosen by or for them. Information can be accessed in
either our notification/alert or interactive/on-demand content delivery formats.
We believe that a key element of our wireless portals is the creation of
personal profiles that detail each user's unique interests. Our users create
personal profiles through Web sites, phone-based browsers or by calling us or a
distributor by telephone. Content requested by the user is transmitted from our
operations center to a wireless network operator's switching facility and on
from there to the customer's wireless device. We believe that our technology's
capability to monitor data streams and identify and deliver information which is
based on to those personal profiles provides substantial value to users.
Our distributors offer our products and services in a mix of complimentary
and subscription service packages as follows:
Complimentary Service. We offer our users the opportunity to receive a
limited product selection free of charge. We provide complimentary services for
an unlimited period of time to the customers of our wireless network operators.
Our wireless network operators, however, may limit the time period of this
complimentary service. This service enables users to receive daily messages from
a basic tier of content providers. For example, all AT&T Digital PCS subscribers
are entitled to select one content provider from among news, sports, finance,
entertainment and weather. Users must first register for our service by either
visiting a distributor's Web site which we co-brand and host or by telephone.
Our experience indicates that complimentary service enables us to demonstrate
the value of our services, including personalized content, to mobile individuals
and provides a base from which to generate subscriptions. We also have the
capacity to add advertising taglines to complimentary services messages, thereby
generating additional revenues for ourselves and our distributors. In some
cases, we are also compensated by wireless network operators for complimentary
services at a rate of $0.10 per month for each complimentary user. The aggregate
amount of revenue we received in 1999 from wireless network operators for
providing complimentary services to their customers was approximately $418,000.
Subscription Services. We generally offer two paid subscription levels,
basic service and advanced service. By subscribing to either service level for a
monthly fee, subscribers are able to receive personalized messages throughout
the day. For example, a subscriber who has chosen to receive New York Yankees
scores might receive updated scores from a current game at the end of the fifth
inning and as the game ends. We estimate that the typical basic service
subscriber receives between 10 and 30 messages per selected content provider per
month, or an average of 30 to 90 total subscription messages per month in
addition to
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complimentary messages. We estimate that the typical advanced service subscriber
receives between 10 and 30 messages per selected content provider per month, or
an average of 80 to 240 total subscription messages per subscriber per month in
addition to complimentary messages. Currently, the price of our basic service
ranges from $2.99 to $4.99 per month, and the price of our advanced service
ranges from $5.99 to $12.99 per month. The cost of providing our basic service
is a function of our content and communication costs. We acquire content from
over 50 sources, and we have negotiated different pricing terms with each of
these sources, including user-based, flat fixed fees and a hybrid of flat fee
and user-based. The pricing terms vary by provider and range from a fixed
monthly cost to a specific charge per message. Accordingly, the cost per month
per user can vary significantly based on the user's content selection and the
method that is used to communicate that content.
CONTENT DELIVERY FORMATS
Our technology allows us to tailor message formats to maximize the message
length permitted by a user's particular wireless device. Messages typically
range between 40 characters and 240 characters but we can format the messages to
be as brief as 20 characters or as long as permitted by the user's wireless
device and wireless network carrier. Our technology permits subscribers to
select from two distinct message formats:
Notification Services. Triggered Alert/Notification Messages are sent to a
subscriber when our network detects a specific event has occurred which is time-
sensitive and relevant to that subscriber's information profile. For example, a
subscriber might request that we send an alert if there is a severe weather
watch issued for Topeka, Kansas, if IBM's stock price moves 2%, or if traffic
information becomes available for a specific street or highway at a particular
time of day.
Timed Notification Messages allow each subscriber to individually determine
the designated time for message delivery. Subscribers can tailor their message
delivery format to maximize the utility of each message. For example, a
subscriber may request to receive the weather forecast for Fairfax, Virginia
every day before getting dressed in the morning, local news for Sacramento,
California mid-morning or the winning lottery numbers immediately after the
drawing.
Interactive Services. Our subscribers can interact with their wireless
device to quickly access content on demand depending on the type of wireless
network and device. Under the interactive services model, content is sent at the
request of subscribers and we send a response to the wireless network operator
within seconds to be distributed to the user. Wireless users can interact by
two-way Short Message Service and menu-driven browser capabilities, including
Wireless Application Protocol, on their wireless devices. For example, a
subscriber may request a real-time stock quote for a company that is in the
news, or a weather forecast for a city while traveling there, or a report on the
score for a sporting event in progress.
CONTENT CATEGORIES
We deliver global and national as well as regional and local content which
is available in selected locations based on the content's relevance to the
regional markets. For example, the results of a curling tournament are available
to interested users in Western Canada and subscribers in New York may obtain
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scores for the New York Mets. In addition, local traffic conditions and weather
can be provided for both of those markets.
Similar to established Internet portals, we offer users access to diverse,
popular information that is categorized by major topical headings. Most of our
content is offered in English. Some of our products and services are also
offered in French and Spanish. We currently offer content to over 40,000
Canadian subscribers in both French and English. We are currently evaluating
Spanish content services aimed at the United States market. Our systems have the
capability to process content in additional languages as demand requires.
Our content is categorized into a number of product groups, including news,
weather, sports, business and finance, travel, entertainment and others. The
availability of particular content categories depends on the wireless network to
which our users subscribe. The following are the product groups and services
that we offer:
NEWS PRODUCTS
As-issued Breaking News
Headline News
Canadian Headline News
Local News
International News
Political News
Technology News
Health/Medical News
Real Estate News
WEATHER PRODUCTS
Daily Weather Forecasts
Severe Weather Alerts
3-day Forecasts
Travel Weather (multi-city)
Regional Weather Headlines
Marine Forecasts
TRAVEL PRODUCTS
Traffic Conditions
Flight Arrival and Departure
Information
SPORTS PRODUCTS
Real-time Scores
Score Roundups (timed/on-demand)
Pro Sports Stats and Standings
Auto/Truck Racing Results
Sports News Headlines
Pro Sports Team News
Breaking Sports News
Golf Leaderboards
Skiing/Snowboarding Reports
Horse Racing Results
Sports Trivia
Tennis Results
BUSINESS AND FINANCE PRODUCTS
Real-time Stock Price Movement Alerts
Real-time Stock Quotes
Mutual Fund Quotes
Market Indices
Breaking Financial News
Business News Headlines
Industry News Headlines
Company News Alerts by ticker
TRANSACTIONAL APPLICATIONS
Reminder Service
Interactive Advertising
On-demand Stock Quotes
MESSAGING APPLICATIONS
E-mail Gateway
Web-Messaging Gateway
ENTERTAINMENT PRODUCTS
Entertainment News Headlines
Horoscopes
Joke of the Day
Lottery Results
Soap Opera Updates
Movie Reviews From Roger Ebert
Concert Updates
"News Of The Weird" from C. Shepard
Roxy Roxborough's Sports Odds
Celebrity Birthdays
This Day in History
Thought for Today
Quote of the Day
Daily Trivia Question
Bible Quotes
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CONTENT RELATIONSHIPS
We have agreements with media and information companies pursuant to which
they provide high-quality content to our users. We offer content providers the
opportunity to leverage their existing information in a new medium at little or
no incremental cost to them and with significant co-branding opportunities.
While each of our content agreements contain varying terms, our standard form of
content agreement has an initial term of three years and automatically renews
for continuous one year terms unless one of the parties provides notice that it
does not intend to renew the agreement. The amount we pay to the content
provider is either a flat monthly fee, a fee based on the number of subscribers,
a fee based on percentage of revenue received by us derived from revenue
generated from the content they provide, the number of content messages
requested or a combination of the four. The content providers with which we have
existing relationships are:
American Stock Exchange
AccuWeather
Associated Press:
- AP Wire
- LATAM (Latin American)
Canadian Exchange Group
Canadian Press
CNBC.com LLC
COMTEX Scientific Corporation
- Agence France Presse
- Business Wire
- Knight Ridder
- PRNewswire
- Thomson Publishing
- Ziff-Davis Wire
Dow Jones
Environment Canada
FlyteComm
GTE/NOAA (weather)
infoUSA
InteliHealth
Interactive Sports Wire
L.A. Times
Lottery Canada
Lotto Net
Metro Network
NASDAQ
New York Stock Exchange
News America Digital Publishing
- Fox News
- Fox Sports
- Fox Market Wire
Reuters Health Information Services
Inc.
SkyWords
SportsTicker
Sports Wire
Street Software Technology, Inc.
Tampa Tribune
Tourdates
TravInfo
Trustar Limited
Universal New Media:
- Eugenia Last
- Roger Ebert
University Wire
The Weather Channel
EMERGING PRODUCTS AND SERVICES
We are continually expanding our products and services based on perceived
market opportunities. We believe all of these products and services represent
additional potential sources of revenue. We are currently offering advertising
taglines, basic electronic commerce transactions and e-mail on a limited basis
and intend to begin offering additional services in the future, including
personal information management applications, location-based services, voice
recognition and text-to-speech applications and in-vehicle applications.
Advertising. In many cases, we have the capacity to attach advertising
taglines to the end of content messages being delivered to individuals. Our
patent-
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pending Advanced Data Mining Advertising Tagging and Transaction system,
matches personal profile and demographic data with targeted advertising
information. We currently have the capacity to deliver in excess of 12 million
targeted advertising impressions per month. For example, when a user in Denver,
Colorado receives a message from The Weather Channel with the weather forecast
for Vail, Colorado, we have the capability to tag the weather message with a
short advertisement for a local ski area ticket discount or a sale at a local
ski shop. We also plan to offer non-targeted, broadly distributed advertisements
marketed towards wireless device users in general.
Initially, we believe we have established our advertising rates to compare
favorably with average Internet portal cost-per-thousand impressions rates.
Although the revenues we have received from providing advertising services to
date have been minimal, we believe this revenue will increase as advertisers
accept this new advertising medium. We believe that we will be able to charge
them a premium rate based on our ability to reach a large number of mobile
individuals with highly targeted and location specific messages.
Electronic Commerce. Our current electronic commerce platform offers
personal calendar alert functions and permits users to place an order for a
product or service from their wireless device. This capability not only provides
us with an opportunity to share in the revenue from an electronic commerce sale,
but it also motivates the user to use the wireless device to contact the vendor.
In addition, we believe this results in increased usage over the wireless device
and, accordingly, additional revenues for the wireless network operator. We have
secured a mix of exclusive and non-exclusive licenses and anticipate securing
additional licenses to enable us to deliver secure wireless electronic commerce
transactional services.
Although our electronic commerce platform is in the early stage of
development, we have existing technology which is capable of enabling wireless
electronic commerce transactions. We are engaged in creating advanced wireless
electronic commerce applications which include mobile banking, stock trading,
online auction, travel service bidding and online shopping applications.
Although the revenues we have received from electronic commerce to date have
been minimal, we believe revenue from enabling electronic commerce companies for
wireless transactions will include fee-based development activities,
per-transaction pricing and receiving a portion of revenue generated from goods
or services sold.
Through our relationships with 1-800-FLOWERS and Vermont Teddy Bear, a user
may set up a reminder for a friend's birthday through the Internet. At a pre-
set date and time prior to the event, a message is transmitted to his or her
wireless device which alerts him or her of the upcoming birthday. This alert
message contains the details of the friend's birthday, along with a tagline
providing a gift suggestion and a special toll-free number to call to initiate a
transaction. Under this arrangement, we will receive a portion of the revenues
generated from this electronic commerce transaction.
We believe that the electronic commerce market presents significant revenue
potential for us and we are currently in discussions with a number of additional
companies that conduct electronic commerce on the Internet.
E-mail and Personal Information Management Applications. We believe that
e-mail and personal calendar information are among the most important content
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services for mobile individuals. Our e-mail development efforts are focused on
adding new features to our e-mail gateway platform, such as the ability to have
messages automatically forwarded from one location to the user's wireless device
e-mail address and automatic replies. We are now developing the technology to
allow a user to direct his or her e-mail normally received at a workstation
location, such as an office, to his or her wireless device. We are also
developing the technology to allow the user to remotely interact with his or her
desktop e-mail/ scheduling applications to enable the remote receipt of and
response to e-mail messages.
Location-Based Services. We are working to provide services that are based
on the user's geographical location as he or she travels. We have conducted a
successful trial of location-coded notification services with a wireless network
operator, and intend to utilize new location technologies to enhance our ability
to provide more localized information for mobile individuals. For example, a New
York subscriber could receive Arizona weather reports while he or she is
traveling in Phoenix. Other services that may be useful to a user's specific
location include traffic, restaurant/business/ATM location information, as well
as targeted advertising and electronic commerce programs.
Voice Recognition and Text-to-Speech Applications. We are developing a
system that allows a user to interact with our products and services using voice
recognition and text-to-speech technology. These applications allow users to
access our services through the voice channel on their wireless phones, rather
than the data channel. We believe that voice-based services can provide an
effective means for on-demand content delivery and triggered notification. To
support our efforts in this area, we are working with several industry leaders
on voice product prototypes, including serving as a development partner for
Nuance's Voyager voice browser platform.
In-Vehicle Applications. We are participating with major automotive
manufacturers in the development of and trials of various platforms and services
for in-vehicle applications. We are developing systems that will allow a user to
obtain critical information while travelling in a car, including directions and
traffic information. We intend to combine this functionality with our voice
recognition product to allow a user to speak to an in-vehicle device to request
information.
DISTRIBUTION RELATIONSHIPS
WIRELESS NETWORK OPERATORS
We have entered into relationships with a number of leading
telecommunications carriers and wireless network operators in order to
facilitate widespread distribution of our services and to grow our user base.
Marketing fee arrangements provide incentives to our wireless network operator
distributors to promote our products and services. Although the terms of each
wireless network operator distribution agreement differ, the standard agreement
we use is non-exclusive, has a term of one to three years, automatically renews
for continuous one year terms and may be terminated by either party on notice,
with or without cause.
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The following are the wireless telephone network operators with which we
have distribution agreements:
<TABLE>
<S> <C>
AT&T Wireless Services PrimeCo PCS
- AT&T Digital PCS SBC Communications Inc.
- AT&T PocketNet - Southwestern Bell Mobile
AirTouch Cellular Systems, Inc.
Bell Mobility Cellular, Inc. (Canada) - Pacific Bell
Cellular One of Amarillo - Cellular One (Boston,
Cellular One of Oregon Baltimore, Washington, D.C.)
Cellular One of San Francisco TeleCorp
CFW Wireless Triton PCS
Clearnet PCS United States Cellular
MTT Mobility (Canada) U.S. West Wireless
Omnipoint Communications Services
</TABLE>
In addition to our distribution agreement with AT&T Wireless Services,
Inc., we have entered into a second agreement with AT&T Wireless Services, Inc.
under which it may develop programs to tag our messages with advertisements and
send welcome and reminder messages for our complimentary service to new and
existing AT&T Wireless customers. As part of this agreement, we have agreed to
issue to AT&T Wireless Services, Inc. warrants to purchase up to 200,000 shares
of our common stock at a per share exercise price of $15.00. The warrants will
vest upon the development and implementation of the program to tag messages with
advertisements and upon the achievement of designated new registered user
levels.
We also have a number of distribution agreements with paging network
operators. In 1999, we received 98% of our subscriber revenues from wireless
network operators.
ENTERPRISES
We believe that we provide a powerful enabling technology that allows
Internet media networks and corporate enterprises to extend the reach of their
services through the use of wireless devices. We can derive revenue from this
service for Internet media networks and corporate enterprises in a number of
ways, including fees for development services, licensing fees and
transaction-based pricing and per user subscription fees. We currently have
agreements with four enterprises, including Internet media network agreements
with RotoNews and The Weather Channel/Wireless Weather. We provide these
enterprises with customer support, billing services, Web site design and
hosting, software development, personal profiling and content delivery. The
RotoNews Agreement has a one year term, and The Weather Channel/Wireless Weather
Agreement has a two year term. Under these agreements we provide all of the
technology and support to allow these enterprises to provide their content to
their subscribers via wireless devices. We derive revenue through subscription
fees collected from their subscribers and pay the enterprises an agreed upon
portion of those fees for content and access to their subscribers ranging from
30% to 55%. We are in discussions with additional businesses such as banking and
financial services companies, portal and stock-trading Web sites, airlines and
package delivery services companies that have
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indicated their interest in having us enable their enterprises to communicate
with their customers when they are not at their desktops.
Internet Media Networks. We believe that these enterprises have begun to
consider wireless as a viable vehicle to deliver Web site content to their
users. Because our platform is compatible with all major data standards and
wireless transmission protocols we are capable of creating, hosting and
maintaining a product offering that allows Internet media networks to deliver
wireless portal services. For example, Weather.com uses our technology to
provide subscribers with branded weather content, formerly only available on the
Internet, via their wireless devices.
Corporate Enterprises. Our technology can also enable corporations to
extend their information and services to customers and employees using wireless
devices. This can include e-mail, calendar and inventory applications,
notifications and corporate intranet access. Enterprise data can be supplemented
with our news and information content based on the needs of service users.
Although we have not entered into any definitive agreements to date, we are in
discussions with numerous companies to provide these types of services. We
believe this market will provide us with additional opportunities to facilitate
and expand the use of electronic commerce. We believe enterprises that might use
our services to provide wireless content services to their employees and/or
customers include banking and financial services, portal and stock trading Web
sites, airlines and package delivery services. For example, an enterprise could
notify a user on their wireless device that a package was delivered to the
recipient, or, in the case of an airline company, users could use their wireless
devices to request information regarding flight delays. We can derive revenues
by charging fees to complete a transaction even in those cases where we may not
receive a portion of the revenues of the actual sale.
OUR DISTRIBUTOR PRODUCT OFFERINGS
We provide wireless data services to wireless network operators, Internet
media networks and corporate enterprise distributors by offering a package of
technology and services enabling the delivery of personalized information. We
offer these distributors several critical components with which to build
co-branded wireless portals. We offer all of the following services to our
wireless network operator relationships and offer the messaging gateway,
personalization and software development components to our Internet media
network and corporate enterprise relationships:
- Content Aggregation. We acquire content from over 50 content providers
who deliver general, broad-based information as well as locale and user
profile specific content.
- Content Filtering and Parsing. Our proprietary technology is designed to
extract only that content which is relevant to our users from the data we
receive. We send specific messages on a timely basis to specific users
based on their personal profiles or interactive requests.
- Personal Profiling. We maintain individual information, network, and
device profiles for each of our more than 450,000 users. These personal
profiles contain data reflecting each user's individual content
preferences. Our
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content filtering and parsing engines work in conjunction with our
profiling system to provide personalized information to our users.
- Messaging Gateway. Our products work with every major network protocol
for transmission of messages between our operating center and the systems
of our wireless network operator distributors. We currently maintain
connectivity to over 600 messaging switches around North America,
including but not limited to those of our wireless network operator
distributors.
- Operations, Billing, Customer Care and Reporting. We ensure timely and
accurate delivery of our services through our operations center, which is
staffed continuously. We provide user billing and live-operator customer
care services on behalf of our distributors and provide them with
detailed reporting on user numbers and behavior.
- Software Development. We typically create customized co-branded Web-
based systems in conjunction with each of our distributors which allow
users to create individual profiles and subscribe for services over the
Internet. We also develop interactive voice response systems with many of
our distributors, which are automated telephone systems that allows users
to register and manage their personal profiles by telephone. In addition,
we can create communications software to accommodate a distributor's
systems infrastructure and high message volume.
OTHER RELATIONSHIPS
We have entered into agreements with two of our investors, NBC Interactive
Media, Inc. and Sony Corporation of America. Each agreement has a term of two
years and provides affiliates of NBC Interactive Media, Inc. and Sony
Corporation of America with incentives to enter into wireless distribution
relationships with us. These incentives include preferred placement of content
and the issuance of warrants. We have agreed to issue warrants to purchase up to
20,000 shares of our common stock at a per share exercise price of $10.00 for
each distribution agreement entered into with affiliates of either NBC
Interactive Media, Inc. or Sony Corporation of America. The maximum number of
shares of common stock that may be issued under each of these arrangements is
110,000. We believe that affiliates of NBC Interactive Media, Inc. and Sony
Corporation of America will enter into distribution relationships with us to
enable them to capitalize on the growing market for the delivery of their
content on a wireless basis and to integrate our product offerings into their
products and services. To date, we have not entered into any distribution
agreements with any affiliates of Sony under our relationship with Sony
Corporation of America. The first distribution agreement under the NBC
Interactive Media, Inc. relationship was entered into as of March 7, 2000 with
CNBC.com LLC, and a warrant to purchase 10,000 shares of our common stock at
$10.00 per share was issued to CNBC.com LLC. This agreement has a term of two
years and provides for CNBC.com to make available to us three financial-related
headline messages per trading day for distribution through our wireless network
operators as a complimentary service. Neither party is required to pay fees to
the other in connection with the services contemplated by the agreement. In
addition, we will provide marketing support and make available to CNBC.com 5% of
our unused inventory of wireless advertising taglines. As part of the
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agreement, we have also agreed to purchase $200,000 of banner advertising from
CNBC.com.
We have also entered into an agreement with BroadcastEntertainment.com Inc.
During the five year term of the agreement, BroadcastEntertainment.com Inc. will
be our exclusive provider of motion picture, concert, animation, radio, video
and music content for delivery to our users. The agreement also precludes
BroadcastEntertainment.com from providing the same or similar content to our
competitors. The agreement also provides opportunities for us to develop
wireless event ticketing electronic commerce services with
BroadcastEntertainment.com Inc. We will provide BroadcastEntertainment.com Inc.
and up to five of its affiliates with enabling technology and development
services to deliver its content directly to the wireless devices of its
customers. BroadcastEntertainment.com Inc. has agreed to pay us $2 million for
these services and provide us with advertising credits on its affiliated
Internet websites and radio stations. We are in the process of determining the
value of these advertising credits.
We have also entered into a letter of intent with Sportsline.com, Inc.
During the three year term of the proposed agreement, we will serve as the
exclusive integrator of Sportsline.com, Inc.'s wireless information services
from the CBS Sportsline Web site and will pay $1.2 million to Sportsline.com,
Inc. for fees and marketing support. We will receive a development fee to design
the wireless portals for the Sportsline.com service and will share equally in
the net revenue from the sale of advertising and electronic commerce within the
wireless portals for the Sportsline.com service. As part of the proposed
agreement, we will issue to Sportsline.com, Inc. warrants to purchase up to
20,000 shares of our common stock at a per share exercise price of $15.00. These
warrants will vest one-half upon issuance and one-half eighteen months after
issuance.
We have also entered into a letter of intent with GO.com. During the two
year term of the proposed agreement, we will be the exclusive provider of short
messaging service integration services, including content delivery, wireless
advertising and electronic commerce transactions, to GO.com's affiliated Web
sites that consist of ESPN.com, GO.com and ABCNEWS.com and will pay $825,000 to
GO.com for fees and marketing support. We will receive a development fee to
design specifications for GO.com's and its affiliates' Web sites, a monthly fee
based on the total number of wireless users of GO.com and its affiliates and an
equal share of any net advertising, electronic commerce and subscription
revenues derived from users of the Web sites. As part of the proposed agreement,
we will issue to GO.com warrants to purchase up to 40,000 shares of our common
stock at a per share exercise price of $15.00. These warrants will vest
one-third upon the first wireless service launch, one-third on the first
anniversary of the launch date and one-third on the second anniversary of the
launch date.
SALES AND MARKETING
Our sales and marketing activities are focused on entering into additional
agreements with wireless network operators, Internet media networks and
corporate enterprises who will market our products and services using our
"Powered by i3 Mobile" co-branding campaign. Our marketing efforts have also
been targeted towards accelerating the adoption of our services by mobile
individuals. By relying on the sales and marketing strength of our wireless
network
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operators, we are able to focus our capital on broadening our product offering
and incorporating technological advances. We currently employ 20 sales and
marketing professionals and intend to expand this group significantly during
2000.
We have implemented a number of initiatives supporting our distributors'
retail sales efforts and accelerating adoption of our services by mobile
individuals. These initiatives include:
- Cooperative Advertising Program. Since 1998, we have offered a
cooperative advertising program for distributors who offer our services
under the "Powered by i3 Mobile" brand. Through this program, we provide
reimbursement for up to 3% of actual amounts invoiced for pre-approved
advertising and promotional materials used to support the sale of our
services to mobile individuals. We spent $47,000 in 1999 and $0 in 1998
under this program.
- Market Development Funds. Since 1999, we have made available market
development funds at the discretion of management for use by our
distributors to promote specific products and services and to increase
sales in targeted markets. We work with our distributors to identify
appropriate media and geography for the efforts we fund. During 1999 we
made available $31,000 in market development funds.
- On-Device Promotions. We have begun promoting our services to mobile
individuals directly on their wireless devices. We currently send service
availability notification messages including instructions on selected
networks on how to activate our services to our distributors' subscribers
who have not yet signed up for our services. For some of our
complimentary service users we have begun attaching periodic promotional
messages to content messages aimed at selling subscription services to
these customers. To date, we have not paid any fees to our distributors
for these promotional messages.
- "Powered by i3 Mobile" Advertising. As an additional means of increasing
customer awareness and demand for our services we intend to continue to
implement advertising and promotional campaigns addressed directly to
mobile individuals. For example, we plan to advertise in markets where we
have a high density of potential customers such as California or South
Florida, each of which has three wireless network operators offering our
services.
TECHNOLOGY AND SYSTEMS
We believe that one of our principal strengths is our proprietary
internally developed technology. Our systems have been designed to provide a
network and device independent platform for creation and delivery of all of our
products. We acquire, filter and parse data streams for content, advertising and
commerce applications, provide user personal profile systems, and our wireless
delivery gateway.
Our various components run on a number of operating systems to satisfy the
requirements of our content providers and distributors, but all are integrated
in a common network architecture. Each component has been designed for expansion
so that our current systems can accommodate more content without compromising
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performance, advertising and commerce relationships and greater messaging
volume.
CONTENT ACQUISITION, FILTERING AND PARSING SYSTEMS
Our engines for content aggregation and filtering have been designed to
accept virtually any type of data formatting and volume of data. We offer our
content providers the option to provide us their data in almost any content
format. We retrieve data from content providers under license through third
parties and our own proprietary filtering technologies. We can also accept data
delivery through established two-way connectivity with our content providers. In
the case of our stock quote alert products, for example, we receive data through
satellite on over 300,000 securities on a constant basis from our financial
content providers, with a dedicated network connection for backup purposes.
Our filtering and parsing engines determine relevance of information by
screening for key words in the data we receive and create various types of
messages for our end users' devices. We have created proprietary technology to
efficiently monitor the large volume of data entering our operating system and
to identify particular information that is relevant to our individual end users.
Our parsing engines then use proprietary algorithms to transform relevant data
into messages of various lengths and formats. For example, our engines create
100, 140, 150 and 240 character messages targeted for different types of message
displays on various devices. In addition, our engines create full-word 3-day
weather forecasts, and 50 character same day weather forecast messages with word
abbreviations, such as "t-stms" instead of "thunderstorms", from the same data.
Our systems have been refined over time to handle high data volume and rapid
message creation, and we tag messages with expiration designations and priority
of delivery. These expiration designations indicate to our wireless network
operator distributors' system how long a message should try to be delivered, and
which messages, such as on-demand stock quotes, should be delivered first.
We have developed a patent-pending Advanced Data Mining Advertising Tagging
and Transaction system, our advertising and electronic commerce platform. This
system matches advertising tags and commerce opportunity tags with specific
messages based on user information profiles and the content of the messages. For
example, our system can monitor weather data for temperature and humidity and
can insert into a weather forecast message an advertising tag for a soft drink
when the temperature exceeds 85 degrees. In addition, the system can monitor a
user's commerce preferences to insert electronic commerce opportunity tags into
our reminder system. For example, if a user chooses to be reminded of a child's
birthday, our system will insert an embedded phone number for a children's gift
manufacturer into the reminder message. This system is designed to work with
high volumes of messages and multiple vendors and to provide data on user
preferences to our electronic commerce distributors.
PERSONAL PROFILING SYSTEM
We allow our users to create personal profiles through the Internet,
interactive voice response systems and, depending on its capabilities, a user's
wireless device. We update user profiles in each of these systems to
automatically reflect user-initiated changes.
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Our Web and interactive voice response systems currently utilize load-
balanced hardware integrated into our Web server environment for redundancy and
to manage rapid growth. Our next generation Internet-based system will employ a
distributed application model for even greater scalability and performance.
Each user's personal profile is queried by our content parsing engines to
determine appropriate message delivery. For example, we monitor our sports
information data for a user's selected team and when scores appear for that
team, create a message for that user's device characteristics and deliver that
message through appropriate protocols to that user's wireless network operator.
Our personalization engines have been designed for expansion without
compromising performance.
WIRELESS DELIVERY GATEWAY AND NETWORK OPERATIONS
Our wireless delivery gateway provides the means to send customized content
to most types of mobile handheld devices. Our gateway provides message transport
utilizing several paging protocols and various protocols for Short Message
Services. The gateway also supports the protocols and languages compatible with
microbrowsers and the Wireless Application Protocol servers. Our gateway
provides delivery through all major wireless networks.
We have written applications in a number of languages to work with new
microbrowser gateways and protocols and emerging voice browser platforms. These
new applications provide the basis for the next generation of our wireless
information portals and are focused on enhancing the Internet functionality of
wireless devices. For example, our technology enables a Wireless Application
Protocol-enabled handset to become a platform for two-way interactive services
such as directory searches and remote personal information manager connectivity.
Handling a high volume of message input and output is crucial to our end
users and wireless network operator distributors. Our operating center currently
handles approximately 800,000 messages per day and is capable of providing
message transport of five times that volume. We are also in the process of
building a new data center in Connecticut which is expected to provide capacity
for 20,000,000 messages per day. We currently anticipate that our new data
center will be operational during the second quarter of 2000 at an aggregate
cost of approximately $1.2 million.
Our data center is designed to utilize mirrored server technology, load-
balancing components, backup power supplies, backup generator systems and
redundant network interfaces to eliminate service interruptions because of
single points of failure. In addition, in order to provide service to our
subscribers if a disaster should occur in our Connecticut facility, we are
upgrading our redundant data center in Hurst, Texas, with plans for this
upgraded facility to be operational during the second quarter of 2000. Each
system component in the Connecticut and Texas facilities has been designed to
scale for significantly larger service volume.
RESEARCH AND DEVELOPMENT
Our research and development strategy is to anticipate market needs and to
implement the technological advancements necessary to meet these needs. This
strategy is consistent with our history. In the early stages of our development,
we created the proprietary platforms that allowed us to provide deliverable
wireless
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products when the wireless data market began to develop. We believe we developed
one of the first profile-based stock quote alert products in North America, one
of the first applications for capturing user profiles for wireless delivery and
one of the first notification applications for Phone.com's microbrowser and many
other innovations. We have senior level management who are specifically assigned
to direct our research and development efforts. In addition, a team of
individuals from a number of different departments is selected to develop and
implement each research and development project. We actively solicit feedback
from wireless network operators, content providers, and Internet media networks
and corporate enterprises to determine changes in market needs and user demands.
Our research and development strategy consists of the following:
INDUSTRY STANDARDS
As an active participant in the development of the wireless data industry,
we share our expertise with various industry groups and with technology
alliances. As a result, we share in the benefits from research performed by many
of our industry contemporaries, including wireless network operators, content
providers, technology vendors, and electronic commerce providers. For example,
as a member of the Wireless Application Protocol Forum, we have agreed to
license our intellectual property to other members on fair and reasonable terms
to the extent that the license is required to develop non-infringing products
under the specifications promulgated by the Wireless Application Protocol Forum.
Each other member has entered into a reciprocal agreement.
PROTOTYPE DEVELOPMENT
Our research and development group develops prototypes of new products and
systems. Prototypes are created in response to specific wireless network
operator trials, new technology relationships and our ongoing product
development efforts. When a prototype is targeted for production, our research
and development group transfers information and strategy to our systems and
technology group for implementation into commercial products.
OTHER RESEARCH AND DEVELOPMENT INITIATIVES
In support of our strategy of network and device independence, we continue
to develop applications that will allow us to offer our products and services to
any user, regardless of his or her selected wireless device. We are also
concentrating our efforts on new wireless telephones, pagers and personal
digital assistants, and on creation of products that work in conjunction with
Wireless Application Protocol, the Palm OS and associated network browsing
platforms, Windows CE, EPOC and other applications. We believe this strategy
will allow us to remain competitive when and if a major protocol achieves market
dominance.
RESEARCH RELATIONSHIPS
In support of our research and development efforts, we have formed
relationships with wireless software and infrastructure companies and with the
Wireless Application Protocol Forum and Wireless Data Forum trade organizations.
We have established these relationships to gain early awareness of emerging
wireless device and Internet technologies by sharing our research and
development efforts with these companies. For example, we seek to ensure that
our products work with the hardware and protocols of leading wireless data
infrastructure providers. These include Short Message Service Center manufac-
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turers Logica Aldiscon, ADC NewNet and Comverse, and Wireless Application
Protocol gateway and microbrowser manufacturers Nokia, Phone.com, Motorola and
CMG. In the case of the Short Message Service Center manufacturers, we test the
compliance of our respective products and are listed as certified developers for
their platforms. In the case of the Wireless Application Protocol gateway
manufacturers, we work with the companies to ensure that our products are
compliant with their programming languages, servers and, in some cases, wireless
handsets. These companies also include our services among their demonstration
Web sites for handset microbrowsers. For example, we were one of a limited
number of Nokia's initial North American Wireless Application Protocol
application development partners. As part of that relationship, we jointly
showcase our offerings at major industry trade fairs.
In addition, we have cooperative development relationships with other
wireless technology and services vendors. We have a cooperative development
relationship with SignalSoft to build products that work with SignalSoft's
location-based technology, and we have a non-exclusive licensing arrangement
with transaction security provider Diversinet to use Diversinet's secure
transactions software for our electronic commerce product offerings. We also
have a cooperative relationship agreement with voice recognition and browser
technology provider Nuance Communications to test products we developed that run
on Nuance's Voyager voice-browsing platform. In most of these relationships, we
test compliance of our respective products, but do not market products together.
We have also established original equipment manufacturer distribution
relationships with Neopoint and Motorola. For example, Neopoint's MyAladdin
product and Motorola's iKno product include content services we provide, and we
have developed several products for Motorola's wireless information services
prototype platforms. Each of these relationships has been developed in order to
further our understanding of our partners' technology and product offerings. We
anticipate that these development relationships will translate into distribution
agreements for our products.
COMPETITION
The market for our services is becoming increasingly competitive. The
potential adoption of an industry standard may make it easier for new market
entrants to offer some or all of the services we offer and may make it easier
for existing competitors to introduce some or all of the services they do not
now provide, or improve the quality of their services. We expect that we will
compete primarily on the basis of the functionality, price, breadth and quality
of our products and services.
Our current competitors include:
- wireless data providers and portals, such as InfoSpace.com, Saraide.com,
MSN Mobile, Datalink, Airflash, Inc., Phone.com, Yahoo!, Inc., AirMedia,
@mobile.com and CNN Mobile; and
- wireless financial services providers, such as Aether Systems, Inc.,
SmartServ Online, Inc., Strategy.com and 724 Solutions, Inc.
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Our potential competitors include:
- entities that have announced their intentions to become wireless data
providers, such as America Online, Inc. and TIBCO Software Inc.; and
- wireless network operators, such as AT&T Wireless, Bell Atlantic Mobile,
Metricom, Inc., Nextel Communications, Inc., Omnipoint Communications
Services and Sprint PCS, any of which may decide to develop in-house
resources to provide similar services themselves.
Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do.
Additionally, many of these companies have greater name recognition and more
established relationships with our target customers. Furthermore, these
competitors may be able to adopt more aggressive pricing policies and offer
customers more attractive terms than we can.
GOVERNMENT REGULATION
We are not currently subject to direct federal, state or local government
regulation, other than regulations that apply to businesses generally. The
wireless network operators with which we contract to provide airtime are subject
to regulation by the Federal Communications Commission. Therefore, indirectly,
changes in Federal Communications Commission regulations could affect the
availability of wireless coverage these carriers are willing or able to sell to
us.
We could also be adversely affected by developments in regulations that
govern or may in the future govern the Internet, the allocation of radio
frequencies or the placement of cellular towers. Due to the increasing
popularity and use of the Internet, there is an increasing number of laws and
regulations pertaining to the Internet. In addition, a number of legislative and
regulatory proposals are under consideration by various agencies and commissions
in the United States and elsewhere. Laws or regulations may be adopted, and in
some countries have already been adopted, with respect to the Internet relating
to liability for information retrieved from or transmitted over the Internet,
online content regulation, user privacy, taxation and quality of products and
services. Moreover, the applicability to the Internet of existing laws governing
issues such as intellectual property ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment and personal privacy is
uncertain and developing. Uncertainty and new regulations could increase our
costs and prevent us from delivering some or all of our services.
DATA PROTECTION
Legislative proposals have been made in the United States that would afford
broader protection to owners of databases of information such as stock quotes
and sports scores. If enacted, this legislation could result in an increase in
the price of services that provide data to wireless communications devices and
could create potential liability for unauthorized use of this data.
INTERNET TAXATION
A number of legislative proposals have been made at the federal, state and
local level that would impose additional taxes on the sale of goods and services
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over the Internet and certain states have taken measures to tax Internet-related
activities. Although Congress recently placed a three-year moratorium on state
and local taxes on Internet access or on discriminatory taxes on electronic
commerce, existing state or local laws were expressly excepted from this
moratorium. Further, once this moratorium is lifted, some type of federal and/or
state taxes may be imposed upon electronic commerce. This legislation, or other
attempts at regulating commerce over the Internet, may substantially impede the
growth of commerce on the Internet and, as a result, adversely affect our future
opportunity to derive financial benefit from those activities.
INTELLECTUAL PROPERTY RIGHTS
We have filed applications to register the marks "i3 Mobile," "Powered by
i3 Mobile," and "Powered by iii" in the United States. In addition, we have
registered the marks "Eyes on the Web," "Village Square," "News Alert Service,"
"Sports Alert Service" and "Intelligent Information Incorporated" on the
Principal Register of the United States Patent and Trademark Office. We also
have pending applications to register the marks "Eyes on the Web," "Village
Square" and "Powered by iii" in Canada. This prospectus also includes trade
names, service marks and trademarks of other companies. All other brand names or
trademarks appearing in this prospectus are the property of their respective
holders.
We rely on a combination of copyright, trademark, service mark, trade
secret laws and contractual restrictions to establish and protect certain
proprietary rights in our services. We have applied for a patent covering
Advanced Data Mining Advertising Tagging and Transaction system, which is a
system that matches personal profile and demographic data against advertising
targeting information to attach advertising taglines to the end of content
messages being delivered to users. We have also entered into a license agreement
with Portel Services Network, Inc. for its method patent, which allows us to
involve a third party processing center or clearinghouse that authenticates user
orders in each electronic commerce transaction. Under the terms of this
agreement, we paid Portel Services Network $175,000 to date. In addition, we
have agreed to pay a royalty equal to five percent of gross revenue related to
electronic commerce through March 29, 2005 and May 8, 2007 for sales in the
United States and Canada, respectively.
The steps we have taken to protect our intellectual property may not prove
sufficient to prevent misappropriation of our technology or to deter independent
third-party development of similar technologies. The laws of certain foreign
countries may not protect our services or intellectual property rights to the
same extent as do the laws of the United States. We also rely on certain
technologies that we license from third parties including data feeds and related
software. These third-party technology licenses may not continue to be available
to us on commercially attractive terms. The loss of the ability to use such
technology could require us to obtain the rights to use substitute technology,
which could be more expensive or offer lower quality or performance, and
therefore have a material adverse effect on our business, financial condition or
results of operations.
Third parties could claim infringement by us with respect to current or
future services. As the number of entrants into our market increases, the
possibility of an infringement claim against us grows. We may be inadvertently
infringing a patent of which we are unaware. In addition, because patent
applications can take many
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years to issue, there may be a patent application now pending of which we are
unaware, which will cause us to be infringing when it issues in the future. Any
infringement claim, whether meritorious or not, could be time-consuming, result
in costly litigation, cause service installation delays or require us to enter
into royalty or licensing agreements. Royalty or licensing agreements might not
be available on terms acceptable to us or at all. As a result, any claim could
have a material adverse effect upon our business, financial condition or results
of operations.
As a member of the Wireless Application Protocol Forum, we have agreed to
license our intellectual property to other members on fair and reasonable terms
to the extent that the license is required to develop non-infringing products
under the specifications promulgated by the Wireless Application Protocol Forum.
Each other member has entered into a reciprocal agreement.
EMPLOYEES
As of March 31, 2000, we had 95 full-time employees and 1 part-time
employee. Management considers its relations with our employees to be good. None
of our employees are represented by a union.
PROPERTIES
Our principal executive office is located at 181 Harbor Drive, Stamford,
Connecticut. We currently operate four facilities under leases as follows:
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE ANNUAL RENT LEASE
LOCATION SQUARE FOOTAGE IN 1999 EXPIRATION DATE
- -------- -------------- ----------- ---------------
<S> <C> <C> <C>
181 Harbor Drive.................... 20,000 $63,000(1) March 2008
Stamford, CT
One Dock Street..................... 5,047 $81,000 March 2002
Stamford, CT
1237 Southridge Court............... 1,000 $25,000 February 2002
Hurst, TX
305 N.E. Loop....................... 10,035 $ --(2) January 2010
Hurst, TX
</TABLE>
- -------------------------
(1) The annual rent for 2000 is expected to be approximately $511,325.
(2) The annual rent for 2000 is expected to be approximately $110,385.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings. However, we may from
time to time become a party to various legal proceedings arising in the ordinary
course of our business.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The names and ages of our executive officers, directors and key employees
as of March 31, 2000 are as follows:
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS AGE POSITION
- -------------------------------- --- --------
<S> <C> <C>
Stephen G. Maloney.............. 43 President, Chief Executive Officer
and Director
Robert M. Unnold................ 52 Chairman of the Board
Michael P. Neuscheler........... 39 Vice President and Chief Financial
Officer
Michael Forbes.................. 38 Vice President, Marketing
Richard J. Rutkowski............ 48 Vice President, Technology and
Systems
Alan Katzman.................... 40 Vice President and General Counsel
Kevin W. Ryan................... 53 Vice President, Human Resources and
Administration
Jeffrey N. Klein................ 50 Vice President, Research and
Development
Donald G. Rossi................. 43 Vice President, Sales
Kerry J. Dale................... 43 Director
James A. Johnson................ 61 Director
J. William Grimes............... 58 Director
Donald F. Christino............. 42 Director
W. Peter Daniels................ 45 Director
<CAPTION>
KEY EMPLOYEES AGE POSITION
- ------------- --- --------
<S> <C> <C>
Robert Coletti.................. 45 Controller
Timothy S. Manny................ 29 Director, Product Development
Richard C. Haylon............... 37 Director, Operations
</TABLE>
There is no family relationship between any director and executive officer
of i3 Mobile except that Robert Coletti is married to Stephen G. Maloney's
sister.
STEPHEN G. MALONEY has served as our Chief Executive Officer since
September 1999. He has been our President and a director since he co-founded i3
Mobile with Mr. Unnold in 1991. From February 1987 to April 1994, Mr. Maloney
was Senior Vice President for Operations of Our Lady of Mercy Medical Center, a
teaching hospital located in the Bronx, New York. Prior to that, from February
1984 until January 1987, he served as Vice President, Ancillary Services at
Misericordia Medical Center.
ROBERT M. UNNOLD has been the Chairman of the Board since September 1999
and a director since 1991. Mr. Unnold co-founded i3 Mobile with Stephen G.
Maloney in 1991 and served as our Chief Executive Officer from such time until
September 1999. From 1989 until 1991 he served as a General Manager for Bell
South/Mobilecomm for the New York market. Mr. Unnold also founded Mincron SBC
Corporation, a software company, of which he was President from 1979 to 1989 and
a director from 1979 until its sale in 1999.
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MICHAEL P. NEUSCHELER has served as our Vice President and Chief Financial
Officer since January 10, 2000. From June 1999 to December 1999, Mr. Neuscheler
was Chief Financial Officer of International Telecommunications Data Systems,
Inc., a provider of billing solutions to the wireless telecommunications
industry. From January 1998 to June 1999, he was Vice President and Chief
Financial Officer of Collegiate Health Care, Inc., a provider of management
services to student health centers at colleges and universities. From May 1994
to December 1997, he was Executive Vice President and Chief Financial Officer of
Professional Sports Care Management, Inc., a provider of outpatient orthopedic
rehabilitation services. From 1982 to 1994, Mr. Neuscheler served in various
capacities with Ernst & Young LLP. Mr. Neuscheler is a Certified Public
Accountant.
MICHAEL FORBES has served as our Vice President of Marketing since February
1999. From August 1996 until February 1999, Mr. Forbes was our Director of
Marketing. Prior to joining us, from August 1989 to July 1996, Mr. Forbes worked
for Columbia House Company, a direct retailer of various entertainment products
in a number of capacities, including Creative Director for Columbia House's
Video Club and Director of Sales Promotion for Columbia House's Music Club.
RICHARD J. RUTKOWSKI has served as our Vice President of Technology and
Systems since March 1999. From June 1996 to December 1998, Mr. Rutkowski was the
Director, Software Systems Development at Gerber Coburn, Inc., a company that
provides production equipment software systems for the ophthalmic industry. From
January 1986 to May 1996, he served in a number of capacities at Pitney Bowes,
Inc., a provider of fax and copier systems, business outsourcing and digital
document management, including Director of Engineering-Product Development,
Engineering Manager-Scale Based Products and Engineering Manager-Systems.
ALAN KATZMAN has served as our Vice President and General Counsel since
March 1999. From April 1996 to February 1999, Mr. Katzman served as corporate
counsel and business development executive to Corechange, Inc., a technology
company with a focus on building information portals for Fortune 500 companies.
From January 1993 to January 1996, he served in similar capacities at Candle
Corporation, an independent software vendor.
KEVIN W. RYAN has been our Vice President of Human Resources and
Administration since February 1999. From July 1996 until February 1999 he was
our Manager of Health Information Services. Prior to joining us, from April 1994
to July 1996, he was President of Kevin Ryan Ltd., a management consulting firm.
From September 1990 to April 1994, Mr. Ryan served as President and Chief
Executive Officer at Franciscan Children's Hospital, located in Brighton,
Massachusetts.
JEFFREY N. KLEIN has been our Vice President of Research and Development
since January 1999. From June 1992 to December 1998, he served as our Vice
President of Technical Development. From September 1989 to May 1992, Mr. Klein
was President of Jeff Klein Aviation, a company that developed the Pilot Weather
Service, the predecessor of i3 Mobile's Weather Alert Service.
DONALD G. ROSSI has been our Vice President of Sales since September 1999.
Prior to joining us, from August 1998 until September 1999, Mr. Rossi was a
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Director of Sales and then Vice President of Sales for RTS Wireless, a leading
provider of gateways and infrastructure to the wireless industry. From March
1998 to August 1998, Mr. Rossi was a Director of Sales for Unwired Planet, now
known as Phone.com. From March 1994 to March 1998, Mr. Rossi was Vice President,
Sales and Marketing for AirMedia, Inc., a wireless data solutions company.
KERRY J. DALE was elected a director of i3 Mobile in August 1996. Since
1989, Mr. Dale has been a General Partner of Keystone Venture Capital, a venture
capital investment company. Mr. Dale is a board member of a number of non-
public Keystone Venture Capital portfolio companies. Mr. Dale also serves on the
advisory board of Jefferson Bank.
JAMES A. JOHNSON was elected a director of i3 Mobile in August 1998. Since
1987, Mr. Johnson has been a managing general partner of Apex Investment
Partners, a Chicago-based venture capital firm, which he co-founded in 1987.
Prior to 1987, he was one of the three founding partners of Knightsbridge
Partners, a private investment firm. Previously, Mr. Johnson was associated with
Beatrice Foods, serving in a number of positions, including Chief Financial
Officer of the parent corporation and Senior Vice President of the US Foods
operating subsidiary. Mr. Johnson currently serves on the board of director
White Cap Industries, Inc., a retailer to professional contractors, and a number
of private companies.
J. WILLIAM GRIMES was elected a director of i3 Mobile in February 1999.
Since 1996, Mr. Grimes has been a Member of BG Media Investors LLC, a company he
founded. BG Media Investors LLC is a private equity capital firm specializing in
investments in media and telecommunications companies. From 1994 until 1996, Mr.
Grimes was the Chief Executive Officer of Zenith Media, a media services agency.
From 1991 until 1993, he served as Chief Executive Officer of Multimedia, Inc.,
a diversified media company which merged into Gannett Co., Inc. in 1995. From
1988 through 1991, Mr. Grimes was President and Chief Executive Officer of
Univision Holdings, Inc., the largest Spanish language media company in the
United States. From 1982 through 1988, Mr. Grimes was President and Chief
Executive Officer of ESPN, Inc. Mr. Grimes serves on the board of directors of
InterVU, Inc. and is an Executive Director of the New School University's "Media
Management Program."
DONALD F. CHRISTINO was elected a director of i3 Mobile in July 1991. Since
1987, Mr. Christino has been the President of Green Mountain Enterprises Inc., a
computer consulting company he founded.
W. PETER DANIELS was elected a director of i3 Mobile in July 1991. In
November 1999, Mr. Daniels became the President and Chief Executive Officer of
Southampton Hospital in Southampton, New York. From January 1995 until November
1999, Mr. Daniels was the Chief Operating Officer of Winthrop University
Hospital in Mineola, New York.
ROBERT COLETTI has been our Controller since February 1995. From November
1993 to February 1995, he was a financial consultant to i3 Mobile. Prior to
that, from July 1987 to October 1993, Mr. Coletti held a number of different
positions, including Finance Manager, with Weyerhaeuser Co./Shemin Nurseries, a
nursery wholesaler to landscape contractors. From 1981 to 1986, he was the plant
controller for The Allen Group/G&O Manufacturing, a company that manufactured
and distributed heat transfer units.
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TIMOTHY S. MANNY has served as our Director of Product Development since
December 1, 1999. Prior to that, from March 1999 until December 1999, he was our
Manager of Business Development. Prior to joining us, from April 1996 to October
1998, Mr. Manny was Director of Operations for the Knowledge Group of
CareData.com, a company that markets Internet research software and search
engines. From April 1995 to April 1996, Mr. Manny was the Manager of Business
Development at Big Top Productions, a multimedia software publisher.
RICHARD C. HAYLON has served as our Director of Operations since March
1999. Prior to joining us, Mr. Haylon served as manager of Application
Development and Support at G.E. Capital from 1993 until March 1999.
BOARD COMMITTEES
COMPENSATION COMMITTEE
Our compensation committee currently consists of Messrs. Christino, Dale,
Grimes and Maloney. The compensation committee recommends, reviews and oversees
the salaries, benefits and stock options for our employees, directors and other
individuals compensated by us. The compensation committee also administers our
incentive compensation and benefit plans.
AUDIT COMMITTEE
Our audit committee currently consists of Messrs. Dale, Daniels and
Johnson. The audit committee reviews, acts on and reports to the board of
directors with respect to various auditing and accounting matters, including the
recommendation of our independent public accountants, the results and scope of
the audits and other services provided by our independent public accountants,
the performance of and the fees to be paid to our independent public
accountants, our accounting procedures and the adequacy of our internal
controls.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Christino, Dale, Grimes and Unnold, our Chief Executive Officer
until September 1999 and currently our Chairman of the Board, served as members
of our compensation committee during the 1999 fiscal year. None of our executive
officers has served as a member of the compensation committee, or other
committee serving an equivalent function, of any other entity, whose executive
officers served as a director of or a member of our compensation committee.
BOARD COMPOSITION
Our board of directors consists of seven individuals. Each director is
elected for a one-year term at our annual meeting of stockholders and serves
until the next annual meeting or until his successor is duly elected and
qualified. The executive officers serve at the discretion of the board of
directors.
DIRECTOR COMPENSATION
We have no established compensation arrangements with our directors, but
directors may be reimbursed for their reasonable expenses incurred in connection
with the attendance at board and committee meetings. In the future, we may adopt
new compensation arrangements for our directors. Directors are eligible to
receive options to purchase common stock under our option plans.
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EXECUTIVE COMPENSATION
The following table shows all compensation earned for services rendered to
us by our chief executive officer and our three other most highly paid executive
officers whose annual salary and bonus exceeded $100,000 in the fiscal years
ended December 31, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------- ----------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
- --------------------------- ---- -------- ------------ ----------------------
<S> <C> <C> <C> <C>
Stephen G. Maloney............... 1999 $150,000 $12,000 --
President and Chief Executive 1998 126,810 7,500 12,500(3)
Officer(1) 1997 122,533 -- 12,500(4)
Robert M. Unnold................. 1999 $150,000 $12,000 --
Chairman of the Board(2) 1998 126,810 7,500 12,500(3)
1997 124,080 -- 12,500(4)
Jeffrey N. Klein................. 1999 $125,000 $ -- 25,500(5)
Vice President, 1998 114,000 7,000 18,100(6)
Research and Development 1997 96,000 7,680 17,000(7)
Kevin W. Ryan.................... 1999 $111,833 -- 20,500(8)
Vice President, Human 1998 96,000 -- 9,000(6)
Resources and Administration 1997 96,000 -- 9,000(7)
</TABLE>
- -------------------------
(1) Mr. Maloney was appointed Chief Executive Officer in September 1999.
(2) Mr. Unnold was our Chief Executive Officer until September 1999.
(3) Represents options to purchase shares of our common stock at $2.61 per
share.
(4) Represents options to purchase shares of our common stock at $1.94 per
share.
(5) Represents options to purchase 13,500 shares of our common stock at $4.00
per share and 12,000 shares of our common stock at $2.37 per share.
(6) Represents options to purchase shares of our common stock at $2.37 per
share.
(7) Represents options to purchase shares of our common stock at $1.76 per
share.
(8) Represents options to purchase 7,000 shares of our common stock at $2.37 per
share and 13,500 shares of our common stock at $4.00 per share.
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OPTION GRANTS IN 1999
The following table shows information regarding options granted to the
named executive officers during the year ended December 31, 1999. We have not
granted any stock appreciation rights. None of the named executive officers
exercised any stock options during 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(6)
OPTION IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED(1) YEAR(2) SHARE(3)(4) DATE(5) 5% 10%
- ---- ---------- ------------- ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stephen G. Maloney............. -- -- -- -- $ -- $ --
Robert M. Unnold............... -- -- -- -- -- --
Jeffrey N. Klein............... 25,500 4.7% $3.23 2009 473,776 720,117
Kevin W. Ryan.................. 20,500 3.8% $3.44 2009 367,525 558,786
</TABLE>
- -------------------------
(1) All options were granted under our 1995 Stock Incentive Plan. All options
were incentive stock options which vest in annual installments over either
four or five years, subject to immediate vesting in the event of a change in
control of our company.
(2) Based upon options to purchase an aggregate of 540,500 shares of our common
stock granted to employees in 1999.
(3) Certain of these options resulted in deferred compensation that will be
recognized over the vesting period.
(4) This figure represents the weighted average exercise price per share.
(5) The options have ten year terms, subject to earlier termination upon death,
disability or termination of employment.
(6) We recommend caution in interpreting the financial significance of the
figures representing the potential realizable value of the stock options.
They are calculated by multiplying the number of options granted by the
difference between a future hypothetical stock price and the option exercise
price and are shown pursuant to rules of the SEC. They assume that the fair
value of the common stock appreciates 5% or 10% each year based on the
assumed initial public offering price of $15.00 per share, compounded
annually, for ten years (the term of each option). They are not intended to
forecast possible future appreciation, if any, of our stock price or to
establish a present value of options. Also, if appreciation does occur at
the 5% or 10% per year rate, the amounts shown would not be realized by the
recipients until the year 2009. Depending on inflation rates, these amounts
may be worth significantly less in 2009, in real terms, than their value
today.
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YEAR-END OPTION VALUES
The following table provides information about options held as of December
31, 1999 by the named executive officers. No options were exercised by any
officer or director during 1999. The value of unexercised in-the-money options
at year-end is based on the assumed initial public offering price of $15.00 per
share, less the exercise price per share, multiplied by the number of shares
underlying the options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen G. Maloney.......... 12,500 12,500 $162,450 $160,925
Robert M. Unnold............ 12,500 12,500 162,450 160,925
Jeffrey N. Klein............ 57,340 46,760 805,486 587,707
Kevin W. Ryan............... 13,100 25,400 171,771 297,969
</TABLE>
1995 STOCK INCENTIVE PLAN AND 2000 STOCK INCENTIVE PLAN
We adopted the 1995 Stock Incentive Plan on November 7, 1995 and the 2000
Stock Incentive Plan on February 9, 2000. The plans provide for grants of
options to our designated employees, officers, directors and consultants.
GENERAL. The 1995 Stock Incentive Plan, as amended, authorizes options to
purchase up to 1,014,000 shares of our common stock. The 2000 Stock Incentive
Plan authorizes options to purchase up to 1,250,000 shares of our common stock.
If options granted under these plans expire or are terminated for any reason
without being exercised, the shares of common stock underlying such grant will
again be available for grant under the plans.
ADMINISTRATION OF THE PLANS. The Board of Directors administers and
interprets the plans. The Board has the sole authority to:
- determine the employees and officers and consultants to whom grants will
be made under the plans;
- determine the type, size and terms of the grants to be made to each
optionee;
- determine the time when the grants will be made, the vesting period and
the duration of any applicable exercise or restriction period, including
the criteria for vesting; and
- deal with any other matters arising under the plans.
TYPES OF GRANTS. Grants under the plans may consist of:
- options intended to qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code;
- nonqualified stock options that are not intended to so qualify;
- stock appreciation rights; and
- stock bonus awards.
The 2000 Stock Incentive Plan also permits the grant of phantom stock
awards, which are awards denominated in stock-equivalent units. These units are
credited to a bookkeeping reserve account for accounting purposes and do not
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give the grantee any rights of a stockholder. The Board may settle phantom stock
awards in cash and/or shares of our common stock.
ELIGIBILITY FOR PARTICIPATION. Grants may be made to any of our employees,
officers, directors and consultants. As of March 31, 2000, there were options to
purchase 1,005,300 shares of our common stock granted under the 1995 Stock
Incentive Plan at a weighted average exercise price of $3.18 per share and
252,600 shares of our common stock granted under the 2000 Stock Incentive Plan
at a weighted average exercise price of $9.39 per share.
The option exercise price will be determined by the Board and may be equal
to or greater than the fair market value of a share of the Company's common
stock on the date of grant.
- the exercise price of an incentive stock option may be no less than the
fair market value of a share of our common stock on the date of grant;
and
- the exercise price of an incentive stock option granted to an employee
who owns more than 10% of our common stock will be no less than 110% of
the fair market value of a share of our common stock on the date of
grant.
The participant may pay the exercise price:
- by certified or bank cashier's check;
- by the surrender and delivery to us of shares of our common stock having
a fair market value equal to the purchase price of the stock issuable
upon exercise of the options are being exercised; or
- by delivery of a promissory note secured by a pledge of stock.
The board will determine the term of each option, except that the term of
an incentive stock option granted to an employee who owns more than 10% of the
common stock may not exceed five years from the date of grant.
Under the 2000 Stock Incentive Plan, options to purchase no more than
300,000 shares of our common stock may be granted during any one fiscal year to
any one person.
STOCK APPRECIATION RIGHTS. The board may grant a right to receive a number
of shares or, in the discretion of the board, an amount in cash or a combination
of shares and cash, based on the increase in the fair market value of the shares
underlying the right during a stated period specified by the board. The board
may approve the grant of these stock appreciation rights related or unrelated to
stock options. Upon exercise of a stock appreciation right that is related to a
stock option grant, the holder of the related option will surrender the option
for the number of shares as to which the stock appreciation right is exercised
and will receive payment of an amount computed as provided in the stock
appreciation right award.
STOCK BONUS AWARDS. The board may also award cash and/or shares of common
stock to participants. These stock awards may be conditioned on the achievement
of performance goals and/or continued employment with us through a specified
period.
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AMENDMENT AND TERMINATION OF THE PLANS. The board may amend or terminate
the plans at any time, except that it may not make any amendment without
stockholder approval that:
- increases the maximum number of shares as to which options may be granted
under the plans (except in the case of a merger, reorganization or
similar event);
- expands the class of employees or consultants entitled to receive
options, rights or awards under the plans;
- decreases the minimum purchase price at which options or rights may be
granted;
- extends the maximum term of options or rights granted under the plans;
- extends the term of the plans; or
- materially increases the benefits accruing to participants under the
plans who are subject to liability under Section 16(b) of the Exchange
Act.
The board may terminate the plans at any time; provided, however, that the
term of the plans may not be longer than ten years from its commencement date.
TAX CONSEQUENCES. The following description of the tax consequences of
awards under the plans is based on present federal tax laws and does not purport
to be a complete description of the tax consequences of the plans. There are
generally no federal tax consequences as to the optionee or to us upon the grant
of an option. On the exercise of an incentive stock option, the optionee will
not recognize any income, and we will not be entitled to a deduction for tax
purposes, although such exercise may give rise to liability for the optionee
under the alternative minimum tax provisions of the Internal Revenue Code.
However, if the optionee disposes of shares acquired upon the exercise of an
incentive stock option within two years of the date of grant or one year of the
date of exercise, the optionee will recognize ordinary income, and we will be
entitled to a deduction for tax purposes in the amount of the excess of the fair
market value of the shares of common stock on the date of exercise over the
option exercise price (or the gain on sale, if less); the remainder of any gain,
and any loss, to the optionee will be treated as capital gain or loss to the
optionee. On the exercise of a nonqualified stock option, the amount by which
the fair market value of common stock on the date of the exercise exceeds the
option exercise price will generally be taxable to the optionee as ordinary
income and will generally be deductible for tax purposes by us. The disposition
of shares acquired upon exercise of a non-qualified option, or an incentive
stock option, if after the one year and two year periods described above, will
generally result in capital gain or loss to the optionee but will have no tax
consequences to us.
SECTION 162(m). Under Section 162(m) of the Internal Revenue Code, we may
be precluded from claiming a federal income tax deduction for total remuneration
in excess of $1,000,000 paid to the chief executive officer or to any of the
other four most highly compensated officers in any one year. Total remuneration
would include amounts received upon the exercise of stock options. An exception
exists, however, for "performance-based compensation," including amounts
received upon the exercise of stock options pursuant to a plan approved by
stockholders that meets certain requirements. The plans have been approved
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by stockholders, and it is intended that grants of options thereunder meet the
requirements of "performance-based compensation."
FOUNDERS INCENTIVE PLAN
Our Founders Incentive Plan was adopted in May 1999 and is administered by
our compensation committee. The purpose of the plan is to reward our President
and Chief Executive Officer and our Chairman of the Board if we meet certain
specific performance goals. In setting those goals, the compensation committee
will specify the applicable performance criteria and targets it will use for the
performance period. Each executive eligible under the plan may receive a cash
incentive of up to 80% of his annual salary upon the achievement of these goals
and objectives. The performance criteria and targets will measure the following
performance measures:
- the achievement of a specified number of total subscribers and a
specified number of paying customers;
- the achievement of revenue targets;
- the signing of contracts with carriers;
- the obtaining of specified levels of financing; and
- the achievement of infrastructure initiatives.
EMPLOYMENT AGREEMENTS
We entered into employment agreements dated as of January 1, 1999 and
amended as of September 1, 1999, with each of Stephen G. Maloney, our Chief
Executive Officer and Robert M. Unnold, our Chairman of the Board. Both
agreements will expire on December 31, 2002 but automatically renew for
additional one year periods unless we give notice of termination at least 90
days before the expiration of the term. Pursuant to their respective agreements,
Mr. Maloney is employed as our President and Chief Executive Officer at an
annual salary of not less than $150,000, and Mr. Unnold is employed as Chairman
of the Board at an annual salary of not less than $150,000. If they meet certain
performance goals, Messrs. Maloney and Unnold are entitled to receive incentive
compensation of up to 35% of their respective base salaries. We maintain
separate key-man insurance policies of $2,000,000 for each of Messrs. Maloney
and Unnold. We have the right to terminate each agreement at any time and for
any reason. If we do so without cause, or if either individual terminates his
agreement for "good reason," however, we must continue to pay salary and
benefits until the later of 18 months from the date of termination or the
balance of the term. We are also obligated to pay a similar severance benefit
upon the disability of each individual.
We entered into an employment agreement dated as of January 10, 2000 with
Michael P. Neuscheler, our Vice President and Chief Financial Officer. The
agreement will expire on January 9, 2003 but automatically renews for additional
one year periods unless we give notice of termination at least 90 days before
the expiration of the term. Pursuant to his agreement, Mr. Neuscheler is
employed as our Vice President and Chief Financial Officer at an annual salary
of $150,000. If he meets certain performance goals, Mr. Neuscheler is entitled
to receive incentive compensation of up to 50% of his base salary. We maintain a
key-man insurance policy of $500,000 for Mr. Neuscheler. We have the right to
terminate Mr. Neuscheler's employment agreement at any time and for any reason.
If we do so without cause, or if Mr. Neuscheler terminates his agreement for
"good
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reason," however, we must continue to pay salary and benefits until the later of
18 months from the date of termination or the balance of the term. We are also
obligated to pay a similar severance benefit upon the disability of Mr.
Neuscheler.
We entered into an Employment and Royalty Agreement with Jeffrey N. Klein
on October 27, 1998 for a term beginning January 1, 1999 and ending on December
31, 2001. Pursuant to this agreement, Mr. Klein is employed as Vice President of
Research and Development at an annual salary of $125,000 with annual increases
of no less than 5%. Mr. Klein is also entitled to a monthly royalty payment of
2% of all of our gross revenues, including the revenues of any wholly-owned
subsidiary, until he or his estate has received an aggregate of $500,000, of
which he has received $35,000 as of December 31, 1999. Either we or Mr. Klein
may terminate the agreement at any time upon 60 days notice. If we do so without
cause or if the agreement is terminated as a result of Mr. Klein's death or
disability, we must continue to pay salary and benefits until the earlier to
occur of 18 months and the remainder of the term. The royalty payment maximum
must be paid regardless of Mr. Klein's termination, death or disability.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SALES OF OUR SECURITIES
Pursuant to a stock purchase agreement dated February 12, 1999, we sold a
total of 7,714.56 shares of our Series E mandatorily redeemable convertible
preferred stock to BG Media Investors L.P. for $3.11 per share of common stock,
or an aggregate purchase price of $12,000,000 in February 1999. In November
1999, we sold an additional 1,928.64 of Series E mandatorily redeemable
convertible shares to BG Media Investors L.P. for $3.11 per share of common
stock, or an aggregate purchase price of $3,000,000. The value of these shares,
based on the assumed initial public offering price of $15.00 per share, is
$72,324,000. Mr. Grimes, one of our directors, is a member of BG Media Investors
LLC, the General Partner of BG Media Investors L.P. Each share of the Series E
mandatorily redeemable convertible preferred stock will convert into 500 shares
of our common stock immediately upon the completion of this offering.
In June 1998, we issued warrants to purchase 350,000 shares of our common
stock at an exercise price of $3.50 per share to Keystone Venture IV, L.P. in
consideration for services rendered in connection with our 1998 financings. In
addition, pursuant to a stock purchase agreement dated December 22, 1999, we
sold 757.5 shares of Series F mandatorily redeemable convertible preferred stock
to Keystone Venture V, L.P. for $7.92 per share of common stock, or an aggregate
purchase price of $3,000,000. The value of these shares, based on the assumed
initial public offering price of $15.00 per share, is $5,681,250. Mr. Dale, one
of our directors, is Vice President of Keystone IV MCGP, Inc., the General
Partner of Keystone Venture IV Management Company, L.P., which is the General
Partner of Keystone Venture IV, L.P. and Managing Director of Keystone V
Management Company, Inc., the General Partner of Keystone V Partners, L.P.,
which is the General Partner of Keystone Venture V, L.P. Each share of the
Series F mandatorily redeemable preferred stock will convert into 500 shares of
our common stock immediately upon the completion of this offering.
Pursuant to a stock purchase agreement dated as of August 11, 1998, we
issued a total of 843 shares of our Series D mandatorily redeemable convertible
preferred stock to Apex Investment Fund III, L.P. and Apex Strategic Partners,
LLC for $2.37 per share of common stock, or an aggregate purchase price of
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$1,001,000 in cash and notes payable. The value of these shares, based on the
assumed initial public offering price of $15.00 per share, is $6,322,500. In
consideration for the notes payable, we issued warrants to purchase an aggregate
of 195,984 shares of our common stock at an exercise price of $3.00 per share to
the purchasers. In addition, in connection with our Loan Incentive Warrant Plan
which was established in September 1998, we issued warrants to purchase an
aggregate of 20,235 shares of our common stock to the purchasers at an exercise
price of $3.50 per share on March 8, 1999 in consideration of their loans of
$200,000 to us on November 18, 1998. This Loan Incentive Warrant Plan was
established to issue warrants to purchase shares of our common stock to our
lenders in consideration of loans made by them to us. Mr. Johnson, one of our
directors, is President of Stellar Investment Co., the Managing Member of Apex
Management III, LLC, which is the General Partner of Apex Investment Fund III,
L.P. He is also the Managing Member of Apex Strategic Partners, LLC. Each share
of the Series D mandatorily redeemable convertible preferred stock will convert
into 500 shares of our common stock immediately upon the completion of this
offering.
In connection with the preferred stock financings and issuance of common
stock to our founders, we granted registration rights to our preferred
stockholders and Messrs. Unnold, Maloney, Christino and Daniels, among others.
Upon exercise of these registration rights, these stockholders can require us to
file registration statements covering the sale of shares of common stock held by
them and may include the sale of their shares in registration statements
covering our sale of shares to the public.
LOANS FROM US
On May 12, 1999, we loaned Mr. Maloney, our President and Chief Executive
Officer, $100,000 evidenced by a promissory note bearing interest at a rate of
10% per annum. The entire balance of the note plus interest was repaid by Mr.
Maloney on May 26, 1999.
On September 29, 1999, we loaned Mr. Unnold, our Chairman of the Board,
$100,000 evidenced by a promissory note bearing interest at a rate of 10% per
annum. The entire principal balance of the note plus interest was repaid by Mr.
Unnold on October 4, 1999.
LOANS TO US
Mr. Coletti, our Controller, loaned us $40,000 on July 30, 1997 and $25,000
on October 10, 1997 pursuant to promissory notes bearing interest at a rate of
18% per annum. In August 1998, as a condition for us to receive financing in
connection with the Series D mandatorily redeemable preferred stock offering,
the interest rates were adjusted from 18% to 10%. These interest adjustments
were applied retroactively to January 1, 1998. The entire principal balance of
the notes plus interest was repaid to Mr. Coletti on February 16, 1999. In
connection with our Loan Incentive Warrant Plan, we issued to Mr. Coletti and
his designee warrants to purchase 31,805 shares of our common stock at an
exercise price of $3.50 per share on March 8, 1999.
Mr. Unnold, our Chairman of the Board, loaned us $22,000 on July 30, 1997,
$10,000 on April 3, 1998 and $17,000 on April 20, 1998 pursuant to promissory
notes which accrue interest at a rate of 18% per annum. In August 1998, as a
condition for us to receive financing in connection with the Series D
mandatorily redeemable preferred stock offering, the interest rates were
adjusted from 18% to
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10%. These interest adjustments were applied retroactively to January 1, 1998.
The entire principal balance of the notes plus interest was repaid to Mr. Unnold
on February 16, 1999. In connection with our Loan Incentive Warrant Plan, we
issued to Mr. Unnold's designees warrants to purchase 18,708 shares of common
stock at an exercise price of $3.50 per share on March 8, 1999.
Mr. Christino, one of our directors, loaned us $30,000 on July 30, 1997,
pursuant to a promissory note bearing interest at a rate of 18% per annum. In
August 1998, as a condition for us to receive financing in connection with the
Series D mandatorily redeemable preferred stock offering, the interest rates
were adjusted from 18% to 10%. These interest adjustments were applied
retroactively to January 1, 1998. The entire principal balance of the note plus
interest was repaid to Mr. Christino on February 16, 1999. In connection with
our Loan Incentive Warrant Plan, we issued to Mr. Christino warrants to purchase
15,429 shares of common stock at an exercise price of $3.50 per share on March
8, 1999.
In June 1998, we issued two notes payable totaling $400,000 to Apex
Investment Fund III, L.P. and Apex Strategic Partners, LLC. The notes bore
interest at a rate of 7% per annum and were due and payable on demand. In
connection with this issuance, two warrants were issued for the purchase of
195,984 shares of our common stock for $3.00 per share. These notes payable were
converted in August 1998 into Series D mandatorily redeemable convertible
preferred stock in connection with the issuance of the Series D mandatorily
redeemable preferred stock.
On November 18, 1998, we executed two promissory notes with Apex Investment
Fund III, L.P. and Apex Strategic Partners, LLC providing financing totaling
$200,000. The promissory notes bore interest at a rate of 10% per annum and were
due and payable on December 31, 1998. We repaid the note in February 1999. In
consideration for these notes, we issued two warrants to purchase 20,235 shares
of common stock at an exercise price of $3.50 per share to the holders on March
8, 1999.
OTHER TRANSACTIONS
Pursuant to a stock purchase agreement dated February 27, 1992, as amended,
we purchased all of the outstanding capital stock of Quotes Plus . . . , Inc., a
Colorado corporation, from Michael J. Pryslak and Dennis M. Roland. The payment
terms, as amended, provide that Messrs. Pryslak and Roland will collectively
receive a payment equal to 2.5% of our gross revenues on a monthly basis, but in
no event less than $3,000 per month. If, prior to January 1, 2003, the aggregate
of all monthly payments made to Messrs. Pryslak and Roland equals $6,000,000,
then we will have no further payment obligations to Messrs. Pryslak and Roland.
Otherwise, we must continue to make the monthly payment to Messrs. Pryslak and
Roland. If we pay $7,000,000 to Messrs. Pryslak and Roland before January 1,
2004, then our payment obligations to Messrs. Pryslak and Roland will cease. If,
however, we fail to pay to Messrs. Pryslak and Roland $7,000,000 prior to
January 1, 2004, then we must continue to make the monthly payment until we pay
a total of $8,000,000 to Messrs. Pryslak and Roland. In November 1998, we loaned
Messrs. Pryslak and Roland $53,000 in the aggregate on an unsecured basis to
purchase 42 shares of our Series C convertible preferred stock. The payments
generated under the agreement will initially be used to reduce the principal on
this outstanding loan. As of September 30, 1999, the loan had been reduced by
$16,000.
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<PAGE> 82
We believe that the transactions discussed above were made on terms no less
favorable to us than would have been obtained from unaffiliated third parties.
We have adopted a policy that requires all future transactions between us and
our officers, directors and affiliates to be on terms no less favorable than
could be obtained from unrelated third parties. These transactions were approved
by a majority of the disinterested members of our board of directors.
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<PAGE> 83
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership of
our common stock, as of March 31, 2000, by:
- each person known to us to own beneficially more than 5% of our
outstanding common stock;
- each of our directors;
- each of our executive officers named in the summary compensation table;
and
- all of our directors and executive officers as a group.
Share ownership is based on 17,087,265 shares of common stock outstanding
immediately prior to this offering and assumes conversion of all outstanding
shares of preferred stock into shares of common stock. Share ownership in each
case includes shares issuable upon exercise of outstanding options and warrants
that are exercisable within 60 days of March 31, 2000, as described in the
footnotes below. Unless otherwise indicated, the address for each stockholder is
c/o i3 Mobile, Inc., 181 Harbor Drive, Stamford, Connecticut 06902.
<TABLE>
<CAPTION>
PERCENT OF SHARES
BENEFICIALLY OWNED
NUMBER --------------------------------
NAME AND ADDRESS OF SHARES BEFORE OFFERING AFTER OFFERING
- ---------------- ---------- --------------- --------------
<S> <C> <C> <C>
Robert M. Unnold...................... 2,176,208(1) 12.7% 10.1%
Stephen M. Maloney.................... 1,484,166(2) 8.7 6.9
Donald F. Christino................... 1,080,429(3) 6.3 5.0
W. Peter Daniels...................... 220,000 1.3 1.0
Jeffrey N. Klein...................... 58,015(4) * *
Kevin W. Ryan......................... 13,775(4) * *
Kerry J. Dale......................... 2,089,073(5) 11.8 9.5
c/o Keystone Venture IV, L.P.
1601 Market Street
Suite 2500
Philadelphia, PA 19103
James A. Johnson...................... 637,719(6) 3.7 2.9
c/o Apex Management III, LLC
233 Wacker Drive, Suite 900
Chicago, IL 60606
J. William Grimes..................... 4,821,600(7) 28.2 22.4
c/o BG Media Investors L.P.
399 Park Avenue, 19th Floor
New York, NY 10022
Keystone Venture IV, L.P. ............ 1,710,323(8) 9.7 7.8
1601 Market Street
Suite 2500
Philadelphia, PA 19103
BG Media Investors L.P. .............. 4,821,600 28.2 22.4
399 Park Avenue, 19th Floor
New York, NY 10022
MCI WorldCom, Inc..................... 1,131,250(9) 6.4 5.3
500 Clinton Center Drive Clinton, MS
39056
All directors and officers as a group
(14 persons)........................ 12,618,500 69.9 56.2
</TABLE>
- -------------------------
* less than 1% (one percent).
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<PAGE> 84
(1) Includes 2,000,000 shares of common stock issued to RMU Management LLC, an
entity controlled by Mr. Unnold, 18,708 shares of common stock issuable upon
the exercise of warrants at an exercise price of $3.50 per share held by Mr.
Unnold as custodian for the benefit of his two minor children and options to
purchase 12,500 shares of common stock.
(2) Includes options to purchase 12,500 shares of common stock.
(3) Includes 15,429 shares of common stock issuable upon the exercise of
warrants at an exercise price of $3.50 per share.
(4) Consists of shares of common stock issuable upon the exercise of stock
options.
(5) Consists of 1,125,858 shares of common stock and 584,465 shares of common
stock issuable upon the exercise of warrants at a weighted average exercise
price of $3.30 per share held by Keystone Venture IV, L.P. and 378,750
shares of common stock held by Keystone Venture V, L.P. Mr. Dale is a
director of i3 Mobile and Vice President of Keystone IV MCGP, Inc., the
General Partner of Keystone Venture IV Management Company, L.P., which is
the General Partner of Keystone Venture IV, L.P. Mr. Dale is also Managing
Director of Keystone V Management Company, Inc., the General Partner of
Keystone V Partners, L.P., which is the General Partner of Keystone Venture
V, L.P. Mr. Dale disclaims beneficial ownership of these shares except to
the extent of his pecuniary interest therein.
(6) Consists of 421,500 shares of common stock and 216,219 shares of common
stock issuable upon the exercise of warrants at a weighted average exercise
price of $3.05 per share held by Apex Investment Fund III, L.P. and Apex
Strategic Partners, LLC. Mr. Johnson is a director of i3 Mobile and
President of Stellar Investment Co., the Managing Member of Apex Management
III, LLC, which is the General Partner of Apex Investment Fund III, L.P. and
the Managing Member of Apex Strategic Partners, LLC. Mr. Johnson disclaims
beneficial ownership of these shares except to the extent of his pecuniary
interest therein.
(7) Consists of 4,821,600 shares of common stock held by BG Media Investors L.P.
Mr. Grimes is a director of i3 Mobile and Managing Member of BG Media
Investors LLC, the General Partner of BG Media Investors L.P. Mr. Grimes
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest therein.
(8) Includes 234,465 shares of common stock issuable upon the exercise of
warrants at an exercise price of $3.00 per share and 350,000 shares of
common stock issuable upon the exercise of warrants at an exercise price of
$3.50 per share.
(9) Consists of 631,250 shares of common stock and 500,000 shares of common
stock issuable upon the exercise of warrants at an exercise price of $3.00
per share.
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<PAGE> 85
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 50,000,000 shares of common stock,
of which 17,087,265 shares were issued and outstanding immediately prior to this
offering, and 50,000 shares of preferred stock, of which no shares will be
issued and outstanding upon completion of this offering.
COMMON STOCK
Each share of common stock may be uncertificated or represented by a
certificate signed by an authorized officer of i3 Mobile. Holders of our common
stock are entitled to one vote for each share held of record on all matters on
which stockholders may vote, including the election of directors, and do not
have cumulative voting rights. Holders of our common stock are entitled to
receive, if declared, such dividends and other distributions in cash, stock or
property from our assets or funds legally available for such purposes subject to
any dividend preferences that may be attributable to preferred stock that may be
authorized. Registered stockholders may transfer their shares by surrendering to
us or to our transfer agent their share certificates duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer. If the shares are uncertificated, we must receive proper transfer
instruments from the registered owner of uncertificated shares before we cancel
those shares and issue new shares to the transferee. Annual meetings of
stockholders are held on the first Tuesday in July or at such other date and
time as designated by the board of directors. At the annual meeting, the
stockholders elect the directors by a plurality vote. There are no preemptive,
conversion, redemption or sinking fund provisions applicable to our common
stock. All outstanding shares of common stock are fully paid and non-assessable.
In the event of our liquidation, dissolution or winding up, holders of common
stock are entitled to share ratably in the assets available for distribution.
PREFERRED STOCK
Our board of directors, without further action by the stockholders, is
authorized to issue an aggregate of 50,000 shares of preferred stock. Following
completion of this offering, no shares of preferred stock will be outstanding.
Our board of directors may, without stockholder approval, issue preferred stock
with dividend rates, redemption prices, preferences on liquidation or
dissolution, conversion rights, voting rights and any other preferences, which
rights and preferences could adversely affect the voting power of the holders of
common stock. Issuance of preferred stock, while providing desirable flexibility
in connection with possible acquisitions or other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or could
discourage or delay a third party from acquiring, a majority of our outstanding
common stock. We currently have no plans for new issuances of preferred stock.
The ability of the board of directors to establish the rights of, and to
issue, substantial amounts of preferred stock without the need for shareholder
approval, may have the effect of discouraging, delaying or preventing a change
in control. Such preferred stock, among other things, may be used to create
voting impediments with respect to any changes in control or to dilute the stock
ownership of holders of common stock seeking to obtain control.
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<PAGE> 86
REGISTRATION RIGHTS OF STOCKHOLDERS
Following the offering, holders of an aggregate of 15,121,431 shares of our
outstanding common stock will be entitled to rights with respect to registration
of these shares of common stock under the Securities Act.
We have an agreement with these stockholders that gives them registration
rights. Subject to limitations provided in the agreement, including those in
lock-up agreements that these stockholders have signed relating to this
offering, these stockholders have the right, six months after this offering,
upon request of the holders and under certain circumstances and conditions, to
require us to register their shares of common stock under the Securities Act. We
have granted one demand registration right to each of the following:
- Robert M. Unnold, Stephen G. Maloney, Donald F. Christino and W. Peter
Daniels, as a group;
- BG Media Investors L.P.;
- Apex Investment Fund II L.P. and Apex Strategic Partners, LLC, as a
group; and
- Keystone Venture IV, L.P.
We have also granted up to two demand registration rights to the purchasers of
Series F mandatorily redeemable preferred stock as a group for their shares of
common stock issuable upon conversion of their Series F mandatorily redeemable
preferred stock. In addition to these demand registration rights, and subject to
conditions and limitations provided in the applicable agreement, these
stockholders may require us to file an unlimited number of registration
statements on Form S-2 or Form S-3 under the Securities Act when either form is
available for our use, generally one year after this offering.
If we propose to register our securities under the Securities Act after
this offering, these stockholders and the holder of warrants to purchase up to
123,725 shares of our common stock will be entitled to notice of the
registration and to include their shares in the registration provided that the
underwriters of the proposed offering will have the right to limit the number of
shares included in the registration. We must pay for all expenses in connection
with these registrations, other than any underwriters' discounts and
commissions.
OPTIONS
As of the date of this prospectus, options to purchase up to 1,014,000
shares of common stock may be granted under the 1995 Stock Incentive Plan and up
to 1,250,000 shares of common stock may be granted under the 2000 Stock
Incentive Plan. There are 1,005,300 options outstanding under the 1995 Stock
Incentive Plan at a weighted average exercise price of $3.18 per share, of which
344,707 will be exercisable upon the completion of this offering and 252,600
options outstanding under the 2000 Stock Incentive Plan at a weighted average
exercise price of $9.39 per share, none of which will be exercisable upon the
completion of this offering. Other than these options, we have not granted any
other options. Upon completion of this offering, we intend to file a
registration statement on Form S-8 to register all shares of common stock that
we may issue under our stock option plans.
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<PAGE> 87
WARRANTS
As of the date of this prospectus, the following warrants were outstanding
for the purchase of 1,939,084 shares of common stock at a weighted average
exercise price of $3.53:
<TABLE>
<CAPTION>
NAME NO. OF SHARES
- ---- -------------
<S> <C>
Keystone Venture IV, L.P. .................................. 584,465
G-II Family Partnership..................................... 37,455
Glenville Capital Partners, L.P. ........................... 401,278
Apex Investment Fund III, L.P. ............................. 205,703
Apex Strategic Partners L.L.C. ............................. 10,516
Intelligent Investment Partners, L.P. ...................... 500,000
Robert and Elizabeth Coletti................................ 29,805
Donald Christino............................................ 15,429
Mary Elizabeth Coletti...................................... 2,000
Robert Unnold f/b/o Christine Unnold........................ 9,354
Robert Unnold f/b/o Nicholas Unnold......................... 9,354
Allen & Company Incorporated................................ 123,725
CNBC.com LLC................................................ 10,000
</TABLE>
Warrants to purchase up to an additional 110,000 shares of our common stock may
also be granted to each of NBC Interactive Media, Inc. or its affiliates and
Sony Corporation of America or its affiliates in connection with any definitive
distribution agreements which may be entered into in the future between NBC
Interactive Media, Inc. or its affiliates and us and Sony Corporation of America
or its affiliates and us. These investors will receive warrants to purchase
20,000 shares of our common stock for each content distribution agreement we
enter into with them or any of their affiliates. If we enter into a content
distribution agreement by March 31, 2000, the number of warrants will increase
to 30,000. These warrants will expire three years after they are issued. We may
also grant warrants to purchase up to an additional 200,000 shares of our common
stock to AT&T Wireless Services, Inc. in connection with the completion of
specific product developments or implementations and the achievement of
designated registered user levels, warrants to purchase up to an additional
40,000 shares of our common stock to GO.com in connection with the launch of
wireless products under our proposed agreement with GO.com and warrants to
purchase up to an additional 20,000 shares of our common stock to
Sportsline.com, Inc. in connection with the execution of our proposed agreement
with Sportsline.com, Inc.
ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW
Section 203 of the Delaware General Corporation Law generally prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates
84
<PAGE> 88
and associates, owns, or within three years did own, 15% or more of the
corporation's outstanding voting stock. This statute could prohibit or delay a
change in control of i3 Mobile and could discourage potential acquisition
proposals.
INDEMNIFICATION
Our certificate of incorporation provides that no director of i3 Mobile
shall have any personal liability to i3 Mobile or its stockholders for breach of
fiduciary duty as a director, except for liability:
- for breach of the director's duty of loyalty to i3 Mobile or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for payment of dividends or stock purchases or redemptions by the
corporation in violation of Section 174 of the Delaware General
Corporation Law; or
- for any transaction from which the director derived an improper personal
benefit.
As a result of this provision, i3 Mobile and our stockholders may be unable
to obtain monetary damages from a director for certain breaches of his or her
fiduciary duty. This provision does not, however, eliminate the directors'
fiduciary responsibilities and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. The provision also does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
Our bylaws provides for the indemnification of our directors and officers
to the fullest extent authorized by the Delaware General Corporation Law. Such
indemnification may include, if we so decide, the right of the indemnified party
to be paid expenses in advance of any proceeding for which indemnification may
be had, provided that the payment of these expenses incurred by a director or
officer in advance of the final disposition of a proceeding may be made only
upon delivery to us of an undertaking by or on behalf of the director or officer
to repay all amounts paid in advance if it is ultimately determined that the
director or officer is not entitled to be indemnified. In addition, our
certificate of incorporation provides that our employees and other agents, may
be indemnified in accordance with the Delaware General Corporation law to the
extent determined by our board of directors in its sole discretion.
LIMITATIONS ON STOCKHOLDER ACTION BY WRITTEN CONSENT
Our certificate of incorporation also provides that any action required or
permitted to be taken at a stockholders' meeting may be taken without a meeting,
without prior notice and without a vote, if the action is taken by persons who
would be entitled to vote at a meeting and who hold shares having voting power
equal to not less than the minimum number of votes of each class or series that
would be necessary to authorize or take the action at a meeting at which all
shares of each class or series entitled to vote were present and voted.
85
<PAGE> 89
AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION
Under the Delaware General Corporation Law, the affirmative vote of a
majority of the shares entitled to vote on any matter is required to amend our
certificate of incorporation.
TRANSFER AGENT
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
LISTING
Our shares of common stock have been approved for listing on the Nasdaq
National Market under the symbol "IIIM."
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<PAGE> 90
SHARES ELIGIBLE FOR FUTURE SALE
Following this offering, we will have 21,487,265 shares of common stock
outstanding. If the underwriters exercise their over-allotment option in full,
we will have 22,147,265 shares of common stock outstanding. All the shares we
sell in this offering will be freely tradable without restriction or further
registration under the Securities Act, except that any shares purchased by our
affiliates, as that term is defined in Rule 144, may generally only be sold in
compliance with the limitations of Rule 144 described below.
The remaining 17,087,265 shares of common stock outstanding following this
offering will be "restricted securities" as the term is defined under Rule 144.
We issued and sold these restricted securities in private transactions in
reliance on exemptions from registration under the Securities Act. Restricted
securities may be sold in the public market only if they are registered or if
they qualify for an exemption under Rule 144 or Rule 701 under the Securities
Act, as summarized below.
Taking into account the lock-up agreements, and assuming Deutsche Bank
Securities Inc. does not release stockholders from these agreements, the
following shares will be eligible for sale in the public market at the following
times:
- on the date of this prospectus, the 4,400,000 shares sold in the offering
and an additional 708,548 shares held by current shareholders will be
immediately available for sale in the public market;
- 180 days after the date of this prospectus, approximately 11,290,232
shares will be eligible for sale, 10,069,756 of which will be subject to
volume, manner of sale and other limitations under Rule 144; and
- the remaining 5,088,485 shares will be eligible for sale under Rule 144
from time to time upon the expiration of various one-year holding periods
after the expiration of the lock-up period applicable to those shares.
We have agreed with the underwriters that we will not issue any additional
shares of common stock or securities convertible into, exercisable for or
exchangeable for shares of common stock for a period of 180 days after the date
of this prospectus, except that we may grant options to purchase shares of
common stock under our 1995 Stock Incentive Plan and 2000 Stock Incentive Plan
or in connection with the acquisition of companies, and issue shares of common
stock upon the exercise of outstanding options and warrants and in connection
with the acquisition of companies.
Our officers and directors and some of our other stockholders, who will
hold an aggregate of 16,378,717 shares of common stock upon completion of this
offering, have agreed that they will not, without the prior written consent of
Deutsche Bank Securities Inc., offer, sell, pledge or otherwise dispose of any
shares of our common stock or any securities convertible into or exercisable or
exchangeable for, or any rights to acquire or purchase, any of our common stock,
or publicly announce an intention to effect any of these transactions, for a
period of 180 days after the date of this prospectus without the prior written
consent of Deutsche Bank Securities Inc., except that nothing will prevent any
of them from exercising outstanding options and warrants.
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<PAGE> 91
Following the expiration of the lock-up period, shares issuable upon
exercise of options we granted prior to the date of this prospectus will also be
available for sale in the public market pursuant to Rule 701 under the
Securities Act. Rule 701 permits resales of these shares beginning 90 days after
the date of this prospectus by persons other than affiliates.
In general, under Rule 144, a stockholder who owns restricted shares that
have been outstanding for at least one year is entitled to sell, within any
three-month period, a number of these restricted shares that does not exceed the
greater of:
- one percent of the then outstanding shares of common stock, or
approximately 214,873 shares immediately after this offering; or
- the average weekly trading volume in the common stock on the Nasdaq Stock
Market during the four calendar weeks preceding the sale.
In other words, our affiliates must comply with the restrictions and
requirements of Rule 144, other than the one-year holding period requirement, to
sell shares of common stock which are not restricted securities.
Under Rule 144(k), a stockholder who is not currently, and who has not been
for at least three months before the sale, an affiliate of ours and who owns
restricted shares that have been outstanding for at least two years may resell
these restricted shares without compliance with the above requirements. The one-
and two-year holding periods described above do not begin to run until the full
purchase price is paid by the person acquiring the restricted shares from us or
an affiliate of ours.
As of the date of this prospectus, we have granted options to purchase
1,005,300 shares of common stock to specified persons pursuant to our 1995 Stock
Incentive Plan and 252,600 shares of common stock to specified persons pursuant
to our 2000 Stock Incentive Plan. We intend to file, after the effective date of
this offering, a registration statement on Form S-8 to register 2,264,000 shares
of common stock reserved for issuance under our stock option plans. The
registration statement on Form S-8 will become effective automatically upon
filing.
Shares issued under our 1995 Stock Incentive Plan and 2000 Stock Incentive
Plan, after the filing of a registration statement on Form S-8 may be sold in
the open market, subject, in the case of some holders, to the Rule 144
limitations applicable to affiliates, the lock-up agreements and vesting
restrictions imposed by us. In addition, following this offering, the holders of
15,121,431 shares of outstanding common stock will, under some circumstances,
have rights to require us to register their shares for future sale.
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<PAGE> 92
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives Deutsche Bank Securities
Inc., Chase Securities Inc. and Credit Suisse First Boston Corporation, have
severally agreed to purchase from us the following respective number of shares
of common stock at the initial public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ----------
<S> <C>
Deutsche Bank Securities Inc. ............................
Chase Securities Inc. ....................................
Credit Suisse First Boston Corporation....................
----------
Total................................................ 4,400,000
==========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions precedent and that the underwriters will purchase all of
the shares of common stock offered hereby, other than those covered by the over-
allotment option described below, if any of these shares are purchased.
The underwriters propose to offer the shares of common stock to the public
at the initial public offering price set forth on the cover page of this
prospectus and to certain dealers at that price less a concession not in excess
of $ per share. The underwriters may allow, and these dealers may re-allow,
a concession of not more than $ per share to other dealers. After the
initial public offering, the offering price and other selling terms may be
changed by the representatives of the underwriters.
We have granted to the underwriters an option, exercisable not later than
30 days after the date of this prospectus, to purchase up to 660,000 additional
shares of common stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus. The underwriters may exercise this option only to cover
over-allotments made in connection with the sale of the common stock offered in
this offering. To the extent that the underwriters exercise this option, each of
the underwriters will become obligated, subject to conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to the total number of shares of common stock offered in this offering. We will
be obligated, pursuant to this option, to sell these additional shares of common
stock to the underwriters to the extent the option is exercised. If any
additional shares of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the 4,400,000 shares are
being offered.
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<PAGE> 93
The underwriting fee is equal to the initial public offering price per
share of common stock less the amount paid by the underwriters to us per share
of common stock. The underwriting fee is currently expected to be 7% of the
initial public offering price. We have agreed to pay the underwriters the
following fees, assuming either no exercise or full exercise by the underwriters
of the underwriters' over-allotment option:
<TABLE>
<CAPTION>
TOTAL FEES
--------------------------------
WITHOUT WITH FULL
EXERCISE OF EXERCISE OF
FEE PER OVER-ALLOTMENT OVER-ALLOTMENT
SHARE OPTION OPTION
------- -------------- --------------
<S> <C> <C> <C>
Fees paid by i3 Mobile.......
</TABLE>
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $2.2 million. The National Association of Securities Dealers, Inc.
has determined that the difference between the amount that BT Investment
Partners, Inc., an affiliate of Deutsche Bank Securities Inc., originally paid
for its shares of Series F mandatorily convertible preferred stock and the value
of the Series F mandatorily convertible preferred stock based upon the initial
public offering price, or $ , is additional underwriting compensation
received in connection with this offering.
We have agreed to indemnify the underwriters against certain specified
liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect of any of these
liabilities.
Each of our officers and directors, certain stockholders and certain
holders of options and warrants to purchase our stock, has agreed not to offer,
sell, sell short, contract to sell, transfer, hypothecate, pledge or otherwise
dispose of, or enter into any transaction that is designed to, or could be
expected to, result in the disposition of any shares of our common stock or
other securities convertible into or exchangeable or exercisable for shares of
our common stock or derivatives of our common stock for a period of 180 days
after the effective date of the registration statement of which this prospectus
is a part, directly or indirectly, without the prior written consent of Deutsche
Bank Securities Inc. This consent may be given at any time without public
notice. We have entered into a similar agreement with the representatives of the
underwriters.
The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
In order to facilitate the offering of our common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of our common stock. Specifically, the underwriters may over-allot
shares of our common stock in connection with this offering, thus creating a
short position in our common stock for their own account. A short position
results when an underwriter sells more shares of common stock than that
underwriter is committed to purchase. Additionally, to cover these
over-allotments or to stabilize the market price of our common stock, the
underwriters may bid for, and purchase, shares of our common stock in the open
market. Finally, the representatives, on behalf of the underwriters, may also
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities
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may maintain the market price of our common stock at a level above that which
might otherwise prevail in the open market. These transactions may be effected
on the Nasdaq National Market or otherwise. The underwriters are not required to
engage in these activities and, if commenced, may end any of these activities at
any time.
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 330,000 shares for our directors, officers,
employees, and their family members and other individual associates, vendors,
customers and other business associates, including Michael Hirschberg and Martin
Hillery, a partner and an associate, respectively, of Piper Marbury Rudnick &
Wolfe LLP, our counsel. The number of shares of our common stock available for
sale to the general public will be reduced to the extent these reserved shares
are purchased. Any reserved shares that are not purchased by these persons will
be offered by the underwriters to the general public on the same basis as the
other shares in this offering. Other than our directors, officers and key
employees, participants in the sale of reserved shares will not be subject to
any lock-up arrangements with the underwriters.
In December 1999, we issued and sold 252.5 shares of our Series F
mandatorily redeemable preferred stock to BT Investment Partners, Inc., an
affiliate of Deutsche Bank Securities Inc., at $3,960.40 per share, or $7.92 per
common share, for an aggregate purchase price of $1,000,000. Upon completion of
this offering, the Series F mandatorily redeemable preferred stock held by BT
Investment Partners, Inc. will convert into 126,250 shares of our common stock
on the same terms as other investors in this Series F financing. In connection
with this preferred stock financing, we granted registration rights to the
holders of the Series F mandatorily redeemable preferred stock, including BT
Investment Partners, Inc. Pursuant to the rules and regulations of the National
Association of Securities Dealers, Inc., BT Investment Partners, Inc. has agreed
that its shares of Series F mandatorily convertible preferred stock and the
common stock issued upon the conversion thereof may not be sold, transferred,
assigned, pledged or hypothecated by any person for a period of one year after
the effective date of this offering, except to officers or partners of the
underwriters and members of the selling group and their officers or partners.
PRICING OF THIS OFFERING
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock will
be determined by negotiation among us and the representatives of the
underwriters. Among the primary factors to be considered in determining the
public offering price were:
- prevailing market conditions;
- our results of operations in recent periods;
- the present stage of our development;
- the market capitalization and stage of development of other companies
that we and the representatives of the underwriters believe to be
comparable to our business; and
- estimates of our business potential.
91
<PAGE> 95
The estimated initial public offering price range set forth on the cover of this
preliminary prospectus is subject to change as a result of market conditions and
other factors.
EXPERTS
The consolidated financial statements as of December 31, 1999 and 1998 and
for each of the three years in the period ended December 31, 1999 included in
this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Piper Marbury Rudnick & Wolfe LLP, New York, New York. Certain legal matters
in connection with the offering will be passed upon for the underwriters by
Morrison & Foerster LLP, New York, New York.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, including exhibits, schedules and any amendments with
respect to the common stock we are offering hereby. This prospectus is a part of
the registration statement and includes all of the information which we believe
is material to you in considering whether to make an investment in our common
stock. We refer you to the registration statement for additional information
about us, our common stock and this offering, including the full texts of the
exhibits, some of which have been summarized in this prospectus. The
registration statement is available for inspection and copying at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information about the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet
site that makes available the registration statement. The address of the SEC's
Internet site is http://www.sec.gov.
REPORTS TO STOCKHOLDERS
We intend to distribute to our stockholders annual reports containing
audited financial statements and will make available copies of quarterly reports
for the first three quarters of each fiscal year containing unaudited interim
financial information.
92
<PAGE> 96
I3 MOBILE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheet as of December 31, 1998 and
1999...................................................... F-3
Consolidated Statement of Operations for the years ended
December 31, 1997, 1998 and 1999.......................... F-4
Consolidated Statement of Stockholders' Deficit for the
years ended December 31, 1997, 1998 and 1999.............. F-5
Consolidated Statement of Cash Flows for the years ended
December 31, 1997, 1998 and 1999.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 97
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
i3 Mobile, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' deficit and of cash
flows present fairly, in all material respects, the financial position of i3
Mobile, Inc. at December 31, 1998 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Stamford, Connecticut
February 14, 2000
F-2
<PAGE> 98
I3 MOBILE, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- PRO FORMA
1998 1999 (NOTE 2)
---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 166 $ 28,241 $ 28,241
Accounts receivable, net of allowances (Note 2)........... 441 397 397
Deferred advertising (Note 13)............................ - 4,261 4,261
Prepaid expenses and other current assets................. 11 168 168
------- -------- --------
Total current assets............................... 618 33,067 33,067
Fixed assets, net (Note 4)................................ 50 1,942 1,942
Intangible assets, net (Note 2)........................... - 158 158
Other non-current assets.................................. - 634 634
Deposits.................................................. 14 440 440
------- -------- --------
Total assets....................................... $ 682 $ 36,241 $ 36,241
======= ======== ========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 169 $ 724 $ 724
Accrued liabilities (Note 5).............................. 244 2,775 2,775
Deferred revenue (Note 2)................................. 131 100 100
Deferred revenue -- related parties (Note 9).............. 49 - -
Current portion of long-term debt (Note 6)................ 118 - -
Notes payable -- trade (Note 6)........................... 250 - -
Notes payable -- related parties (Note 9)................. 344 - -
------- -------- --------
Total current liabilities.......................... 1,305 3,599 3,599
Long-term debt (Note 6)..................................... 455 - -
------- -------- --------
Commitments and contingencies (Note 8)
Total liabilities.................................. 1,760 3,599 3,599
------- -------- --------
Mandatorily redeemable convertible preferred stock (Note
10)....................................................... 2,500 55,338 -
------- -------- --------
Stockholders' deficit:
Convertible preferred stock (Note 10)..................... - - -
Common stock; $.01 par value, 50,000,000 shares
authorized, 7,554,000, 7,655,500 and 18,972,265 shares
issued.................................................. 76 77 190
Additional paid-in capital................................ 4,530 27,253 82,478
Notes receivable from stockholders (Note 9)............... (53) (31) (31)
Deferred compensation..................................... - (764) (764)
Accumulated deficit....................................... (8,131) (45,001) (45,001)
Treasury stock at cost, 1,885,000 shares.................. - (4,230) (4,230)
------- -------- --------
Stockholders' deficit..................................... (3,578) (22,696) 32,642
------- -------- --------
Total liabilities, mandatorily redeemable
convertible preferred stock and stockholders'
deficit.......................................... $ 682 $ 36,241 $ 36,241
======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 99
I3 MOBILE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net revenue -- trade....................................... $ 676 $ 1,245 $ 1,711
Net revenue -- related parties............................. 149 160 23
------- ------- --------
Net revenue................................................ 825 1,405 1,734
Cost of revenue (excluding $14 of stock compensation)...... 700 1,081 1,302
------- ------- --------
Gross profit............................................... 125 324 432
------- ------- --------
Operating expenses:
Sales and marketing (excluding $94 of stock
compensation)......................................... 234 584 1,938
General and administrative (excluding $145 of stock
compensation)......................................... 2,258 2,306 4,771
Stock compensation....................................... - - 253
------- ------- --------
Operating expenses......................................... 2,492 2,890 6,962
------- ------- --------
Operating loss............................................. (2,367) (2,566) (6,530)
Interest income............................................ (15) (6) (213)
Interest expense........................................... 88 323 491
Interest expense -- related parties........................ 8 12 48
------- ------- --------
Loss before extraordinary item............................. (2,448) (2,895) (6,856)
Extraordinary item -- loss on extinguishment of debt....... - - (3,434)
------- ------- --------
Net loss................................................... (2,448) (2,895) (10,290)
------- ------- --------
Redemption of preferred stock.............................. - - (3,665)
Beneficial conversion feature of preferred stock........... - - (20,504)
------- ------- --------
Dividends on mandatorily redeemable preferred stock........ (76) (274) (2,411)
------- ------- --------
Loss applicable to common stock............................ $(2,524) $(3,169) $(36,870)
======= ======= ========
Net loss per share -- basic and diluted:
Loss before extraordinary item........................... $ (0.33) $ (0.42) $ (5.83)
Extraordinary item....................................... - - (0.60)
------- ------- --------
Net loss................................................. $ (0.33) $ (0.42) $ (6.43)
======= ======= ========
Shares used in computing net loss per share.............. 7,554 7,554 5,736
======= ======= ========
Pro forma net loss per share -- basic and diluted
(unaudited):
Pro forma loss before extraordinary item................. $ (0.57)
Extraordinary item....................................... (0.29)
--------
Net pro forma loss....................................... $ (0.86)
========
Shares used in computing pro forma net loss per share.... 11,948
========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 100
I3 MOBILE, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SERIES A SERIES C NOTES
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
--------------- ---------------- ------------------ PAID-IN FROM
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDERS
------ ------ ------ ------ --------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 31, 1997...... 3,770 - - - 7,554,000 76 1,447 -
Issuance of Series C preferred
stock........................... - - 864 - - - 879 -
Issuance of warrants to preferred
stockholders.................... - - - - - - 52 -
Issuance of warrants to debt
holders......................... - - - - - - 20 -
Accretion of preferred
dividends....................... - - - - - - - -
Net loss......................... - - - - - - - -
------ -- ----- ------- --------- --- -------- ----
Balance at December 31, 1997..... 3,770 - 864 - 7,554,000 76 2,398 -
Issuance of Series C preferred
stock........................... - - 1,330 - - - 1,579 -
Issuance of warrants to debt
holders......................... - - - - - - 158 -
Extension of warrants............ - - - - - - 213 -
Accretion of preferred
dividends....................... - - - - - - - -
Issuance of warrants for
financing fees.................. - - - - - - 182 -
Notes receivable from
shareholders.................... - - - - - - - (53)
Net loss......................... - - - - - - - -
------ -- ----- ------- --------- --- -------- ----
Balance at December 31, 1998..... 3,770 - 2,194 - 7,554,000 76 4,530 (53)
Repurchase of shares............. (3,770) - - - - - (105) -
Issuance of common stock......... - - - - 101,500 1 174 -
Repayment of notes receivable
from shareholders............... - - - - - - - 22
Issuance of warrants............. - - - - - - 1,133 -
Accretion of preferred stock
dividends....................... - - - - - - - -
Deferred compensation - stock
options......................... - - - - - - 1,017 -
Beneficial conversion feature -
Series E........................ - - - - - - 3,000 -
Beneficial conversion feature-
Series F........................ - - - - - - 17,504 -
Amortization of deferred
compensation.................... - - - - - - - -
Net loss......................... - - - - - - - -
------ -- ----- ------- --------- --- -------- ----
Balance at December 31, 1999..... - $- 2,194 $ - 7,655,500 $77 $ 27,253 $(31)
====== == ===== ======= ========= === ======== ====
<CAPTION>
DEFERRED ACCUMULATED TREASURY
COMPENSATION DEFICIT STOCK TOTAL
------------ ----------- -------- -----
<S> <C> <C> <C> <C>
Balance at January 31, 1997...... - (2,438) - (915)
Issuance of Series C preferred
stock........................... - - - 879
Issuance of warrants to preferred
stockholders.................... - - - 52
Issuance of warrants to debt
holders......................... - - - 20
Accretion of preferred
dividends....................... - (76) - (76)
Net loss......................... - (2,448) - (2,448)
------- -------- ------- --------
Balance at December 31, 1997..... - (4,962) - (2,488)
Issuance of Series C preferred
stock........................... - - - 1,579
Issuance of warrants to debt
holders......................... - - - 158
Extension of warrants............ - - - 213
Accretion of preferred
dividends....................... - (274) - (274)
Issuance of warrants for
financing fees.................. - - - 182
Notes receivable from
shareholders.................... - - - (53)
Net loss......................... - (2,895) - (2,895)
------- -------- ------- --------
Balance at December 31, 1998..... - (8,131) - (3,578)
Repurchase of shares............. - (3,665) (4,230) (8,000)
Issuance of common stock......... - - - 175
Repayment of notes receivable
from shareholders............... - - - 22
Issuance of warrants............. - - - 1,133
Accretion of preferred stock
dividends....................... - (2,411) - (2,411)
Deferred compensation - stock
options......................... (1,017) - - -
Beneficial conversion feature -
Series E........................ - (3,000) - -
Beneficial conversion feature-
Series F........................ - (17,504) - -
Amortization of deferred
compensation.................... 253 - - 253
Net loss......................... - (10,290) - (10,290)
------- -------- ------- --------
Balance at December 31, 1999..... $ (764) $(45,001) $(4,230) $(22,696)
======= ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 101
I3 MOBILE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(2,448) $(2,895) $(10,290)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 45 19 139
Amortization of debt discount........................... 23 35 19
Non-cash charges from the issuance of common stock
warrants............................................... 6 392 100
Stock compensation expense.............................. - - 253
Loss on extinguishment of debt.......................... - - 3,434
Interest on extinguished debt........................... - - 311
Other................................................... 84 67 133
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable............ (106) (390) (88)
(Increase) decrease in other current assets and other
assets............................................... 3 2 (1,217)
Increase (decrease) in accounts payable............... 76 31 166
(Decrease) increase in accrued liabilities............ 31 149 2,531
Increase (decrease) in deferred revenue............... (95) (54) (80)
------- ------- --------
Net cash used in operating activities....................... (2,381) (2,644) (4,589)
------- ------- --------
Cash flows from investing activities:
Purchase of intangible asset.............................. - - (100)
Purchase of fixed assets.................................. (17) (57) (1,700)
------- ------- --------
Net cash used in investing activities....................... (17) (57) (1,800)
------- ------- --------
Cash flows from financing activities:
Proceeds from sales of preferred stock, net............... 1,129 2,154 38,136
Proceeds from issuance of notes payable - trade........... 200 650 -
Proceeds of issuance of notes payable - related parties... 117 227 -
Issuance of common stock.................................. - - 175
Repurchase of common and preferred stock.................. - - (3,000)
Repayments of notes payable............................... - (326) (869)
Issuance of notes receivable - related parties............ - (53) (200)
Repayments of notes receivable - related parties.......... - - 222
------- ------- --------
Net cash provided by financing activities................... 1,446 2,652 34,464
------- ------- --------
Increase (decrease) in cash and cash equivalents............ (952) (49) 28,075
Cash and cash equivalents at beginning of period............ 1,167 215 166
------- ------- --------
Cash and cash equivalents at end of period.................. $ 215 $ 166 $ 28,241
======= ======= ========
Supplemental disclosures of cash flow and non cash
activities:
Interest paid in cash..................................... $ 63 $ 88 $ 136
Conversion of debt to mandatorily redeemable
preferred stock......................................... $ - $ 400 $ 5,317
Deferred advertising received for preferred stock......... $ - $ - $ 4,261
Accretion of mandatorily redeemable preferred stock
dividends............................................... $ 76 $ 274 $ 2,411
Common stock warrants issued in Series F preferred stock
offering................................................ $ - $ - $ 1,033
Liability for fixed asset purchases....................... $ - $ - $ 314
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 102
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 1 -- FORMATION AND OPERATIONS OF THE COMPANY:
i3 Mobile, Inc., "i3" or the "Company", formerly known as Intelligent
Information Incorporated, was incorporated in Delaware on June 28, 1991. The
Company provides personalized information to wireless phone and other wireless
device users. Their services enable wireless device users to have access to
personalized information and electronic commerce. The Company offers a range of
individualized information products, including customized stock quotes, news,
weather, sports, entertainment, traffic and travel information as well as
personal e-mail, calendar and commerce applications.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Significant accounting policies followed in the preparation of these
financial statements are as follows:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company
and a majority-owned subsidiary acquired in 1996. This subsidiary was disposed
of in 1997 (see Note 3). All significant intercompany accounts and transactions
have been eliminated in consolidation.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The markets
for the Company's services are characterized by intense competition, rapid
technological development, regulatory changes, and frequent new service
introductions, all of which could impact the future value of the Company's
assets.
UNAUDITED PRO FORMA BALANCE SHEET:
Upon the closing of the Company's anticipated initial public offering, each
outstanding share of preferred stock will automatically convert into 500 shares
of common stock, with the aggregate number of shares of common stock to be
issued to each stockholder to be rounded up to the nearest whole share. These
transactions have been reflected in the unaudited pro forma balance sheet as if
they occurred on December 31, 1999.
CASH AND CASH EQUIVALENTS:
Cash equivalents consist of highly liquid investments purchased with an
initial maturity of three months or less.
F-7
<PAGE> 103
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
FIXED ASSETS:
Fixed assets are stated at cost and are depreciated using the straight-line
method over the estimated useful lives of the assets, which are between 1 and 3
years. Maintenance and repairs are charged to expense as incurred.
RESEARCH AND DEVELOPMENT:
Research and development costs are charged to expense as incurred. All
costs incurred to establish the technological feasibility of the Company's
products and services have been expensed as general and administrative expenses.
Costs incurred subsequent to the establishment of technological feasibility and
prior to the general release of the product have not been capitalized as such
amounts are not significant.
LONG-LIVED ASSETS:
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
requires that long-lived assets and certain intangible assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. In such an event, the carrying value of
intangible assets is reviewed by management to determine if the value(s) may be
impaired. If this review indicates that the carrying amount(s) will not be
recoverable, as determined based on the estimated expected future cash flows
attributable to such asset(s) over the remaining amortization period, management
will reduce the carrying amount to recognize the impairment and recognize an
impairment loss. The measurement of the impairment losses to be recognized is to
be based on the difference between the fair values and the carrying amounts of
the assets. Fair value is defined as the amount for which the asset could be
bought or sold in a current transaction between willing parties. Where quoted
market prices in active markets are not available, management would estimate
fair value based on the best information available in the circumstances - the
price of similar assets, discounted cash flow analysis or other valuation
techniques.
At each balance sheet date, the Company evaluates the realizability of its
long-lived assets, including goodwill, based on estimates of future
non-discounted cash flows. In the event that the estimated expected future cash
flows from a long-lived asset, including goodwill, are less than the carrying
value, an impairment loss is calculated. This impairment loss is calculated as
the difference between the fair value of the asset, as defined above, and the
carrying value of the asset. In instances where goodwill is identified with
assets that are subject to an impairment loss, the carrying value of the
identified goodwill shall be eliminated before making any reduction of the
carrying amounts of impaired long-lived assets.
In November 1997, the Company suspended the funding of and,
correspondingly, the operations of its majority-owned subsidiary, Strategic
Communications Corporation, "SCC". The only long-lived asset of SCC was goodwill
of $64. Since
F-8
<PAGE> 104
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
the carrying amount of the goodwill of SCC at that date exceeded the estimate of
the expected future cash flows associated with such goodwill, an impairment loss
of $64, calculated as the difference between the fair value and carrying value
of the goodwill, was recognized.
In 1999, the Company acquired a license to a technology patent. Under the
terms of the agreement, the Company paid the patent holder $100 in cash on
signing the agreement and will pay an additional $75 in January 2000. In
addition, the Company has agreed to pay a royalty equal to 5% of gross revenue
related to electronic commerce through March 29, 2005 and May 8, 2007 for sales
in the United States and Canada, respectively. The license is being amortized
using the straight-line method over the remaining life of the patent, 4.5 years.
At December 31, 1999, the accumulated amortization for the intangible asset was
$17.
REVENUE RECOGNITION:
The majority of the Company's revenues relate to their subscription based
services provided to individual users, wireless network operators and others.
The Company derives subscriber revenue from the delivery of personalized
information to wireless phones and other wireless devices. Subscriber revenue
consists of fixed monthly usage charges, transactional fees based on the
information delivered, or a combination of the two arrangements. The Company
recognizes subscriber revenue when products and services are provided to
subscribers or resellers. The products sold by the Company are information
service products provided to the Company's customers. These information products
are not considered tangible products for financial reporting purposes. The
Company does not offer refund privileges to its customers. Deferred revenue is
comprised of payments received from the Company's resellers in advance of
wireless information services being provided.
As a part of its subscription based revenue, the Company also provides
software design and customization services to its resellers and charges fees on
a time and material basis for these services. These revenues are recognized as
services are rendered. Revenues are net of volume discounts to customers.
Advertising revenues, which are nominal to date, are recognized in the month
that the advertisement messages are sent.
The Company offers complimentary services to build awareness of its
products and services and to generate revenue. The wireless network operators
are responsible for determining the price, if any, to be charged to their
customers for this service. The fees charged by the Company to the wireless
network operators for this service varies by wireless network operator. Under
agreements with reduced pricing terms, the Company recognizes revenue at the
time these services are provided. In the instance where the Company agreed to
provide services directly to the customers of a wireless network operator at no
cost to the customer, no revenue is recognized.
F-9
<PAGE> 105
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
COST OF REVENUES:
Cost of revenues consists primarily of costs associated with purchasing
content, royalty payments, direct labor costs of our operations center and
distribution fees. Content providers are paid either a flat monthly fee, a fee
based on the number of users requesting the content, a fee based on a percentage
of the Company's revenues generated from the content they provide, a fee based
on the number of on-demand messages requested or a combination of these
arrangements. Distribution fees are paid to wireless network operators to use
their network to deliver advertising and electronic commerce enabling messages
and for delivery of content to direct subscribers. Management believes that the
cost of revenues and gross margins on related party revenues are not
significantly different from the cost of revenues and gross margins earned on
third party revenues.
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable.
The Company controls this risk through credit approvals, credit limits and
monitoring procedures. The Company does not require collateral or other forms of
security. The Company can, however, limit the amount of information services
provided to its customers in the event of nonperformance.
Total net revenue for the year ended December 31, 1997 from Bank of
America, SkyTel Communications, Inc., Omnipoint Communications, Inc. and
PageMart Wireless, Inc. was $160, $149, $112 and $86, respectively. Each of
these customers comprised over 10% of total net revenues in 1997.
Total net revenue for the year ended December 31, 1998 from Omnipoint
Communications, Inc. and SkyTel Communications, Inc. was $566 and $160,
respectively. Each of these customers comprised over 10% of total net revenues
in 1998.
Total net revenue for the year ended December 31, 1999 from Omnipoint
Communications, Inc., Bell Mobility Cellular, Inc. and SBC Communications, Inc.
was $723, $246 and $229 respectively. Each of these customers comprised over 10%
of total net revenues for the period.
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
The Company maintained an allowance for doubtful accounts of $110 and $143
at December 31, 1998 and 1999, respectively.
INCOME TAXES:
The Company uses the liability method of accounting for income taxes, as
set forth in Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. Under this method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and liabilities and net
operating loss carryforwards, all calculated using presently enacted tax rates.
F-10
<PAGE> 106
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
SEGMENT INFORMATION:
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
(SFAS No. 131). SFAS No. 131 supersedes SFAS No. 14, Financial Reporting for
Segments of a Business Enterprise, replacing the "industry segment" approach
with the "management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments. The
Company operates in one segment: wireless information provider services. SFAS
No. 131 also requires disclosures about products and services, geographic areas,
and major customers. The adoption of SFAS No. 131 had no impact on the Company's
financial statements for the periods presented.
STOCK COMPENSATION:
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25), and related interpretations in
accounting for its stock option plan and stock awards with the disclosure
provisions of Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation (SFAS 123). Under APB 25, compensation expense is
computed to the extent that the fair value of the underlying stock on the date
of grant exceeds the exercise price of the employee stock option or stock award.
Compensation so computed is deferred and then recognized over the vesting period
of the stock option or award.
No stock compensation expense was recorded for the years ended December 31,
1997 and 1998. Stock compensation expense was $253 for the year ended December
31, 1999.
The Company applies SFAS 123, Emerging Issues Task Force Abstract No.
96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees
for Acquiring, or in Conjunction with Selling, Goods or Services (EITF 96-18)
and related interpretations in accounting for issuances of stock awards to non-
employees. Under SFAS 123 these equity transactions are accounted for based on
the fair value of the consideration received or the fair value of the equity
instruments issued, which ever is more reliably measurable. The value of the
equity instruments is calculated under a fair value based method using a Black-
Scholes pricing model. EITF 96-18 defines the measurement date for determining
fair value as the earlier of the date at which a commitment for performance by
the counterparty to earn the equity instruments is reached or the date at which
the counterparty's performance is complete.
EARNINGS (LOSS) PER SHARE:
The Company computes net loss per share pursuant to Statement of Financial
Accounting Standards No. 128, Earnings Per Share, and SEC Staff Accounting
Bulletin No. 98. Basic net loss per share is computed by dividing loss
applicable to common stockholders by the weighted average number of shares of
the
F-11
<PAGE> 107
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
Company's common stock outstanding during the period. Diluted net loss per share
is determined in the same manner as basic net loss per share except that the
number of weighted average shares is increased assuming exercise of dilutive
stock options and warrants using the treasury stock method and dilutive
conversion of the Company's preferred stock.
For the years ended December 31, 1997, 1998 and 1999, options to purchase
229,100, 387,250, and 914,000 shares of common stock, respectively, preferred
stock convertible into 3,169,500, 4,256,000, and 11,316,765 shares of common
stock, respectively, and warrants to purchase 510,875, 1,206,859, and 1,929,084
shares of common stock, respectively, were excluded from the calculation of
diluted earnings per share since their inclusion would be antidilutive for all
periods presented.
Pro forma basic and diluted earnings per share have been calculated
assuming the conversion of all outstanding shares of preferred stock that are
mandatorily convertible upon the Company's anticipated initial public offering
into 11,316,765 shares of common stock, as if the shares had converted
immediately upon their issuance. Dividends on mandatorily redeemable preferred
stock, deemed dividends for beneficial conversion features on mandatorily
redeemable preferred stock and loss on redemption of preferred stock have been
excluded from the calculation of pro forma basic and diluted earnings per share
as the related shares are assumed to have converted to common upon issuance.
COMPREHENSIVE INCOME:
The Company has adopted, in 1999, the accounting treatment prescribed by
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income. The adoption of this statement had no impact on the Company's financial
statements for the periods presented.
RECLASSIFICATIONS:
Certain reclassifications have been made for consistent presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In 1999, the Company adopted the American Institute of Certified Public
Accountants' Statement of Position 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use (SoP 98-1). SoP 98-1 provides
guidance for determining whether computer software is internal-use software, and
guidance on accounting for the proceeds of computer software originally
developed or obtained for internal use and then subsequently sold to the public.
It also provides guidance on capitalization of the costs incurred for computer
software developed or obtained for internal use. The adoption of SoP 98-1 did
not have a material impact on the Company's financial statements.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 137 which delays the effective date of
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
F-12
<PAGE> 108
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
No. 133, as amended, is to be effective for the Company beginning in 2001. SFAS
No. 133 establishes accounting and reporting standards for derivative financial
instruments and hedging activities related to those instruments, as well as
other hedging activities. Because the Company does not currently hold any
derivative financial instruments and does not engage in hedging activities, the
adoption of SFAS No. 133 is not expected to have any impact on the consolidated
financial position, results of operations or cash flows of the Company.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition (SAB 101) which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the Securities and Exchange Commission. SAB 101 outlines
the basic criteria that must be met to recognize revenue and provides guidance
for disclosures related to revenue recognition policies. Management believes
that SAB 101 has no material effect on its financial position, results of
operations or cash flows.
NOTE 3 -- DISPOSAL OF BUSINESS:
In November 1997, the Company suspended its funding of and,
correspondingly, the operations of Strategic Communications Corporation ("SCC")
. In connection with the decision to terminate the operations of SCC, the
remaining goodwill of $64 at December 31, 1997 was written off. In January 1998,
the Company sold its interest in SCC for nominal consideration and recorded a
gain of $3.
NOTE 4 -- FIXED ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1998 1999
----- ------
<S> <C> <C>
Furniture and fixtures............................... $63 $ 63
Equipment and computers.............................. 8 218
Construction in progress............................. - 1,804
--- ------
71 2,085
Less - Accumulated depreciation...................... 21 143
--- ------
$50 $1,942
=== ======
</TABLE>
Depreciation expense related to fixed assets for the years ended December
31, 1997, 1998 and 1999 was $19, $19 and $122, respectively.
Construction in progress at December 31, 1999 relates to the expenditures
for leasehold improvements, furniture, equipment and computers for the Company's
new operations center and headquarters in Stamford, Connecticut. As of December
31, 1999 these assets were not yet placed in service and, as such, were not
being depreciated. Capitalized costs will be amortized over the estimated useful
life of the asset beginning when the asset is ready for its intended use.
F-13
<PAGE> 109
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 5 -- ACCRUED LIABILITIES:
The following table provides the major components of accrued liabilities:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1999
---- ------
<S> <C> <C>
Accrued stock issuance and professional fees.......... $108 $2,045
Accrued salaries and wages............................ 38 250
Other accrued liabilities............................. 98 480
---- ------
$244 $2,775
==== ======
</TABLE>
NOTE 6 -- DEBT:
Debt and notes payable - trade consisted of the following at December 31,
1998 and 1999:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1999
----- -----
<S> <C> <C>
CURRENT PORTION OF LONG-TERM DEBT:
Five-year convertible note........................ $ 137 $ -
Unamortized discount........................... (19) -
----- -----
$ 118 $ -
===== =====
NOTES PAYABLE - TRADE:
Demand note - February 1998....................... 150 -
Demand note - April 1998.......................... 100 -
----- -----
$ 250 $ -
===== =====
LONG-TERM DEBT:
Five-year convertible note.......................... $ 493 $ -
Unamortized discount.............................. (38) -
----- -----
$ 455 $ -
===== =====
</TABLE>
In December 1996, the Company executed a five-year convertible note with
the Connecticut Development Authority ("CDA"), which provided financing totaling
$750. In connection with this agreement, a warrant was issued to purchase
101,500 shares of common stock for $1.72 per share (Note 11). The relative fair
value of these warrants of $95 was recorded as a debt discount and was amortized
over the term of the loan.
The fair value of the warrant was determined using the Black-Scholes
pricing model utilizing a volatility rate of 40%, a 6.9-year expected life, no
expected dividends and a risk free rate of return of 6.2%. The gross proceeds of
the debt financing were then allocated between the debt and the warrants based
on the
F-14
<PAGE> 110
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
estimated fair values of both instruments. The note earned interest at a rate
equal to the federal reserve rate for five year treasury securities plus 2.5%.
The note had an effective interest rate of 11%.
In December 1999, the Company entered into an agreement with the CDA to
exchange its five-year convertible note payable for 79.96 shares of Series F
preferred stock at a conversion price of $3,960.40 per share (convertible into
common stock at a conversion rate of 500 to 1), and to exercise its warrant to
purchase 101,500 shares of common stock at a price of $1.72 per share. This debt
extinguishment resulted in an extraordinary loss on redemption of $260.
In December 1997, the Company executed a promissory note with a private
investor, providing financing totaling $200. The promissory note bears interest
at the rate of 10% per annum and was due and payable in February 1998. This note
was repaid in full in August 1998. In connection with the issuance, the private
investor received a warrant to purchase 100,000 shares of common stock for $3.00
per share (Note 11). The relative fair value of this warrant of $20 has been
recorded as a debt discount and is being amortized over the term of the note.
The fair value of the warrant was determined using the Black-Scholes pricing
model utilizing a volatility rate of 40%, a 1-year expected life, no expected
dividends and a risk free rate of return of 5.7%. The gross proceeds of the debt
financing were then allocated between the debt and the warrants based on the
estimated fair values of both instruments. The effective interest rate on the
note is 20%.
In February and April 1998, the Company executed promissory notes with a
private investor, providing financing totaling $150 and $100, respectively. The
promissory notes bear interest at a rate of 10% and were due and payable in
March 1998 and April 1998, respectively. In December 1998 the Company issued a
warrant to purchase 150,000 shares of common stock at $3.50 per share to the
noteholders (Note 11). As a result of the issuance, the Company has recorded the
fair value of the warrant of $75 as a charge directly to interest expense. The
fair value of the warrant was determined using the Black-Scholes pricing model
utilizing a volatility rate of 40%, a 3.1-year expected life, no expected
dividends and risk free rate of return of 4.5%. In February 1999 the notes were
repaid in full. Repayment of these notes was guaranteed by the holder of the
Company's Series B mandatorily redeemable preferred stock, a related party. The
effective interest rate on these notes is 10%.
In June 1998, the Company issued two notes payable totaling $400 to a
private investor group. The notes bore interest at a rate of 7% per annum and
were due and payable on demand in cash or Series D preferred stock. In
connection with this issuance, two warrants were issued in August 1998 for the
purchase of 195,984 shares of the Company's common stock for $3.00 per share
(Note 11). The value of these warrants of $83 has been charged directly to
interest expense. The fair value of the warrant was determined using the Black-
Scholes pricing model utilizing a volatility rate of 40%, a 5-year expected
life, no expected dividends and risk free rate of return of 4.8%. These notes
payable were converted in August 1998 into Series D mandatorily redeemable
convertible
F-15
<PAGE> 111
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
preferred stock ("Series D Preferred Stock") in connection with the issuance of
the Series D Preferred Stock.
In February 1999, the Company issued a $5,000 promissory note, a warrant to
purchase 500,000 shares of common stock and $3,000 of cash to redeem 3,770
shares of its Series A convertible preferred stock and 1,885,000 shares of its
common stock owned by Intelligent Investment Partners, Inc. Intelligent
Investment Partners, Inc. is a wholly owned subsidiary of SkyTel Communications,
Inc., SkyTel, a significant customer. The promissory note, which matures on
February 12, 2004, pays interest at a rate of 10% per annum beginning after the
first year. Interest is payable semiannually thereafter until maturity. The
long-term note payable becomes immediately due and payable upon the Company's
anticipated initial public offering or a sale of the Company. The effective
interest rate on this note is 9.8%. The warrants allow the holder to purchase
500,000 shares of the Company's common stock at a price of $3.00 per share (Note
11). The fair value of the warrant was determined using the Black-Scholes
pricing model utilizing a volatility rate of 40%, a 5-year expected life, no
expected dividends and risk free rate of return of 5.0%.
On December 29, 1999, the Company entered into an agreement with MCI
WorldCom, Inc., parent company to SkyTel to convert SkyTel's five-year $5,000
note payable into 1,262.5 shares of Series F mandatorily redeemable preferred
stock at a conversion price of $3,960.40 per share (convertible into common
stock at a conversion rate of 500 to 1). This debt extinguishment resulted in an
extraordinary loss on redemption of $3,174.
NOTE 7 -- INCOME TAXES:
No provision for federal or state income taxes has been made for the years
ended December 31, 1997, 1998 and 1999 given the Company's loss position in each
year. At December 31, 1999, the Company had net operating loss carryforwards of
$16,454 which expire through the year 2018. Net deferred tax assets at December
31, 1998 and 1999 have been fully reserved due to the uncertainty of
realization.
F-16
<PAGE> 112
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
The Company's gross deferred tax assets at December 31, 1998 and 1999 were
comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1999
------- -------
<S> <C> <C>
GROSS DEFERRED TAX ASSET:
Net operating loss carryforwards................. $ 3,074 $ 7,275
Warrant issuances................................ 172 216
Interest accretion............................... 26 187
Other............................................ 5 104
------- -------
3,277 7,782
Valuation allowance.............................. (3,277) (7,782)
------- -------
Net deferred taxes............................... $ - $ -
======= =======
</TABLE>
Under provisions of the Tax Reform Act of 1986, if certain substantial
changes in the Company's ownership should occur, there would be an annual
limitation on the amount of net operating loss carryforwards which could be
utilized. Due to this potential annual limitation, the net operating loss
carryforwards may expire prior to when otherwise utilizable.
NOTE 8 -- COMMITMENTS AND CONTINGENCIES:
LEASE AGREEMENTS:
The Company leases space in several buildings which is used for offices and
development facilities as well as various equipment, all subject to operating
leases. As of December 31, 1999, the minimum annual rental payments under the
terms of such noncancelable leases which expire at various dates through 2008
are as follows:
<TABLE>
<S> <C>
2000.................................................. $ 715
2001.................................................. 730
2002.................................................. 708
2003.................................................. 685
2004.................................................. 685
Thereafter............................................ 1,922
------
Total minimum lease payments.......................... $5,445
======
</TABLE>
Rent expense for the years ended December 31, 1997, 1998 and 1999 amounted
to $109, $165, and $211, respectively.
During 1999, in connection with one of the Company's office leases, the
Company was required to provide a $400 security deposit.
F-17
<PAGE> 113
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
LITIGATION:
The Company, in the ordinary course of business, is subject to various
legal proceedings. While it is impossible to determine the ultimate outcome of
these matters, it is management's opinion that the resolution of these matters
will not have a material adverse effect on the financial position or results of
operations of the Company.
COMMITMENTS:
At December 31, 1999, the Company had entered into contracts committing the
Company to approximately $2,100 worth of expenditures for construction,
furniture and equipment related to their new operations center and headquarters
in Stamford, Connecticut.
EMPLOYMENT AGREEMENTS
The Company maintains employment agreements with its key officers. These
agreements expire on December 31, 2002 but automatically renew unless notice of
termination is given at least 90 days prior to expiration. These agreements
provide minimum salary levels $150 per annum and compensation guidelines for
each employee. Additionally, the Company maintains separate key-man insurance
policies of $2,000 for two of its executives.
OTHER AGREEMENTS:
The Company has agreements with wireless network operators who act as
resellers of the Company's products and services to their customers. These
contracts generally have one to three-year terms and are nonexclusive.
The Company maintains agreements with various content providers. The
content agreements frequently have one-year terms, are nonexclusive and can be
canceled by either party without notice.
The Company is a member of an industry association of wireless service,
wireless equipment and software companies that develops worldwide standards for
wireless information and telephony services on digital mobile phones and other
wireless devices. As a result of their affiliation with the organization, the
Company has agreed to license its intellectual property to other members on fair
and reasonable terms to the extent that the license is required to develop
noninfringing products under the specifications promulgated by the organization.
Each other member has entered into reciprocal agreements.
The Company maintains royalty agreements with certain individuals. These
agreements are discussed in further detail in Note 9.
F-18
<PAGE> 114
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
NOTE 9 -- RELATED PARTY TRANSACTIONS:
REVENUE/DEFERRED REVENUE:
The Company had revenue and deferred revenue for services provided to
SkyTel Communications, Inc. Intelligent Investment Partners, Inc., a wholly
owned subsidiary of Skytel, was a holder of common and Series A preferred shares
of the Company. In February 1999, Intelligent Investment Partners, Inc.'s equity
holdings in the Company were redeemed (see Note 6), and its seat on the Board of
Directors was relinquished. Subsequent to February 1999, they are no longer
considered a related party of the Company.
NOTES PAYABLE TO RELATED PARTIES:
The Company had outstanding borrowings totaling $144 as of December 31,
1998, payable to the Chairman of the Board of Directors of the Company, an
employee/officer of the Company, and a director of the Company. These notes bore
interest at a rate of 18% per annum and repayment could be required at any time.
In August 1998, as a condition for the Company to receive financing in
connection with the Series D mandatorily redeemable preferred stock offering,
the interest rates on these related party notes were adjusted from 18% to 10%.
These interest rate adjustments were applied retroactively to January 1, 1998
and remained in effect through the repayment of the notes. The note holders
forgave $7 of related party interest expense in 1998 related to this retroactive
adjustment. These notes payable were repaid in full in February 1999.
On November 18, 1998, the Company executed two promissory notes with a
stockholder of the Company providing financing totaling $200. The promissory
notes bore interest at a rate of 10% per annum and were due and payable on
December 31, 1998. In March 1999, the Company issued a warrant to purchase
20,235 shares of common stock at $3.50 per share to the noteholder under the
Company's Loan Incentive Warrant Plan (Note 11). The Company repaid the note in
February 1999.
NOTE RECEIVABLE FROM RELATED PARTIES:
On May 12, 1999, the Company loaned the President and Chief Executive
Officer $100 at an interest rate of 10% per annum. The entire balance, plus
interest, was repaid on May 26, 1999.
On September 30, 1999, the company loaned the Chairman of the Board of
Directors $100 at an interest rate of 10% per annum. The entire balance, plus
interest was repaid on October 4, 1999.
ROYALTY AGREEMENTS:
The Company maintains a royalty agreement with two current stockholders of
the Company. The agreements provide for the payment of royalties of 2 1/2% of
gross revenues on a monthly basis, but in no event less than $3 per month, with
a
F-19
<PAGE> 115
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
maximum aggregate payment of $6,000 adjustable up to a maximum of $8,000 as
defined in the agreement. Total royalties expensed under the terms of the
agreement were, $39, $32, and $46 for the years ended December 31, 1997, 1998
and 1999, respectively. In November 1998, the Company loaned the two
shareholders $53 on an unsecured basis to purchase Series C convertible
preferred stock. The royalties generated under the agreement subsequent to
November 1998 will be used to reduce the loan outstanding to the Company. The
balance outstanding on these loans were $53 and $31 at December 31, 1998 and
1999, respectively.
The Company maintains a royalty agreement with a current employee. The
original agreement provided for the payment of royalties based on the number of
subscribers with a maximum royalty payment of $750. In 1999, in connection with
an employment agreement, the royalty agreement was amended to be based on a
percentage of gross revenues, as defined in the agreement. The maximum royalty
was also reduced by $250 for the cumulative salary paid to the employee. The
employee is entitled to a monthly royalty payment of 2% of gross revenues. Total
royalties expensed under the terms of the royalty agreement were $15, $29 and
$35 for the years ended December 31, 1997, 1998 and 1999, respectively.
NOTE 10 -- PREFERRED STOCK:
Preferred stock consisted of the following at December 31, 1998 and 1999:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1998 1999
------ -------
<S> <C> <C>
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
STOCK:
Series B....................................... $1,436 $ 1,460
Series D....................................... 1,064 1,292
Series E....................................... - 17,104
Series F....................................... - 35,482
------ -------
Total mandatorily redeemable
convertible preferred stock......... $2,500 $55,338
====== =======
CONVERTIBLE PREFERRED STOCK AT PAR VALUE:
Series A....................................... $ - $ -
Series C....................................... - -
------ -------
$ - $ -
====== =======
</TABLE>
SERIES A CONVERTIBLE PREFERRED STOCK:
In February 1995, the Company issued 3,770 shares of Series A convertible
preferred stock to IIP for $150 per share. Series A convertible preferred stock
was convertible into common shares at a conversion rate of 500-to-1. As the
equivalent conversion price per common share was equal to or greater than the
estimated fair value of the Company's common shares at the time of issuance no
beneficial
F-20
<PAGE> 116
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
conversion charge was applicable to this issuance. Upon the issuance, 40% of the
Company's common stock was owned by Intelligent Investment Partners, Inc., a
holding company, which is wholly owned by SkyTel Communications, Inc., a
significant customer.
In February 1999, the Company redeemed all 3,770 shares of its Series A
convertible preferred stock and 1,885,000 shares of its common stock owned by
Intelligent Investment Partners, Inc. The redemption price of the Series A
preferred stock and the common stock of $8,000 is payable as follows: $3,000 in
cash upon closing of the transaction and $5,000 in a promissory note which
matures on February 12, 2004 (Note 6). In addition a warrant to purchase 500,000
shares of the Company's common stock at a price of $3.00 per share was issued to
Intelligent Investment Partners, Inc. This warrant expires February 11, 2004
(Note 11). This warrant has a fair value of $460 which has been applied to the
value of the common and preferred stock repurchased. The fair value of the
warrant was determined using the Black-Scholes pricing model utilizing a
volatility rate of 40%, a 5-year expected life, no expected dividends and a risk
free rate of return of 5.0%. The redemption of the preferred stock resulted in
$4,230 recorded as treasury stock, a $3,665 charge to accumulated deficit that
is included in "loss applicable to common stock" and a $105 charge to additional
paid-in capital. The additional paid-in capital charge represents the net impact
of eliminating the Company's basis in the Series A convertible preferred stock
of $565, and the recording of the $460 value of the common stock warrants
issued. The aggregate redemption value of $8,460 was allocated between the
common and convertible preferred stock redeemed based on the ratio of equivalent
common shares of each instrument.
SERIES B MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:
In August 1996, the Company issued 1,421 shares of Series B mandatorily
redeemable preferred stock to a private investor group for $879.66 per share.
Series B mandatorily redeemable convertible preferred stock is convertible into
common shares at a conversion rate of 500-to-1. As the equivalent conversion
price per common share was equal to or greater than the estimated fair value of
the Company's common shares at the time of issuance no beneficial conversion
charge was applicable to this issuance. In connection with the issuance of the
Series B mandatorily redeemable preferred stock, warrants were issued to the
investor group to purchase 153,000 shares of common stock for $1.76 per share
(Note 11). These warrants were not exercised and expired on August 31, 1997.
Also, in connection with the issuance of the Series B mandatorily
redeemable preferred stock, the investor group was granted options to purchase
an additional 284 shares of Series B mandatorily redeemable preferred stock at a
price of $879.66. These options were exercisable at the option of the holder at
any time prior to August 31, 1997. Further if the Company fulfilled certain
criteria as outlined in the stock agreement and, if the investor group did not
exercise its option, the Company had the option to issue and sell to the
investor group, and the investor
F-21
<PAGE> 117
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
group was required to buy, 284 shares of Series B mandatorily redeemable
preferred stock at a price of $879.66. The Company fulfilled the criteria as
outlined in the Series B agreement and, accordingly, the investor group
purchased 284 shares of Series B mandatorily redeemable preferred stock on
February 27, 1997.
The relative fair value of the warrants and options granted in conjunction
with the Series B preferred stock of $90 was recorded as a discount to the
Series B preferred stock value and is being amortized as preferred stock
dividends over the period until the earliest possible redemption date. The fair
value of the warrant was determined using the Black-Scholes pricing model
utilizing a volatility rate of 40%, a 1-year expected life, no expected
dividends and a risk free rate of return of 6.7%.
SERIES C CONVERTIBLE PREFERRED STOCK:
From July 1997 through December 1997, the Company sold 476 and 388 shares
of Series C convertible preferred stock to private investors at prices of
$879.66 per share and $1,187.00 per share, respectively. During 1998, the
Company changed the number of authorized shares of its Series C convertible
preferred stock to 2,194 and sold an additional 1,330 shares of its Series C
convertible preferred stock to private investors for $1,187.00 per share. Series
C convertible preferred stock is convertible into common shares at a conversion
rate of 500-to-1. As the equivalent conversion price per common share was equal
to or greater than the estimated fair value of the Company's common shares at
the time of issuance no beneficial conversion charge was applicable to this
issuance. Related parties purchased 430 of the 1,330 shares issued in 1998. In
connection with these issuances, a warrant was issued for the purchase of 74,910
shares of common stock for $3.00 per share (Note 11). The fair value of the
warrants were determined using the Black-Scholes pricing model utilizing a
volatility rate of 40%, a 1-year expected life, no expected dividends and a risk
free rate of return of 5.7%.
On December 22, 1999, the Company's certificate of incorporation was
amended to provide for the mandatory conversion of the Series C preferred stock
into common stock upon a qualified initial public offering. This amendment was
approved by the Board of Directors and the stockholders, including a majority of
the Series C stockholders.
SERIES D MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:
In August 1998, the Company converted two outstanding notes payable into
Series D preferred stock and sold additional shares of Series D preferred stock
to a private investor group. The notes were issued to the private investor group
in June 1998. The carrying value of the notes of $407 was converted into Series
D preferred stock at $1,187.00 per share (Note 6). A total of 843 shares of
Series D preferred stock were sold at a price of $1,187.00 per share for total
consideration of $1,001 of cash and converted notes payable. Series D
mandatorily redeemable convertible preferred stock is convertible into common
shares at a conversion rate
F-22
<PAGE> 118
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
of 500-to-1. As the equivalent conversion price per common share is equal to or
greater than the estimated fair value of the Company's common shares at the time
of issuance no beneficial conversion charge is applicable to the issuance.
SERIES E MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:
In February 1999, the Company sold to a private investor group, 7,714.56
shares of Series E mandatorily redeemable convertible preferred stock at a price
of $1,555.50 per share for $12,000. Series E mandatorily redeemable convertible
preferred stock is convertible into common shares at a conversion rate of
500-to-1. As the equivalent conversion price per common share related to the
February 1999 issuance is equal to or greater than the estimated fair value of
the Company's common shares at the time of issuance no beneficial conversion
charge is applicable to the February issuance.
On November 23, 1999, the same private investor group, in accordance with
its contract with the Company, purchased an additional 1,928.64 shares of Series
E mandatorily redeemable convertible preferred stock at a price of $1,555.50 per
share for $3,000. A $3,000 deemed dividend has been recognized as a charge to
additional paid-in capital and an increase to net loss available to common
shareholders for the beneficial conversion feature, calculated as the difference
between the per share conversion price and the estimated fair value of the
common stock into which the preferred stock is convertible, measured at the
commitment date. This beneficial conversion feature is limited to the amount of
the proceeds received, or $3,000.
SERIES F MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:
On December 22, 1999, the Company issued 8,248.33 shares of Series F
mandatorily redeemable convertible preferred stock at a price of $3,960.40 per
share to private investor groups. The proceeds include $24,850 of cash
investments, including $3,000 from a related party stockholder of the Company,
the conversion of a $5,000 outstanding note payable, the conversion of a $317
five-year convertible note payable and future television advertising rights. In
connection with this issuance the Company recorded a beneficial conversion
charge of $17,504, an extraordinary loss on the redemption of the two notes
payable of $3,434 and deferred advertising value of $4,261. These charges are
calculated as the difference between the per share value of the conversion
feature and the estimated fair value of the common stock at commitment date
multiplied by the applicable equivalent common shares.
CONVERSION FEATURES, RIGHTS AND PREFERENCES:
All preferred stock is convertible at any time into shares of common stock
at the option of the holder according to a 500-to-1 conversion rate. Each series
of preferred stock includes anitdilution and conversion price adjustment
provisions that may increase the conversion ratio for these shares in the event
of a sale by the Company of additional shares of common stock at a price below
the conversion price for such shares. Automatic conversion of all outstanding
F-23
<PAGE> 119
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
preferred stock occurs upon the closing of an initial public offering or sale or
merger of the Company provided certain defined minimum proceeds and per share
requirements are met. The conversion of preferred stock into a total of
11,316,765 shares of common stock is reflected in the unaudited pro forma
consolidated balance sheet at December 31, 1999.
Series C preferred stock is not entitled to any voting rights. Series B
preferred stock is entitled to vote on certain matters and Series D, E, and F
preferred stock are entitled to voting rights afforded to common stockholders in
proportion to the number of common shares into which their preferred shares are
convertible.
The Series B mandatorily redeemable preferred stock and Series C preferred
stock are entitled to receive dividends when and if declared by the board of
directors. The Series D, E, and F mandatorily redeemable preferred stock accrue
dividends cumulatively at a rate of 10% per share per annum. This cumulative
dividend is included in the charge to accumulated deficit and the increase in
carrying values of the preferred shares related to the 20% internal rate of
return guarantee. Such dividends may only be paid at the discretion of the board
of directors and are payable upon the conversion of the related shares into
common stock upon the closing of an initial public offering. All accumulated
dividends shall be forfeited in the event of a public offering where the value
of i3 is equal to or greater than $152,000.
In the event of an involuntary liquidation, the holders of the Series F
preferred shares are entitled to receive the stated value per share of the stock
together with any accrued and unpaid dividends before any payments to the other
stockholders of the Company. Subsequently, the Series B, Series D and Series E
preferred stockholders are entitled to receive, on a pro rata basis, prior and
in preference to Series C preferred stock, the stated value per share for each
outstanding share plus accrued but unpaid dividends. After the initial payment
to the holders of the Series F preferred shares and payment to the other
preferred stockholders of the Company in accordance with the Company's
certificate of incorporation, the holders of the Series F preferred shares are
entitled to receive an additional amount until they shall have received an
aggregate of two times the stated value per share of the stock.
Series B preferred stock is mandatorily redeemable based on certain
predefined events subsequent to December 31, 2003, but no later than June 30,
2004, at a price per share equal to $879.66 per share, without any dividends.
The Series D, E, and F preferred stock is mandatorily redeemable based on
certain predefined events subsequent to December 31, 2003, but no later than
June 30, 2004, at a price which equates to the investor receiving a 20% internal
rate of return on their initial investment of $1,187.00, $1,555.50 and $3,960.40
per share, respectively. This 20% internal rate of return is being recorded by a
charge to accumulated deficit and an increase to the carrying values of the
Series D, E, and F preferred shares. The state in which the Company is
incorporated does not preclude companies from accruing dividends when a
stockholders' deficit exists.
F-24
<PAGE> 120
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
The total preferred shares authorized was 10,000 at December 31, 1998 and
50,000 at December 31, 1999. The Company's preferred stock issued and
outstanding consisted of the following shares at December 31, 1998 and 1999:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1999
----- -------------
<S> <C> <C>
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
STOCK:
Series B, $.01 par value
Shares issued and outstanding........... 1,705 1,705
Series D, $.01 par value
Shares issued and outstanding........... 843 843
Series E, $.01 par value
Shares issued and outstanding........... - 9,643.20
Series F, $.01 par value
Shares issued and outstanding........... - 8,248.33
CONVERTIBLE PREFERRED STOCK:
Series A, $.01 par value
Shares issued and outstanding........... 3,770 -
Series C, $.01 par value
Shares issued and outstanding........... 2,194 2,194
</TABLE>
NOTE 11 -- COMMON STOCK:
COMMON STOCK WARRANTS:
The Company had outstanding stock purchase warrants as follows. In this
table, "Debt financings" refers to warrants issued to noteholders, while
"Services related to 1998 capital raising" refers to warrants issued in
consideration for assistance provided to the Company in obtaining debt and
preferred stock financing.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
--------- -------------
<S> <C> <C>
Debt financings.......................... 547,484 645,984
Series B preferred stock................. 234,465 234,465
Series C preferred stock................. 74,910 74,910
Services related to 1998 capital
raising................................ 350,000 350,000
Series A preferred stock redemption...... - 500,000
Series F preferred stock................. - 123,725
--------- ---------
1,206,859 1,929,084
========= =========
Weighted Average exercise price per
share.................................. $3.10 $3.50
</TABLE>
In connection with the Company's 1996 debt financing (Note 6), a warrant
was issued for the purchase of 101,500 shares of common stock for $1.72 per
share. This warrant is exercisable at the option of the holder and expires on
December 31, 2003. The relative fair value of this warrant of $95 has been
F-25
<PAGE> 121
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
recorded as additional paid-in capital and as a discount to the debt. The fair
value of the warrant was determined using the Black-Scholes pricing model
utilizing a volatility rate of 40%, a 6.9-year expected life, no expected
dividends and a risk free rate of return of 6.2%. The gross proceeds of the debt
financing were allocated between the debt and the warrants based on the
estimated fair values of both instruments.
In December 1997, a warrant was issued to the Series B preferred
stockholders, a related party, for the purchase of 234,465 shares of common
stock of the Company for $3.00 per share. This warrant was issued in
consideration for the Series B stockholder giving up its 12% cumulative
dividend. This cumulative dividend was to be paid as of the sale or initial
public offering of the Company. The elimination of the dividend was a condition
for the Company to receive the Series C convertible preferred stock financing.
The warrant is exercisable at the option of the holder and originally expired on
December 31, 1998. In April 1998 the expiration date of this warrant was
extended to December 31, 2001 in consideration for the continued financial
support of the Series B stockholder. The warrants' original fair value of $52
was charged as a preferred dividend immediately upon issuance in 1997 and the
fair value of the extension of the expiration date of $123 was immediately
charged as a preferred dividend in 1998.
In connection with the issuance of the Series C convertible preferred stock
in 1997 (Note 10), two warrants were issued for the purchase of an aggregate of
74,910 shares of common stock for $3.00 per share. The warrants are exercisable
at the option of the holder, had an original expiration date of December 31,
1998. In April 1998 the expiration dates of these warrants were extended to
December 31, 2001 in consideration for the continued financial support of the
holders. The fair value of the warrants issued with Series C convertible
preferred stock was determined to be $17 using the Black-Scholes pricing model
utilizing a volatility rate of 40%, a 1-year expected life, no expected
dividends and a risk free rate of return of 5.7% percent. The cash proceeds were
allocated to the warrants, recorded as additional paid-in capital, and to the
Series C convertible preferred stock. The difference between the fair value of
the warrants under their original terms and the fair value under the extended
terms of $39 was immediately charged as a preferred dividend in 1998.
In December 1997, in connection with the issuance of a $200 promissory note
(Note 6), a warrant was issued to the private investor for the purchase of
100,000 shares of common stock of the Company for $3.00 per share. The warrant
is exercisable at the option of the holder and had an original expiration date
of December 31, 1998. The relative fair value of the warrant of $20 was
amortized to interest expense over the term of the note. In April 1998 the
expiration date for this warrant was extended to December 31, 2001 in
consideration for the continued financial support of the lender. The fair value
related to the extension of the expiration date of $52 was immediately charged
as interest expense in 1998.
In connection with the issuance of the Company's June 1998 notes to private
investors, two warrants were issued in August 1998 to purchase an aggregate of
F-26
<PAGE> 122
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
195,984 shares of the Company's common stock at a price of $3.00 per share.
These notes to private investors were converted into Series D preferred stock in
August 1998. These warrants expire on July 31, 2003. The fair value of the
warrant of $83 was immediately recorded as interest expense in 1998.
In consideration for assistance provided in raising capital during 1998, a
warrant was issued in June 1998 to the holder of the Series B preferred stock, a
related party, for the purchase of 350,000 shares of common stock for $3.50 per
share in June 1998. This warrant is exercisable at the option of the holder and
expires on December 31, 2001. As a result of the issuance, the fair value of the
warrant of $182 has been charged to general and administrative expense in 1998.
The charge was recorded to general and administrative expenses as the warrants
were issued in consideration for the general assistance provided to the Company
in obtaining debt and preferred stock financings and was not applicable to a
specific financing.
In December 1998 a warrant to purchase 150,000 shares of the Company's
common stock at a price of $3.50 per share was issued to a holder of the
Company's notes payable for financing provided to the Company (Note 6). This
warrant expires on December 31, 2001. As a result of this issuance, the Company
has recorded the fair value of the warrant of $75 as a charge to interest
expense in 1998.
In February 1999, the Company issued a warrant to Intelligent Investment
Partners, Inc., as part of the redemption price for its Series A preferred and
common stock (Note 10). This warrant allows Intelligent Investment Partners,
Inc. to purchase 500,000 shares of the Company's common stock at a price of
$3.00 per share, subject to adjustment. This warrant expires on February 11,
2004. The value of this warrant of $460 was included in the valuation of the
treasury stock and the loss on redemption of Series A preferred stock.
In September 1998 the Company authorized a Loan Incentive Warrant Plan that
provided for the issuance of warrants to purchase common stock of the Company to
the holders of notes payable. In March 1999, the Company issued warrants under
this plan to purchase 200,000 shares of the Company's common stock at a price of
$3.50 per share. The number of warrants was determined by a formula based on the
amount of the loan. This plan has now expired. These warrants were issued to
short-term notes payable holders and expire on December 31, 2001. The related
loans were repaid in February 1999. As a result of the issuance, the Company has
recorded the fair value of the warrants of $100 as a charge to interest expense.
In conjunction with the Series F mandatorily redeemable preferred stock
offering, the Company issued a warrant to purchase 123,725 shares of common
stock at an exercise price of $7.92 per share and incurred a liability of $1,633
to an investment banking firm pursuant to a binding agreement. This fee is in
consideration for acting as placement agent in connection with the Series F
mandatorily redeemable preferred stock offering. The warrant, which has an
exercise price of $7.92 per share and a five year life, has been valued at
$1,033
F-27
<PAGE> 123
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
using a Black-Scholes pricing model. Assumptions utilized included a volatility
rate of 40%, a 5-year expected life, no expected dividends and a risk free rate
of return of 5.8%. The value of the payment and warrants has been accounted for
as issuance costs against the gross proceeds of the Series F offering.
On December 29, 1999, the Company entered into a two-year agreement with
NBC Interactive Media, Inc. This agreement provides the Company with the right
to distribute content from NBC Interactive Media, Inc. or its affiliates upon
execution of distribution agreements. The Company will issue warrants to NBC
Interactive Media, Inc. to purchase 20,000 common shares at an exercise price of
$10.00 per share for each content distribution agreement it or any of its
affiliates enters into with the Company, or 30,000 shares for the first
agreement reached prior to March 31, 2000. The aggregate number of shares of
common stock issuable under this contingent warrant agreement is 110,000 shares.
These warrants expire three years after their issuance. The accounting treatment
for those contingent warrants to be issued to NBC Interactive Media, Inc. is
prescribed by EITF 96-18, Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling Goods or
Services. Under EITF 96-18 the measurement date for determining the fair value
of these warrants would not occur until such time as a distribution agreement is
entered into between i3 Mobile and NBC Interactive Media, Inc. or its
affiliates. The fair value of the warrants will be determined through a
Black-Scholes pricing model utilizing the fair value of the Company's common
stock as of the measurement date. As no such agreements have been entered into
at December 31, 1999 these contingent warrants have no impact on the 1999
financial statements.
COMMON STOCK RESERVED:
The Company has reserved shares of common stock as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1999
---- ----
<S> <C> <C>
Conversion of preferred stock.......... 4,256,000 11,316,765
Stock options.......................... 387,205 914,000
Stock warrants......................... 1,206,859 1,929,084
--------- ----------
5,850,064 14,159,849
========= ==========
</TABLE>
On June 11, 1997, the Company effected a 500-to-1 common stock split. All
references to common stock amounts, shares and per share data included in the
financial statements have been adjusted to give retroactive effect to the stock
split.
NOTE 12 -- STOCK INCENTIVE PLAN:
The Company's 1995 Stock Incentive Plan provides for the issuance of up to
1,014,000 shares of common stock outstanding through the granting of stock
options to employees, officers, consultants and directors. The board of
directors has complete authority to determine awards and establish the exercise
price based on the Board's estimate of fair value provided that the exercise
price of the stock
F-28
<PAGE> 124
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
option was no less than the fair value of a share of common stock on the date of
grant, and the exercise price of a stock option granted to an employee who owns
more than 10% of the common stock will be no less than 110% of the fair value of
a share of common stock on the date of grant. Such option grants prior to
September 15, 1999 vest over a period of five years. As of September 15, 1999,
new options granted will vest over a period of four years.
The following table describes the Company's stock option activity:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
WEIGHTED AVERAGE FAIR VALUE
NUMBER OF EXERCISE PRICE OF OPTIONS GRANTED
OPTIONS PER SHARE PER SHARE
--------- ---------------- ------------------
<S> <C> <C> <C>
Outstanding at January 1,
1997....................... 119,500 $0.30
Granted....................... 130,000 $1.76 $1.76
Canceled...................... (22,500) $1.08
-------
Outstanding at December 31,
1997....................... 227,000 $1.05
Granted....................... 162,600 $2.37 $2.37
Canceled...................... (4,450) $2.37
-------
Outstanding at December 31,
1998....................... 385,150 $1.59
Granted....................... 540,500 $2.74 $5.38
Canceled...................... (11,650) $2.37
-------
Outstanding at December 31,
1999....................... 914,000 $2.71
=======
</TABLE>
The following summarizes the outstanding and exercisable options under the
Plan as of December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER REMAINING EXERCISE NUMBER EXERCISE
EXERCISE PRICE OUTSTANDING LIFE PRICE OUTSTANDING PRICE
- -------------- ----------- ---------- -------- ----------- --------
(IN YEARS)
<S> <C> <C> <C> <C> <C>
$0.30 109,000 1.0 $0.30 87,200 $ .30
$1.76 - $2.37 415,500 3.1 $2.20 161,482 $2.10
$3.11 - $4.00 389,500 3.1 $3.94 96,025 $3.95
------- -------
914,000 344,707
======= =======
</TABLE>
For all options granted in 1997 and 1998, the exercise price equaled the
fair value of the common stock on the date of grant. In 1999, options granted
with an
F-29
<PAGE> 125
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
exercise price equal to fair value of the common stock had a weighted-average
exercise price of $2.42. Options granted with an exercise price below fair value
had a weighted average exercise price and weighted-average fair value of $3.96
and $6.66 per share, respectively.
If compensation expenses had been recognized based on the fair value of the
options at their grant date, in accordance with Statement of Financial
Accounting Standard No. 123 ("FAS 123"), pro forma results of operations would
be as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Loss applicable to common stock:
As reported............................ $(2,524) $(3,169) $(36,870)
Pro forma under FAS 123................ (2,566) (3,231) (37,062)
Basic and diluted net loss per share:
As reported............................ ($ 0.33) ($ 0.42) ($ 6.43)
Pro forma under FAS 123................ ($ 0.34) ($ 0.43) ($ 6.46)
</TABLE>
The estimated fair value at date of grant for options granted for the year
ended December 31, 1999 ranged from $2.37 to $7.00. The fair value of each
option is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions:
<TABLE>
<CAPTION>
1997 1998 1999
------ ------ -----
<S> <C> <C> <C>
Risk free interest rate.................... 6.3% 5.4% 5.8%
Expected dividend yield.................... 0 0 0
Expected life of option (years)............ 5 5 4.33
Expected volatility........................ 0.0001% 0.0001% 28.83%
</TABLE>
As additional options are expected to be granted in future years and the
options vest over several years, the above pro forma results are not necessarily
indicative of future pro forma results.
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
plans. Deferred compensation of $764 was recorded for the year ended December
31, 1999. This represents compensation expense that will be recognized over the
remaining vesting period. Compensation expense of $253 was recorded for the year
ended December 31, 1999. No compensation expense has been recognized for
stock-based compensation plans for the years ended December 31, 1998 and 1997.
NOTE 13 - DEFERRED ADVERTISING:
As part of the Series F mandatorily redeemable convertible preferred stock
offering, the Company entered into an agreement with National Broadcasting
F-30
<PAGE> 126
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
Company, Inc. "NBC". In the agreement NBC provides television advertising rights
to the Company in exchange for 631.25 shares of Series F mandatorily redeemable
preferred stock issued to NBC Interactive Media, Inc. in December 1999. This
advertising can be broadcast on NBC, NBC's owned and operated television
stations or CNBC. The term of the agreement is two years, effective January 1,
2000. The Company has accounted for these services as deferred advertising at
the fair value of the Series F mandatorily redeemable preferred shares exchanged
for the advertising rights of $4,261. These advertising rights will be amortized
to expense as the advertising is used by the Company.
NOTE 14 - SUBSEQUENT EVENTS:
On January 4, 2000 the Company amended its certificate of incorporation to
change its name from Intelligent Information Incorporated to i3 Mobile, Inc.
WARRANTS
On January 25, 2000, the Company entered into a two-year agreement with
Sony Corporation of America, "Sony". This agreement provides the Company with
the right to distribute content from Sony or its affiliates upon execution of
distribution agreements. The Company will issue warrants to Sony to purchase
20,000 common shares at an exercise price of $10.00 per share for each content
distribution agreement Sony or any of its affiliates enters into with the
Company, or 30,000 shares for the first distribution agreement reached prior to
March 31, 2000. The aggregate number of shares of common stock issuable under
this contingent warrant agreement is 110,000 shares. These warrants expire three
years after their issuance.
The accounting treatment for these contingent warrants to be issued to Sony
is prescribed by EITF 96-18. Under EITF 96-18 the measurement date for
determining the fair value of these warrants would not occur until such time as
an agreement is entered into between i3 Mobile and Sony or its affiliates. The
fair value of the warrants will be determined through a Black-Scholes pricing
model utilizing the fair value of the Company's common stock as of the
measurement date.
NOTE 15 -- SUBSEQUENT EVENTS (UNAUDITED):
OPTIONS
Subsequent to December 31, 1999 the Company issued 343,900 stock options to
employees pursuant to employment agreements at a weighted average exercise price
of $8.96 per share. These options vest ratably over a four-year period and
expire after ten years. Based on the estimated the fair value of the common
stock at the grant date, the Company estimates that it will record deferred
compensation for these options of $1,640 in the first quarter of 2000. This
represents compensation that will be recognized over the remaining vesting
period. This deferred compensation charge will be amortized to the statement of
operations
F-31
<PAGE> 127
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
over the four-year vesting period at a rate of $410 per annum for years 2000,
2001, 2002 and 2003.
On February 9, 2000, the Board of Directors adopted the 2000 Stock
Incentive Plan. This plan provides for the issuance of up to 1,250,000 shares of
common stock through the granting of stock options to employees, officers,
consultants and directors. The option exercise price will be determined by the
Board and may be equal to or greater than the fair market value of a share of
the Company's common stock on the date of grant. The plan limits the number of
options issued to any one employee in one fiscal year to 300,000. The Company
has issued 252,600 stock options to date under the 2000 Stock Incentive Plan.
On February 9, 2000, the Company entered into a 5-year agreement with
BroadcastEntertainment.com under which BroadcastEntertainment.com will be the
exclusive provider to i3 for certain entertainment related content. In
consideration, BroadcastEntertainment.com will provide the Company with
advertising credits on its affiliated internet websites and radio stations.
Management is in the process of determining the value of these advertising
credits. The value of the advertising credits will be based on the guidance of
Emerging Issues Task Force Abstract No. 99-17, Accounting for Advertising Barter
Transactions. The agreement also includes that the Company will provide
enterprise services to BroadcastEntertainment.com to upgrade its website for the
delivery of content and related services directly to wireless devices and to
offer BroadcastEntertainment.com the capability to provide these web-to-wireless
services to up to five companies. BroadcastEntertainment.com has agreed to pay
$2,000 in cash for these services.
On March 7, 2000, in conjunction with its agreement with NBC Interactive
Media, Inc. (Note 11), the Company entered into a two-year distribution
agreement with CNBC.com under which the Company is granted a non-exclusive
license to distribute specific types of CNBC.com's content to designated users
and resellers of the Company. In consideration the Company has granted CNBC.com
a warrant to purchase 10,000 shares of the Company's common stock at an exercise
price of $10.00 per share. The warrant has a three-year term and is exercisable
immediately. As part of the agreement, the Company has also agreed to purchase
banner advertising from CNBC.com utilizing its deferred advertising rights
described in Note 13. The value of this warrant has been estimated at $64 using
a Black-Scholes option pricing model assuming a volatility of 40%, an expected
term of 3 years, no expected dividends and a risk free rate of return of 5.8%.
This value of the warrant will be amortized over the term of the agreement as
stock compensation. The original terms of the NBC Interactive Media, Inc.
agreement called for the initial warrant issuance to be for 30,000 shares of
common stock, if issued prior to March 31, 2000, and subsequent warrant
issuances to be for the purchase of 20,000 shares of common stock. These terms
were adjusted to allow for the initial warrant to be for 10,000 shares of common
stock. All subsequent issuances will be subject to the original terms of the
agreement.
F-32
<PAGE> 128
I3 MOBILE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
In March 2000, the Company entered into an agreement with AT&T Wireless
Services, Inc. The agreement calls for the Company to issue stock purchase
warrants based upon certain performance criteria being met. Under the agreement,
the Company can issue warrants to purchase up to 200,000 shares of common stock
at an exercise price of $15.00 per share. These warrants vest upon the
development and implementation of a program to tag messages with advertisements
and upon the achievement of designated new registered user levels. These
warrants expire three years after their issuance date. The accounting treatment
for these contingent warrants is prescribed by EITF 96-18. Under EITF 96-18 the
measurement date for determining the fair value of the warrants would not occur
until such time as the performance criteria are met. The fair value of the
warrants will be determined through a Black-Scholes option pricing model
utilizing the fair value of the Company's common stock at the measurement date.
F-33
<PAGE> 129
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN
THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE SALE OF COMMON
STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH
THE OFFER OR SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 7
Forward Looking Statements............. 22
Use of Proceeds........................ 23
Dividend Policy........................ 23
Capitalization......................... 24
Dilution............................... 26
Selected Consolidated Financial Data... 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 29
Our Business........................... 40
Management............................. 66
Certain Relationships and Related
Transactions......................... 76
Principal Stockholders................. 80
Description Of Capital Stock........... 82
Shares Eligible for Future Sale........ 87
Underwriting........................... 89
Experts................................ 92
Legal Matters.......................... 92
Where You Can Find Additional
Information.......................... 92
Reports to Stockholders................ 92
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATIONS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[I3 MOBILE, INC. LOGO]
i3 MOBILE, INC.
4,400,000 SHARES
COMMON STOCK
DEUTSCHE BANC ALEX. BROWN
CHASE H&Q
CREDIT SUISSE FIRST BOSTON
PROSPECTUS
, 2000
<PAGE> 130
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by i3 Mobile in connection with this offering,
other than underwriting discounts and commissions, are as follows. All amounts
other than the SEC registration fee, the NASD filing fee and the Nasdaq National
Market listing fee are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 21,374
NASD filing fee............................................. 7,540
Nasdaq National Market listing fee.......................... 1,000
Printing and engraving expenses............................. 500,000
Accounting fees and expenses................................ 750,000
Legal fees and expenses..................................... 750,000
Blue Sky fees and expenses.................................. 24,460
Transfer Agent and Registrar fees and expenses.............. 25,000
Miscellaneous expenses...................................... 100,626
----------
Total:................................................. $2,180,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 102 of the Delaware General Corporation Law, the
Restated Certificate of Incorporation of i3 Mobile (filed as Exhibit 3.1 to this
registration statement) eliminates its directors' personal liability to i3
Mobile or its stockholders for monetary damages for a breach of fiduciary duty
as a director of i3 Mobile, except:
- for any breach of the director's duty of loyalty to i3 Mobile or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for payment of dividends or stock purchases or redemptions by the
corporation in violation of Section 174 of the Delaware General
Corporation Law; or
- for any transaction from which the director derived an improper personal
benefit.
As a result of this provision, i3 Mobile and its stockholders may be unable to
obtain monetary damages from a director for certain breaches of his or her
fiduciary duty to i3 Mobile. This provision does not, however, eliminate the
directors' fiduciary responsibilities and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. The provision also does not affect a
director's
II-1
<PAGE> 131
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
The Amended Bylaws of i3 Mobile (filed as Exhibit 3.2 to this registration
statement) provide that i3 Mobile must indemnify its directors and officers to
the fullest extent permitted by the Delaware General Corporation Law and that it
may indemnify its employees and agents in accordance with Delaware law as
determined by i3 Mobile's board of directors in its sole discretion. Under
Section 145 of the Delaware General Corporation Law, a Delaware corporation has
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that the person is or was a director, officer, employee or agent of the
corporation. The corporation may indemnify such a person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with the action,
suit or proceeding if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful, except that, in the
case of an action by or in the right of the corporation, judicial approval is
required for indemnification in respect of any claim, issue or matter as to
which the person was adjudged to be liable to the corporation. To the extent
that a present or former director or officer of a corporation is successful on
the merits or otherwise in the defense of any such action, suit or proceeding,
the corporation must indemnify him or her against the expenses (including
attorney's fees) he or she actually and reasonably incurred. Under Delaware law,
the expenses of an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by a
Delaware corporation in advance of the final disposition of the action, suit or
proceeding after delivery to the corporation of an undertaking by or on behalf
of the director or officer to repay such amounts if it is ultimately determined
that the director or officer is not entitled to be indemnified. Expenses
incurred by former directors and officers or other employees and agents may be
so paid on such terms and conditions, if any, as the corporation deems
appropriate.
The Underwriting Agreement (filed as Exhibit 1.1 to this registration
statement) provides for indemnification by the underwriters of i3 Mobile and its
officers and directors for certain liabilities arising under the Securities Act
of 1933, as amended, or otherwise.
The indemnification provision in i3 Mobile's Restated Certificate of
Incorporation, Amended Bylaws and the Underwriting Agreement may be sufficiently
broad to permit indemnification of i3 Mobile's directors and executive officers
for liabilities arising under the Securities Act of 1933, as amended.
i3 Mobile has obtained a Directors' and Officers' Liability and Private
Company Reimbursement Insurance Policy that insures its directors and officers
against the cost of defense, settlement or payment of a judgment under certain
circumstances.
II-2
<PAGE> 132
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities were issued by i3 Mobile within the past three
years and were not registered under the Securities Act of 1933, as amended (the
"Securities Act").
(a) Pursuant to a Stock Purchase Agreement dated August 30, 1996, i3 Mobile
issued 1,421 shares of Series B Convertible Preferred Stock and warrants to
purchase up to an additional 153,000 shares of common stock to Keystone Venture
IV, L.P. for $1.76 per common share or an aggregate purchase price of $1,250,000
in cash. These warrants were not exercised and expired. Subsequently, the
Company issued a warrant to purchase 234,465 shares of common stock to Keystone
Venture IV, L.P. in consideration for the elimination of the right to receive
dividends payable upon a sale or initial public offering of i3 Mobile. This
warrant was exercisable at any time until December 31, 1998 at an exercise price
of $3.00 per share. In April 1998, i3 Mobile extended the expiration date of
this warrant to December 31, 2001. Also, in connection with the issuance of the
Series B Convertible Preferred Stock, Keystone Venture IV, L.P. purchased an
additional 284 shares of Series B Convertible Preferred Stock for $1.76 per
common share or an aggregate purchase price of $250,000 in cash in February
1998. Each of these shares will be converted into 500 shares of our common stock
upon the completion of this offering.
(b) On December 30, 1996, i3 Mobile issued to Connecticut Development
Authority warrants to purchase 101,500 shares of common stock in connection with
a loan to us of $750,000. The warrants are exercisable at any time until
December 31, 2003 at an exercise price of $1.72 per share. The warrants were
exercised on December 22, 1999 by converting a portion of the outstanding loan
equal to the aggregate warrant exercise price.
(c) Between July 31, 1997 and October 16, 1998, the following investors
purchased an aggregate of 2,194 shares of Series C Convertible Preferred Stock
for an aggregate consideration of $2,458,000:
<TABLE>
<CAPTION>
EQUIVALENT
PRICE PER COMMON STOCK
NAME SHARES SHARE PRICE PER SHARE
- ---- ------ --------- ---------------
<S> <C> <C> <C>
William Lombardi.............................. 22 $ 879.66 $1.76
GII Family Partnership........................ 227 879.66 1.76
Glenville Capital Partnership L.P. ........... 227 879.66 1.76
Robert Flynn.................................. 125 1,187.00 2.37
George Denney................................. 168 1,187.00 2.37
Wayne and Joy Jordan.......................... 84 1,187.00 2.37
Peter Linder.................................. 42 1,187.00 2.37
Robert Muir, Jr. ............................. 126 1,187.00 2.37
Francis Unnold................................ 9 1,187.00 2.37
Henry Applebaum............................... 84 1,187.00 2.37
Alson II Partners............................. 210 1,187.00 2.37
Ruth McAdam................................... 21 1,187.00 2.37
Elizabeth Rogers.............................. 2 1,187.00 2.37
Marge Bonomo.................................. 9 1,187.00 2.37
</TABLE>
II-3
<PAGE> 133
<TABLE>
<CAPTION>
EQUIVALENT
PRICE PER COMMON STOCK
NAME SHARES SHARE PRICE PER SHARE
- ---- ------ --------- ---------------
<S> <C> <C> <C>
Charlene Rogers............................... 10 1,187.00 $2.37
Patrick McCarthy.............................. 21 1,187.00 2.37
Robert Collawn................................ 50 1,187.00 2.37
Keystone Venture IV L.P. ..................... 421 1,187.00 2.37
Dennis Roland................................. 21 1,187.00 2.37
Michael Pryslak............................... 21 1,187.00 2.37
Triple I, LLC................................. 294 1,187.00 2.37
</TABLE>
Each of these shares will be converted into 500 shares of our common stock
upon the completion of this offering. Additionally, i3 Mobile issued to each of
G-II Family Partnership and Glenville Capital Partners L.P. warrants to purchase
37,455 shares of our common stock at $3.00 per share in connection with the
Series C issuance. The warrants are exercisable at any time until December 31,
1998 at an exercise price of $3.00 per share. In April 1998, i3 Mobile extended
the expiration date of these warrants to December 31, 2001.
(d) On December 17, 1997, i3 Mobile issued to Glenville Capital Partners,
L.P. warrants to purchase 100,000 shares of common stock in consideration of
loans to us aggregating $200,000. The warrants are exercisable at any time until
December 31, 1998 at an exercise price of $3.00 per share. In April 1998, i3
Mobile extended the expiration date of these warrants to December 31, 2001.
(e) On June 23, 1998, i3 Mobile issued to Keystone Venture IV, L.P.
warrants to purchase 350,000 shares of common stock in consideration for
services rendered in connection with 1998 financings. The warrants are
exercisable at any time until December 31, 2001 at an exercise price of $3.50
per share.
(f) Pursuant to a Stock Purchase Agreement dated as of August 11, 1998, i3
Mobile issued an aggregate of 843 shares of Series D Convertible Preferred Stock
to Apex Investment Fund III, L.P. and Apex Strategic Partners, LLC for $2.37 per
common share or an aggregate purchase price of $1,001,000 in cash and converted
notes payable. Each of these shares will be converted into 500 shares of our
common stock upon the completion of this offering. As part of the issuance of
the notes payable, i3 Mobile issued warrants to purchase an aggregate of 195,984
shares of its common stock to Apex Investment Fund III, L.P. and Apex Strategic
Partners, LLC. The warrants are exercisable at any time until July 31, 2003 at
an exercise price of $3.00 per share.
(g) On December 1, 1998, i3 Mobile issued to Glenville Capital Partners,
L.P. a warrant to purchase 150,000 shares of common stock at an exercise price
of $3.50 per share related to previously issued notes payable. These warrants
are exercisable at any time until December 31, 2001.
(h) Pursuant to a Stock Purchase Agreement dated December 1, 1998, and
consummated on February 12, 1999, i3 Mobile redeemed 3,770 shares of Series A
Convertible Preferred Stock and 1,885,000 shares of common stock from
Intelligent Investment Partners, Inc. for an aggregate purchase price consisting
of $3,000,000 in cash, a $5,000,000 10% promissory note and a warrant to
purchase 500,000 shares of common stock. This warrant is exercisable at any time
until February 11, 2004 at an exercise price of $3.00 per share. This promissory
note
II-4
<PAGE> 134
was converted into Series F mandarorily redeemable preferred stock in December
1999.
(i) Pursuant to a Stock Purchase Agreement dated February 1, 1999, i3
Mobile sold a total of 9,643.2 shares of Series E Convertible Preferred Stock to
BG Media Investors L.P. for $3.11 per common share or an aggregate purchase
price of $15,000,000. 7,714.56 shares were purchased in February 1999 for
$12,000,000 and 1,928.64 shares were purchased in November 1999 for $3,000,000.
Each of these shares will be converted into 500 shares of our common stock upon
the completion of this offering.
(j) On March 8, 1999, i3 Mobile issued warrants, in accordance with its
Loan Incentive Warrant Plan, to purchase an aggregate of 200,000 shares of
common stock in consideration for certain loans made to i3 Mobile by the
following persons and entities:
<TABLE>
<CAPTION>
ISSUED TO: NO. OF SHARES
- ---------- -------------
<S> <C>
Glenville Capital Partners, L.P. ........................ 113,823
Apex Investment Fund III, L.P. .......................... 19,251
Apex Strategic Partners, LLC............................. 984
Certain directors, officers and employees................ 65,942
</TABLE>
All of the warrants listed above are exercisable at any time until December 31,
2001 at an exercise price of $3.50 per share.
(k) Pursuant to a Stock Purchase Agreement dated as of December 22, 1999,
i3 Mobile sold an aggregate of 8,248.33 shares of Series F Convertible Preferred
Stock for $7.92 per common share or an aggregate purchase price of $32,667,000
to the following strategic and financial investors:
<TABLE>
<CAPTION>
PURCHASE
NAME NO. OF SHARES PRICE
---- ------------- ----------
<S> <C> <C>
NBC Interactive Media, Inc. 1,262.50 $5,000,000
Sony Corporation of America 505.00 2,000,000
Sony Music Entertainment Inc. 757.50 3,000,000
GE Capital Equity Investments, Inc. 1,262.50 5,000,000
Bowman Capital Management Funds 1,262.50 5,000,000
MCI WorldCom, Inc. 1,262.50 5,000,000
Keystone Venture V, L.P. 757.50 3,000,000
Susquehanna Partners, GP 378.75 1,500,000
Clearnet Communications, Inc. 340.87 1,350,000
BT Investment Partners, Inc. 252.5 1,000,000
Connecticut Development Authority 206.21 817,000
</TABLE>
The aggregate consideration was paid in cash except for the value of future
television advertising rights from the National Broadcasting Company, Inc.,
$317,000 in conversion of a portion of an outstanding loan from Connecticut
Development Authority and $5,000,000 in conversion of a note payable from an
II-5
<PAGE> 135
affiliate of MCI WorldCom, Inc. Each of these shares will be converted into
500 shares of our common stock upon the completion of this offering.
(l) As of the date of this prospectus, i3 Mobile had granted options to
employees under the 1995 Stock Incentive Plan to purchase an aggregate of
914,000 shares of common stock at a weighted average exercise price of $2.71 per
share.
The sale and issuance of securities in the transactions described set forth
in paragraphs (a) to (k) above were exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act or Regulation D
promulgated thereunder as transactions by an issuer not involving a public
offering where the purchasers were sophisticated investors who represented their
intention to acquire securities for investment only and not with a view to
distribution and received or had access to adequate information about i3 Mobile.
Appropriate restrictive legends were affixed to the stock certificates issued in
these transactions, and the affixing of similar legends is required in
connection with any subsequent sales of any such securities.
The sale and issuance of the options described in paragraph (l) above were
exempt from registration under the Securities Act in reliance on Rule 701 as
transactions under a written compensatory benefit plan established by i3 Mobile
for the participation of its employees, directors, officers, consultants and
advisors.
No underwriters were employed in any of the above transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.+
3.1 Restated Certificate of Incorporation filed with the
Secretary of State of the State of Delaware on February 16,
1999.+
3.2 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999.+
3.3 Certificate of Designations, Powers, Preferences and Rights
of Series F Convertible Preferred Stock filed with the
Secretary of State of the State of Delaware on December 22,
1999.+
3.4 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999.+
3.5 Amendment to Certificate of Designations, Powers,
Preferences and Rights of Series F Convertible Preferred
Stock filed with Secretary of State of Delaware on December
30, 1999.+
3.6 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on January 4, 2000.+
3.7 Amended and Restated Bylaws of i3 Mobile as amended as of
February 9, 2000.+
4.1 Form of Common Stock Certificate.+
</TABLE>
II-6
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.2 Fourth Amended and Restated Stockholders Agreement dated
December 22, 1999.+
4.3 1995 Stock Incentive Plan, as amended, as of July 13, 1999.+
4.4 Third Amended and Restated Registration Rights Agreement
dated December 22, 1999.+
4.6 General Form of Warrant issued to other warrantholders.+
5.1 Opinion of Piper Marbury Rudnick & Wolfe LLP.*
10.1 Employment Agreement by and between i3 Mobile and Stephen G.
Maloney dated as of January 1, 1999 as amended September 9,
1999.+
10.2 Employment Agreement by and between i3 Mobile and Robert M.
Unnold dated January 1, 1999, as amended September 9, 1999.+
10.3 Employment and Royalty Agreement by and between i3 Mobile
and Jeffrey N. Klein dated October 27, 1998.+
10.4 Agreement of Lease by and between i3 Mobile and Seaboard
Property Management, Inc. dated April 27, 1995, as amended.+
10.4a Lease Modification Agreement between i3 Mobile and Seaboard
Property Management, Inc. dated February 1997.+
10.5 Ridgewood Square Office Park Commercial Lease by and between
i3 Mobile and Ridgewood Square Ltd. dated February 7, 1997.+
10.6 Agreement of Sublease by and between i3 Mobile and National
Westminster Bank, PLC, dated as of September 9, 1999.+
10.7 Lease Agreement by and between i3 Mobile and Double Creek
Capital Corporation dated November 30, 1999.+
10.8 Stock Purchase Agreement by and between i3 Mobile and
Michael J. Pryslak and Dennis M. Roland dated February 27,
1992, as amended as of September 30, 1994 and further
amended in November 1998.+
10.9 Master Service Agreement by and between i3 Mobile and AT&T
Wireless Services, Inc. dated November 3, 1998.*
10.10 Preferred Content License Agreement by and between i3 Mobile
and AT&T Wireless Service Data, Inc. d/b/a AT&T Wireless
Services dated May 1, 1997, as amended May 1, 1998.+
10.11 Service Agreement by and between i3 Mobile and Bell Mobility
Cellular Inc. dated May 12, 1998.*
10.12 Service Reseller Agreement by and between i3 Mobile and
Omnipoint Communications Services dated November 8, 1996, as
amended July 10, 1998.*
10.12a Amendment to Service Reseller Agreement by and between i3
Mobile and Omnipoint Communications Services dated July 10,
1998.*
10.13 Services Agreement by and between i3 Mobile and Southwestern
Bell Mobile Systems, Inc. and Southwestern Bell Wireless
Inc. dated June 9, 1998.*
10.13a Amendment to Services Agreement by and between i3 Mobile and
Southwestern Bell Mobile Systems Inc. and Southwestern Bell
Wireless Inc. dated January 11, 1999.*
10.14 Service Agreement by and between i3 Mobile and AirTouch
Cellular dated April 30, 1999.*
10.15 Service Agreement by and between i3 Mobile and The Weather
Channel Enterprises, Inc. dated December 21, 1998.*
</TABLE>
II-7
<PAGE> 137
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.16 Letter Agreement by and between i3 Mobile and National
Broadcasting Company, Inc. dated December 24, 1999.+
10.17 Letter Agreement by and between i3 Mobile and NBC
Interactive Media, Inc. dated December 29, 1999.+
10.18 Letter Agreement by and between i3 Mobile and 1-800-Flowers
dated May 6, 1997.*
10.19 2000 Stock Incentive Plan.+
10.20 Employment Agreement by and between i3 Mobile and Michael P.
Neuscheler dated as of January 10, 2000.+
10.21 Letter Agreement by and between i3 Mobile and Sony
Corporation of America dated January 25, 2000.+
10.22 Master Content Provider Agreement by and between i3 Mobile
and Broadcast Entertainment.com, Inc. dated February 9,
2000.*
10.23 Content Distribution Agreement by and between i3 Mobile and
Dow Jones & Company, Inc. dated February 20, 1996.*
10.24 Distribution Agreement by and between i3 Mobile and Fox News
Network LLC dated June 16, 1997.*
10.24a Addendum to Distribution Agreement by and between i3 Mobile
and Fox News Network LLC dated June 4, 1998.+
10.24b Addendum to Distribution Agreement by and between i3 Mobile
and Fox News Network LLC dated August 20, 1998.+
10.25 Subscription Agreement by and between i3 Mobile and
SportsTicker Enterprises L.P. dated June 29, 1998.*
10.25a Addendum to Subscription Agreement by and between i3 Mobile
and SportsTicker Enterprises L.P. dated June 29, 1998.*
10.26 Distribution Agreement by and between i3 Mobile and LA Times
dated August 12, 1997.*
10.26a Addendum to Distribution Agreement by and between i3 Mobile
and LA Times dated July 19, 1997.+
10.27 Database License Agreement -- Wireless Internet by and
between i3 Mobile, Inc. and InfoUSA Inc. dated December 28,
1999.*
10.28 Distribution Agreement by and between i3 Mobile and Comtex
Scientific Corporation dated June 13, 1995.*
10.28a Amendment I to Agreement by and between i3 Mobile and Comtex
Scientific Corporation dated July 1, 1995.+
10.29 Distribution Agreement by and between i3 Mobile and Press
News LTD dated December 14, 1998.*
10.30 Distribution Agreement by and between i3 Mobile and Press
Association, a wholly owned subsidiary of The Associated
Press dated February 1, 1999.*
10.31 Distribution Agreement by and between i3 Mobile and CNBC.com
LLC dated March 13, 2000.*
10.32 Letter Agreement by and between i3 Mobile and AT&T Wireless
Services, Inc. dated March 29, 2000.*
10.33 Letter of Intent by and between i3 Mobile and GO.com dated
March 30, 2000.*
</TABLE>
II-8
<PAGE> 138
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.34 Letter of Intent by and between i3 Mobile and
Sportsline.com, Inc. dated March 30, 2000.*
21.1 Subsidiaries of the Registrant.+
23.1 Consent of PricewaterhouseCoopers LLP.*
23.2 Consent of Counsel (included in Exhibit 5.1)*
24.1 Power of Attorney.+
27.1 Financial Data Schedule.*
</TABLE>
- -------------------------
* Filed herewith.
+ Filed previously.
(b) Financial Statement Schedules
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION
- -------- -----------
<C> <S>
I Report of PricewaterhouseCoopers LLP on financial statement
schedule
II Valuation and Qualifying Accounts
</TABLE>
II-9
<PAGE> 139
SCHEDULE I
REPORT OF PRICEWATERHOUSECOOPERS LLP ON FINANCIAL STATEMENT SCHEDULE
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
To the Board of Directors and Stockholders
of i3 Mobile, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 14, 2000 appearing on page F-2 in this Registration Statement on
Form S-1 of i3 Mobile, Inc. also included an audit of the Financial Statement
Schedule listed in Part II Item 16(b) of this Registration Statement on Form
S-1. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Stamford, Connecticut
February 14, 2000
II-10
<PAGE> 140
SCHEDULE II
I3 MOBILE, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<S> <C>
Allowance for doubtful accounts:
Balance, January 1, 1997.................................... $ 50,000
Provision................................................. 20,000
Recoveries................................................ -
Charge-offs............................................... 28,000
--------
Balance, December 31, 1997.................................. 42,000
Provision................................................. 65,000
Recoveries................................................ 3,000
Charge-offs............................................... -
--------
Balance, December 31, 1998.................................. 110,000
Provision................................................. 131,000
Recoveries................................................ -
Charge-offs............................................... (98,000)
--------
Balance, December 31, 1999.................................. $143,000
========
</TABLE>
II-11
<PAGE> 141
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as may be required by the underwriter
to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 14 of this
registration statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) For the purpose of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933, as amended, shall be deemed to be part of this registration statement
as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-12
<PAGE> 142
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Stamford,
State of Connecticut, on April 3, 2000.
i3 MOBILE, INC.
By: /s/ STEPHEN G. MALONEY
------------------------------------
Stephen G. Maloney
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ STEPHEN G. MALONEY President and Chief Executive Officer April 3, 2000
- ------------------------------------------ and Director (Principal Executive
Stephen G. Maloney Officer)
/s/ MICHAEL P. NEUSCHELER Chief Financial Officer (Principal April 3, 2000
- ------------------------------------------ Financial and Accounting Officer)
Michael P. Neuscheler
* Chairman of the Board and Director April 3, 2000
- ------------------------------------------
Robert M. Unnold
* Director April 3, 2000
- ------------------------------------------
Kerry J. Dale
* Director April 3, 2000
- ------------------------------------------
James A. Johnson
* Director April 3, 2000
- ------------------------------------------
J. William Grimes
* Director April 3, 2000
- ------------------------------------------
Donald F. Christino
* Director April 3, 2000
- ------------------------------------------
W. Peter Daniels
*By: /s/ STEPHEN G. MALONEY April 3, 2000
- -----------------------------------------
Stephen G. Maloney
Attorney-In-Fact
</TABLE>
II-13
<PAGE> 143
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement.+............................
3.1 Restated Certificate of Incorporation filed with the
Secretary of State of the State of Delaware on February 16,
1999.+......................................................
3.2 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999.+..........................
3.3 Certificate of Designations, Powers, Preferences and Rights
of Series F Convertible Preferred Stock filed with the
Secretary of State of the State of Delaware on December 22,
1999.+......................................................
3.4 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on December 22, 1999.+..........................
3.5 Amendment to Certificate of Designations, Powers,
Preferences and Rights of Series F Convertible Preferred
Stock filed with Secretary of State of the State of Delaware
on December 30, 1999.+......................................
3.6 Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of the State
of Delaware on January 4, 2000.+............................
3.7 Amended and Restated Bylaws of i3 Mobile as amended as of
February 9, 2000.+..........................................
4.1 Form of Common Stock Certificate.+..........................
4.2 Fourth Amended and Restated Stockholders Agreement dated
December 22, 1999.+.........................................
4.3 1995 Stock Incentive Plan, as amended, as of July 13,
1999.+......................................................
4.4 Third Amended and Restated Registration Rights Agreement
dated December 22, 1999.+...................................
4.6 General Form of Warrant issued to other warrantholders.+....
5.1 Opinion of Piper Marbury Rudnick & Wolfe LLP.*..............
10.1 Employment Agreement by and between i3 Mobile and
Stephen G. Maloney dated as of January 1, 1999 as amended
September 9, 1999.+.........................................
10.2 Employment Agreement by and between i3 Mobile and Robert M.
Unnold dated January 1, 1999, as amended September 9,
1999.+......................................................
10.3 Employment and Royalty Agreement by and between i3 Mobile
and Jeffrey N. Klein dated October 27, 1998.+...............
10.4 Agreement of Lease by and between i3 Mobile and Seaboard
Property Management, Inc. dated April 27, 1995, as
amended.+...................................................
10.4a Lease Modification Agreement between i3 Mobile and Seaboard
Property Management, Inc. dated February 1997.+.............
</TABLE>
<PAGE> 144
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
10.5 Ridgewood Square Office Park Commercial Lease by and between
i3 Mobile and Ridgewood Square Ltd. dated February 7,
1997.+......................................................
10.6 Agreement of Sublease by and between i3 Mobile and National
Westminster Bank, PLC, dated as of September 9, 1999.+......
10.7 Lease Agreement by and between i3 Mobile and Double Creek
Capital Corporation dated November 30, 1999.+...............
10.8 Stock Purchase Agreement by and between i3 Mobile and
Michael J. Pryslak and Dennis M. Roland dated February 27,
1992, as amended as of September 30, 1994 and further
amended in November 1998.+..................................
10.9 Master Service Agreement by and between i3 Mobile and AT&T
Wireless Services, Inc. dated November 3, 1998.*............
10.10 Preferred Content License Agreement by and between i3 Mobile
and AT&T Wireless Service Data, Inc. d/b/a AT&T Wireless
Services dated May 1, 1997, as amended May 1, 1998.+........
10.11 Service Agreement by and between i3 Mobile and Bell Mobility
Cellular Inc. dated May 12, 1998.*..........................
10.12 Service Reseller Agreement by and between i3 Mobile and
Omnipoint Communications Services dated November 8, 1996, as
amended July 10, 1998.*.....................................
10.12a Amendment to Service Reseller Agreement by and between i3
Mobile and Omnipoint Communications Services dated July 10,
1998.*......................................................
10.13 Services Agreement by and between i3 Mobile and Southwestern
Bell Mobile Systems, Inc. and Southwestern Bell Wireless
Inc. dated June 9, 1998.*...................................
10.13a Amendment to Services Agreement by and between i3 Mobile and
Southwestern Bell Mobile Systems Inc. and Southwestern Bell
Wireless Inc. dated January 11, 1999.*......................
10.14 Service Agreement by and between i3 Mobile and AirTouch
Cellular dated April 30, 1999.*.............................
10.15 Service Agreement by and between i3 Mobile and The Weather
Channel Enterprises, Inc. dated December 21, 1998.*.........
10.16 Letter Agreement by and between i3 Mobile and National
Broadcasting Company, Inc. dated December 24, 1999.+........
10.17 Letter Agreement by and between i3 Mobile and NBC
Interactive Media, Inc. dated December 29, 1999.+...........
10.18 Marketing Agreement by and between i3 Mobile and
1-800-Flowers dated May 6, 1997.*...........................
10.19 2000 Stock Incentive Plan.+.................................
10.20 Employment Agreement by and between i3 Mobile and Michael P.
Neuscheler dated as of January 10, 2000.+...................
</TABLE>
<PAGE> 145
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
10.21 Letter Agreement by and between i3 Mobile and Sony
Corporation of America dated January 25, 2000.+.............
10.22 Master Content Provider Agreement by and between i3 Mobile
and Broadcast Entertainment.com, Inc. dated February 9,
2000.*......................................................
10.23 Content Distribution Agreement by and between i3 Mobile and
Dow Jones & Company, Inc. dated February 20, 1996.*.........
10.24 Distribution Agreement by and between i3 Mobile and Fox News
Network LLC dated June 16, 1997.*...........................
10.24a Addendum to Distribution Agreement by and between i3 Mobile
and Fox News Network LLC dated June 4, 1998.+...............
10.24b Addendum to Distribution Agreement by and between i3 Mobile
and Fox News Network LLC dated August 20, 1998.+............
10.25 Subscription Agreement by and between i3 Mobile and
SportsTicker Enterprises LP dated June 29, 1998.*...........
10.25a Addendum to Subscription Agreement by and between i3 Mobile
and SportsTicker Enterprises L.P. dated June 29, 1998.*.....
10.26 Distribution Agreement by and between i3 Mobile and LA Times
dated August 12, 1997.*.....................................
10.26a Addendum to Distribution Agreement by and between i3 Mobile
and LA Times dated July 19, 1997.+..........................
10.27 Database License Agreement -- Wireless Internet by and
between i3 Mobile, Inc. and InfoUSA Inc. dated December 28,
1999.*......................................................
10.28 Distribution Agreement by and between i3 Mobile and Comtex
Scientific Corporation dated June 13, 1995.*................
10.28a Amendment I to Agreement by and between i3 Mobile and Comtex
Scientific Corporation dated July 1, 1995.+.................
10.29 Distribution Agreement by and between i3 Mobile and Press
News LTD dated December 14, 1998.*..........................
10.30 Distribution Agreement by and between i3 Mobile and Press
Association, a wholly owned subsidiary of The Associated
Press dated February 1, 1999.*..............................
10.31 Distribution Agreement by and between i3 Mobile and CNBC.com
LLC dated March 13, 2000.*..................................
10.32 Letter Agreement by and between i3 Mobile and AT&T Wireless
Services Inc. dated March 29, 2000.*
10.33 Letter of Intent by and between i3 Mobile and GO.com dated
March 30, 2000.*
10.34 Letter of Intent by and between i3 Mobile and
Sportsline.com, Inc. dated March 30, 2000.*
21.1 Subsidiaries of the Registrant.+............................
</TABLE>
<PAGE> 146
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ----------- ------------
<C> <S> <C>
23.1 Consent of PricewaterhouseCoopers LLP.*.....................
23.2 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney.+.........................................
27.1 Financial Data Schedule.*...................................
</TABLE>
- -------------
+ Previously filed.
* Filed herewith.
<PAGE> 1
Exhibit 5.1
April 3, 2000
i3 Mobile, Inc.
181 Harbor Drive, Third Floor
Stamford, Connecticut 06902
Gentlemen:
As counsel for i3 Mobile, Inc., a Delaware corporation (the "Company"), we
are familiar with the Company's Registration Statement on Form S-1 (File No.
333-94191), first filed with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended, (the "Act") on January 7, 2000, as
amended and supplemented (the "Registration Statement"), which relates to your
offering of 4,400,000 shares of the Company's Common Stock (together with
660,000 shares of Common Stock to cover over allotments, if any), par value
$0.01 per share (the "Shares").
In connection with the foregoing, we have examined the Restated Certificate
of Incorporation of the Company filed as Exhibit 3.1 to the Registration
Statement and all amendments thereto, the Amended and Restated Bylaws of the
Company filed as Exhibit 3.7 to the Registration Statement and all amendments
thereto, the Underwriting Agreement in a form similar to the one filed as
Exhibit 1.1 to the Registration Statement, the Registration Statement and all
amendments thereto and such records, documents and other instruments as in our
judgment are necessary or appropriate to enable us to render this opinion.
In our examination of the aforesaid documents, we have assumed, without
independent investigation, the genuineness of all signatures, the legal capacity
of all individuals who have executed any of the aforesaid documents, the
authenticity of all documents submitted to us as originals, the conformity with
originals of all documents submitted to us as copies (and the authenticity of
the originals of such copies) and the accuracy and completeness of all public
records reviewed by us. In making our examination of documents executed by
parties other than the Company, we have assumed that such parties had the power,
corporate or other, to enter into and perform all obligations thereunder, and we
have also assumed the due authorization by all requisite action, corporate or
other, and the valid execution and delivery by such parties of such documents
and the validity, binding effect and enforceability thereof with respect to such
parties.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized for issuance and, after payment therefor in advance and in
accordance with the terms and provisions of the Underwriting Agreement and
issuance of the certificates therefor by the Company, will be duly and validly
issued, fully paid and nonassessable.
<PAGE> 2
The foregoing opinion is rendered as of the date hereof. We assume no
obligation to update such opinion to reflect any facts or circumstances which
may hereafter come to our attention or changes in the law which may hereafter
occur. We hereby consent to the use of our name in the Registration Statement
and under the caption "Legal Matters" in the related Prospectus and consent to
the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
PIPER MARBURY RUDNICK & WOLFE LLP
<PAGE> 1
EXHIBIT 10.9
MASTER SERVICE AGREEMENT
This Service Agreement ("Agreement") is entered into this twenty first day of
August, 1998 by and between AT&T Wireless Services, Inc., a Delaware corporation
("AWS") and Intelligent Information Incorporated, a Delaware corporation ("III")
for III to provide to AWS customers various wireless information services as
part of "AWS Wireless Data Content Services".
The parties agree as follows:
1. DEFINITIONS
1.1 "Information Providers" are those entities that have the legal
right to sell data.
1.2 "Brand" is the use of a company name, logo or other identifying
mark in the marketing of a service or product.
1.3 "Content" means the data employed by III, under its agreements with
Information Providers, to produce the Service Selections provided hereunder.
1.4 "Branded Content" means the data provided to III under branding
agreements entered into between AWS and the Information Providers. Branded
Content Information Providers are identified in Exhibit A by Service Selection.
1.5 "Service" means the parsing of Content and Branded Content in
accordance with Appendix A, and the delivery of the resultant information
message with advertisements and transaction opportunities to the End User.
1.6 "End User" means the AWS customer using the Service.
1.7 "Advertising" shall mean the impressions provide via message tags
or web site banners to the End User via the Service.
1.8 "E-commerce" shall mean any financial transaction made between an
End User and the III as a result of End User's viewing an Advertisement which
results in the End User paying money for a service or product in accordance with
an arrangement between III and a vendor of goods or services.
1.9 "Short Message Service" or "SMS" refers to the limited size text
message platform or system utilized by AWS to deliver the Service to an End
User's wireless telephone.
1.10 All other initially capitalized terms shall have the meanings
assigned to them in this Agreement.
2. SERVICE
2.1 III will provide the Service identified in Exhibit A to this
Agreement. III shall meet the specifications and support requirements for the
Service set forth in Exhibit B.
2.2 AWS shall evaluate the Service made available pursuant to Exhibit A
prior to it being made available to End Users to determine whether it conforms
to the requirements set forth in Exhibits A
AWS & III Confidential
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<PAGE> 2
and B, and shall notify III promptly in the event AWS discovers any deviations
from such requirements. In the event of any nonconformity, III shall remedy such
non-conformity as soon as possible, and in no event more than twenty (20) days
after AWS' notice of nonconformity.
2.3 At such time as AWS determines that the Service conforms to the
requirements, AWS shall make the Service available to End Users. Upon acceptance
of the Service and for the term of this Agreement, III will be responsible for
the reliability and maintenance of the Service. Throughout the term of this
Agreement, III will use its best efforts to promptly correct any deviations from
the Service and the requirements that AWS may identify and notify it of from
time to time.
2.4 III and AWS shall cooperate to implement modifications or
enhancements to the Service based on recommendations from either party. III
shall make commercially reasonable efforts to upgrade the Service to ensure that
it remains industry competitive.
2.5 To the extent commercially reasonable, enhancements or
modifications that negatively affect the Service's performance or availability
shall be implemented during AWS' regularly scheduled maintenance hours. III will
provide AWS seven (7) days notice of any planned outages or regularly scheduled
maintenance that will negatively affect the Service's performance or
availability.
2.6 AWS reserves the right to suspend access to the Service by its End
Users where, in AWS' reasonable opinion, continued access to the Service is
likely to cause personal, monetary, or property damage to any individual or
entity. In AWS' sole discretion, AWS may re-establish access to the Service upon
the termination of the event or modification by III to the extent that the risk
has been rendered insignificant.
2.7 III will provide the Service to End Users who have executed a
Subscriber Agreement, an example is attached hereto as Appendix G. The method of
execution of a Subscriber Agreement shall be at III's discretion and shall
include but not be limited to electronic indication of acceptance and
distribution by AWS in connection with marketing and End User materials. AWS
agrees not to activate or support two or more wireless devices with the same
identification number so as to allow a single registration on the III server for
more than one wireless device. For each wireless device receiving the Service
(including wireless devices used by AWS), there is to be an exclusively
associated Subscriber registration on the III server and an exclusively
associated Subscriber Agreement executed by the user of the wireless device.
3. AWS RESPONSIBILITIES
3.1 AWS will provide development guidelines to III for designing the
Service's user interface. However, such guidelines shall be consistent with the
functionality of NetCare!, III's systems for End User profile control.
3.2 AWS, upon acceptance of the Service, will make the Service
available to End Users.
3.3 AWS shall develop marketing materials for the Service and shall use
its best efforts to market and sell the Service to potential End Users.
4. LICENSES
4.1 III shall obtain all necessary licenses for the Content.
AWS & III Confidential
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<PAGE> 3
4.2 III grants to AWS during the term of this Agreement a non-exclusive
worldwide royalty-free right and license in accordance with this Agreement to
distribute, display, transmit, advertise and publicly perform the Service, in
fulfillment of its sales support and marketing responsibilities, and to permit
End Users to access the Service.
4.3 AWS' license rights granted under this Section 4 shall extend to
any new versions, editions, enhancements, changes, updates, amendments, or other
modifications to the Service during the term of this Agreement.
5. TRADE NAME, TRADEMARKS, LOGOS AND COPYRIGHTS
5.1 III hereby grants AWS the right to use and publish in connection
with the Service, and promotional materials describing the Service, the
trademarks, trade names and logos now or hereafter owned or used by III which
are associated with III or the Service ("III's Trademarks") for purposes of
advertising and marketing of the Service, provided such use and publication
complies any guidelines provided to AWS by III as listed in Exhibit E. By use of
III's Trademarks AWS may participate in III's Coop Program as defined, and
updated at III's sole discretion, in Exhibit F
5.2 AWS will reasonably use III's Trademarks as listed in Exhibit D
(the "Trademarks") in connection with the marketing and providing of Service to
End Users:
a. In the event AWS uses the Trademarks, AWS shall comply with III's
guidelines for using the Trademarks. Depending on the trademarks
used, the current legend or notice requirements are:
i. A TM should appear adjacent to the Trademarks.
ii. A legend should appear indicating that the Trademark is a
trademark of Intelligent Information Incorporated. For example,
"Powered by iii is a trademark of Intelligent Information
Incorporated".
b. AWS agrees to submit to III a sample of the proposed use of the
Trademarks on or with the Service, boxes, containers and/or
packaging, and III shall have approved such proposed use in writing
prior to any sale of the Service using such Trademarks in the
proposed manner or any other public use of the Trademarks in the
proposed manner by AWS. Approval will not be unreasonably withheld,
and if III does not provide a written response within ten days of
the receipt of such a request, approval shall be considered
granted.
c. AWS will not harm, misuse or bring into disrepute the Trademarks.
d. AWS acknowledges the ownership of III's Trademarks by III, and
agrees that it will do nothing inconsistent with such ownership,
and that all use of III's Trademarks by AWS shall inure to the
benefit of and on behalf of III.
e. AWS agrees that nothing in the Agreement shall give AWS any right,
title or interest in the Trademarks, other than the right to use
III's Trademarks in accordance with this Agreement, and Reseller
agrees that it will not claim title to III's Trademarks or attack
the title of III in III's Trademarks.
AWS & III Confidential
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<PAGE> 4
5.3 III acknowledges that all service marks, trademarks, brands, logos
and trade names used by AWS (collectively the "AWS Marks") are the exclusive
property of AWS. III shall not use any of the AWS Marks for any purpose or in
any medium without the express prior written consent of AWS. III acknowledges
that this Agreement does not transfer any rights to use any AWS Marks and that
this Agreement does not and will not confer any goodwill or other interest in
any AWS Marks upon III, all rights to which shall remain with AWS. Any
unauthorized use of the AWS Marks by III shall constitute infringement of AWS'
rights and a material breach of this Agreement.
5.4 AWS shall take appropriate measures to insure that proper copyright
notice is made known to all End Users, including displaying the copyright notice
with in all instructions for use of the Service. Requirements for copyright
notice are set forth in Exhibit H.
6. END USER SUPPORT
6.1 The parties' obligations with respect to End User support for the
Service are described in Exhibit C, attached hereto and made a part hereof. In
the event AWS and III amend Exhibit A to include other Services, the parties may
agree to amend Exhibit C with respect to the End User support obligations for
such other Services.
6.2 III will develop and maintain current support documentation that
instructs the End User on navigation and use of the Service.
6.3 III will make available to AWS an e-mail address where End Users
may forward questions and comments about the Service. III will provide such
e-mail address on the support documentation and AWS will make it available to
the End User upon request. III will respond to End User questions in a manner
consistent with its policies and procedures for responding to questions and
comments posted in relation to its online Internet services.
6.4 III will provide all End User customer support with regard to any
E-commerce conducted through the Offering.
7. CONNECTIVITY
7.1 AWS will maintain at its own expense a frame relay line or like
communications service to connect AWS' and III's respective networks in primary
and backup configurations. AWS will be responsible for the management and
support of the hardware and network facilities maintaining the connection. AWS
shall provide and maintain at its cost, mutually agreeable communication
protocol(s) for the purposes of providing the Service to End Users. AWS agrees
to maintain these communications facilities in a manner capable of providing
quality service to the End User, based on the then effective volume of messages
being processed. At no cost to III, AWS shall provide to III on a continuous
basis two wireless devices being used by End Users registered on the
appropriate network(s), for III to monitor and test the delivery to such units
of the Service provided hereunder. III will be responsible for payment of
charges for any voice communications used in connection with these testing
devices beyond 600 minutes per month per device at a rate of 25 cents per
minute of wireless airtime plus long distance.
7.2 III is responsible for maintaining the connection between III's
server(s) supporting the Service and the frame relay access device provided by
AWS.
8. MARKETING
8.1 AWS will, from time to time, actively promote and market the
commercial availability of the Service. Marketing initiatives may include direct
response programs, print advertising, seminars, newsletters, brochures, public
relations, retail merchandising and other marketing mediums.
AWS & III Confidential
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<PAGE> 5
8.2 AWS and III will display the other's name or logo on its Internet
web site with the intent of creating a hypertext link to each site. AWS will
allocate a section of its web site to market and sell the Service.
8.3 AWS is solely responsible for establishing all terms and conditions
of use and advertising of the Service. AWS may provide written consent and
required guidelines for III to market the Service, and III agrees to comply with
any terms and conditions of such consent or guidelines.
9. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF III
III hereby represents, warrants, and covenants to AWS that:
9.1 III has the full right and power to enter into and perform
according to the terms of this Agreement, and that it has the right to grant to
AWS each of the rights herein granted. Without limiting the foregoing, III
covenants that (i) use, editing and publication of the Service by AWS as
provided under this Agreement will not violate any patent, trade secret,
copyright, trademark, intellectual property, or other right of any third party,
including without limitation independent contractors hired by III to contribute
to the Service; (ii) the Service will not be pornographic, libelous, and its use
by AWS as provided hereunder shall not violate any rights of privacy and/or
publicity of any third party; and (iii) no instruction, advice, or information
contained in the Service will be injurious to the End User.
9.2 III is not aware of any claim by any third parties adverse to III's
or Service's patent, trade secret, copyright, trademarks or intellectual
property rights.
9.3 III warrants that the information contained in the Service is
accurate, comprehensive and will be updated as set forth in Exhibit B. III also
warrants that information contained in descriptions of its services or business
are accurate and truthful and comply with all applicable laws.
10. RATES AND PAYMENT
10.1 III and AWS will together establish the monthly rate charged by
III to End Users for the Service. III will sell Advertising and E-commerce
contracts based on the Service and End User opportunities as defined by III and
approved by AWS.
10.2 III will pay AWS forty percent (40%) of the collected monthly
rate charged to End Users for the Service. III will pay AWS twenty five percent
(25%) of the collected Advertising and E-commerce revenue.
10.3 III will provide to AWS by the fifteenth (15th) day of each month
a written report indicating for the previous calendar month: (i) the total
number of End Users subscribing to the Service; (ii) the monthly rate for which
they are subscribing; (iii) the total number of messages sent to such End Users,
and (iv) the total dollars collected for Services, Advertising and E-commerce.
III will, with its written report, submit payment to AWS of all amounts due
pursuant to Paragraph 10.2 above.
11. EXCLUSIVITY
During the term of this Agreement and for one year thereafter, III will not (a)
provide the Service, i.e., all the Selections taken as a whole offering, to any
other wireless telecommunications provider or, (b) provide Branded Content
Service Selections to any other telecommunications provider. However, III may
provide individual Service Selections or other groupings of Service Selections
to others.
AWS & III Confidential
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<PAGE> 6
12. TERM; TERMINATION
12.1 The term of this Agreement is one (1) year beginning on the
effective date of this Agreement. This entire Agreement shall automatically
renew itself annually for additional one (1) year terms unless either party
sends notice of termination to the other party sixty (60) days before the
anniversary of the effective date of this Agreement, by certified mail or
confirmed receipt delivery service.
12.2 Either party may terminate this Agreement immediately in the event
the other party fails to cure any material breach of this Agreement within
thirty (30) days written notice thereof.
12.3 AWS may terminate this Agreement immediately in the event III
fails to comply with the specifications and support requirements set forth in
Exhibit B, and such failure continues for a period of five (5) days after AWS's
written notice thereof.
13. MISCELLANEOUS
13.1 Any information disclosed by either party in connection with the
relationship described in this Agreement will be treated as the Disclosing
Party's Confidential Information in accordance with the Nondisclosure terms in
the Preferred Content License Agreement between the parties, dated May 1, 1997.
The parties will mutually agree upon the content and timing of joint press
releases. Notwithstanding the foregoing, AWS may disclose this Agreement and any
of its terms to any affiliate of AWS in which AWS owns at least a 15% beneficial
interest.
13.2 This Agreement will not create an exclusive relationship or any
partnership, joint venture or agency relationship between AWS and III, except as
provided for herein.
13.3 III will indemnify, defend and hold harmless AWS, and its
officers, employees, representatives and agents, against any claim, suit,
action, or other proceeding which is based on or arises from: (i) a claim that
the use of the Service in accordance with this Agreement infringes any
third-party intellectual property right, or any right of personality or
publicity, is libelous or defamatory, or otherwise results in injury or damage
to any third party; (ii) any misrepresentation or breach of representation or
warranty of III contained herein; (iii) any breach of any covenant or agreement
to be performed by III hereunder; or (iv) any willful misconduct or negligence
by III. III will pay any and all costs, damages, and expenses, including, but
not limited to, reasonable attorneys' fees and costs awarded against or
otherwise incurred by AWS in connection with or arising from any such claim,
suit, action or proceeding attributable to any such claim.
13.4 EXCEPT AS PROVIDED IN 13.3 ABOVE, NEITHER PARTY WILL BE LIABLE TO
THE OTHER (OR THE OWNERS, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES,
AGENTS OR CUSTOMERS OF EITHER OF THEM OR ANY THIRD PARTY) FOR ANY INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF SUCH PARTY'S FAILURE TO
PERFORM UNDER THIS AGREEMENT.
13.5 EXCEPT AS SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY,
AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, REGARDING THE PRODUCTS AND SERVICES CONTEMPLATED BY THIS
AGREEMENT, INCLUDING ANY IMPLIED WARRANTY OF
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6
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MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES
ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
13.6 The parties shall comply with all applicable federal, state and
local laws, orders and regulations in performing the terms and conditions of
this Agreement.
13.7 This Agreement (i) will be governed by the internal laws of the
state of Washington, without reference to its choice of law rules, (ii) will
constitute, along with the parties' Nondisclosure Agreement, the parties' entire
agreement with respect to the subject matter hereof, and (iii) may be amended
only by a writing signed by both AWS and III.
13.8 All notices and requests in connection with this Agreement shall
be deemed given as of the day they are (i) hand delivered, (ii) deposited in the
U.S. mails, postage prepaid, certified or registered, return receipt requested;
or (iii) sent by overnight courier, charges prepaid, and addressed as noted
under the signature line below or to such other address as the party to receive
the notice so designates by written notice to the other.
13.9 Neither Party may assign this Agreement, or any portion thereof,
to any third party, except a subsidiary or parent company or an affiliated
company in which the Assigning Party has a controlling interest, unless the
other non assigning Party expressly consents to such assignment in writing. Any
attempted assignment without such consent shall give the non offending Party the
right to terminate this Agreement effective upon written notice.
13.10 The Service shall not be used by AWS for any other purpose other
than the specified use of the distribution of the Service through wireless
devices. In the event that AWS becomes aware that any third party is improperly
using the Service, including, without limitation, providing or about to provide
the Service or Content to an unauthorized party, AWS shall immediately notify
III of the facts of which it is aware in connection with such actual or
potential unauthorized use and shall provide III with any documents in its
possession with respect to the same. The parties shall cooperate to the fullest
extent possible to take all actions necessary to eliminate such unauthorized use
as expeditiously as possible.
13.11 This Agreement, and the Nondisclosure Agreement referenced in
Paragraph 13.1, constitute the entire agreement, and supersede any previous
agreement, between the parties with respect to the subject matter hereof. This
Agreement shall not be modified except by written agreement dated subsequent
hereto signed on behalf of III and AWS by their duly authorized representatives.
Neither this Agreement nor any written or oral statements related hereto
constitute an offer, and this Agreement shall not be legally binding until
executed by both parties hereto.
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The parties have executed this Agreement on the date first written above.
AT&T WIRELESS DATA, INC.
D/B/A AT&T WIRELESS SERVICES INTELLIGENT INFORMATION INCORPORATED
By: By:
______________________________ ______________________________
Its: SVP & GM Its: President
_____________________________ _____________________________
Address: Address:
5000 Carillon Point One Dock Street
Kirkland, WA 98033 Stamford, CT 06902
Attn: Legal Dept. Attn: General Counsel
Phone: 206-827-4500 Phone: 203 969-0020
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EXHIBIT A
SERVICE
The Service, comprised of Selections, i.e., individual information
choices, will be designed for use with the Short Message Service.
1. III will use NetCare!, an internet interactive web page and IVR
(interactive voice response) system for End User registration and profiling
of requirements based on the Service and Selection definitions below. III
will submit its proposed NetCare! design to AWS for its written approval
prior to implementation. III will modify NetCare! at AWS written request.
Any modifications will be submitted to AWS for its written approval prior
to implementation.
2. The Service will consist of Selections based on Content and Branded Content
offered to End Users whereby the End User can choose a specified conditions
from a menu of available Selections. From time to time the parties may
adjust the Selections and may package the Selections in a variety of
different ways by mutual agreement. The Service will include the following
Selection:
<TABLE>
<CAPTION>
Selections Descriptions Source Average
(BC= Branded Volume
Content)
-------------------------- -------------------------------------------------------- ------------------ ------
<S> <C> <C> <C> <C>
1. Today's News Provides a daily news headline. ABC* (BC) 30
2. Business News Provides a daily business news update. Bloomberg * (BC) 30
3. Weather Provides a daily weather brief for the nation Weather Channel* 30
Highlights (BC)
4. Sports Today Provides a daily sports brief ESPN* (BC) 30
5. National News Provides two headline news updates daily. Associated Press 60
6. Political News Provides two headline news updates daily. Associated Press 60
7. International Provides two headline news updates daily. Associated Press 60
News
8. Consumer Health Provides daily health, wellness and fitness news for Reuters Health 30
News consumers.
9. Professional Provides daily health, wellness and fitness news for Reuters Health 30
Health News professionals, i.e., doctors, nurses, paramedics, etc.
10. Weather Forecast Provides daily morning weather forecast at customer's NWS 30
choice of city.
11. Severe Weather Provides severe weather conditions, e.g., winter storm NWS 10
warnings, as reported based upon customer's choice of
county.
12. Stock Quote Provides closing on two companies of customer's choice. Exchanges 21
13. Mutual Fund Provides closing on two mutual funds of customer's Exchanges 21
choice
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
14. Stock Quote Plus Provides mid-day and closing price and volume on one Exchanges 42
company of customer's choice.
15. Company News Provides breaking news on two companies of customer's Dow Jones & Co. 10
choice.
16. Sports Results Provides final scores and on up to two teams. SportsTicker 40
(Baseball, Football, Hockey, and Basketball).
17. College Teams Provides the half time and final football and SportsTicker 20
basketball scores on the college team of the customers
choice
18. Sports Results Provides mid game and final scores with game recaps on SportsTicker 40
Plus: one team.
(Baseball, Football, Hockey, and Basketball).
19. NASCAR Provides mid race and finals on all major NASCAR races. SportsTicker 18
20. Golf Leader Board Provides First through Final Round SportsTicker 18
LeaderBoard results on all major PGA tournaments
21. Tennis Finals Provides the daily results during the semi final and SportsTicker 28*
final rounds on all major USTA events
22. Horse Racing Provides the race results and payoffs SportsWire 30
based on track and races selected up to two
selections at a time.
23. Traffic Report Provides traffic delay alerts based on the customers Metro Traffic 40
choice of route and or city.
24. Entertainment Provides daily headline entertainment news updates. Associated Press 30
25. Movie Review Roger Ebert movie reviews several times a week. Universal Press 16
26. Horoscopes Provides daily horoscope based on customer choice. Universal Press 30
27. Lottery Provides daily/weekly major lotto results based on LottoNet 15
customer's choice of state.
28. Thought for the Provides a daily reflection statement Associated Press 30
Day
29. This Day in Provides a daily interesting event from history Associated Press 30
History
30. Joke of the Day: Provides one joke each day. III 30
31. Ski Reporter Provides current conditions on the trails, base depth, SportsTicker 30
and trails open on the ski area of customer's choice.
32. Daily Dish Provides once each week day a news headline on a TV Guide 20
movie personality or Hollywood celebrity. Entertainment
Network
33. Soap Opera Provides highlights of the day on selected soap opera AccuWeather 20
of customer's choice.
34. Reminders Provides twenty date specific reminder messages, e.g. III 5
birthday, anniversary, etc at the customer's specified
time.
</TABLE>
3. In no event will III permit an End User on average to receive more than
eight (8) Content messages per day without prior written approval from AWS.
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4. Content messages produced by the Service will conform with the then current
maximum message length acceptable to AWS and End User Equipment. The
average number of characters sent per message based on the current service
selections available will be under one hundred characters.
5. III will accept content feeds from AWS' content providers (Branded
Content), and include them as part of the Service, as requested by AWS. III
and AWS will cooperate to develop and provide enhanced and new Service
Selections to End Users. AWS will conduct or acquire market research,
analyze such information and prepare recommendations for development to III
for enhanced or new Service Selections. III will convert these
recommendations into Services in accordance with its standard development
policies and AWS will market and sell these enhanced or new Services in
accordance with the terms of this Agreement.
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EXHIBIT B
SPECIFICATIONS AND SUPPORT
1. III will develop all necessary applications on III's web site to
support the Service and when available on AWS's network to process requests from
AWS wireless devices.
2. III will update and maintain the accuracy of the Service on a basis
equal to that of all III's other services.
3. III will maintain the servers on which the Service is provided to
End Users twenty-four (24) hours a day, seven (7) days a week, with 99.5%
availability.
4. III will ensure that the Service will properly process/utilize dates
beyond December 31, 1999.
5. III and AWS will provide to each other a technical contact to
technically support the frame relay connection and the Service. The parties
agree to respond to each others technical support telephone call within one (1)
hour of the placement of the call to assist with the assessment of the problem
at the following classifications:
(i) Critical - This category includes, but is not limited to,
any material failure that causes the Service, in part or in whole, to not
perform. III shall remedy the failure and restore the Service to Accepted
Condition within 4 hours of notification of the failure. AWS shall remedy the
failure and restore the communications network and SMS to Acceptable Condition
within 4 hours of notification of the failure. Each party will contact the other
party's technical support by phone and e-mail upon restoration of the Service,
communications network and or SMS.
(ii) Major - This category includes, but is not limited to,
any erratic or marginally impaired performance that causes the Service, in part
or in whole, to be available intermittently, to be inaccurate, or to navigate
improperly. III shall remedy the impairment and restore the Service to Accepted
Condition within 24 hours of notification of the impairment. III will contact
AWS technical support by phone and e-mail upon restoration of the Service.
(iii) Minor - This category includes, but is not limited to,
periodic unsatisfactory performance. III shall remedy the unsatisfactory
performance and restore the Service to Accepted Condition within 14 days of
notification of problem. III will contact AWS technical support by phone and
e-mail upon restoration of the Service.
III contact information: AWS contact information:
Name: Trevor Prout Name:
Title: Operations Manager Title:
Phone: 203 969 0020 Ext. 3015 Phone:
E-mail: [email protected] E-mail:
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24X7 Ops Phone: 203 969 0020 Ext. 9 24X7 Ops Phone:
EXHIBIT C
END USER SUPPORT
End Users will be customers of III with respect to the Service. III
will be responsible for all aspects of the customer relationship, including but
not limited to:
- Terms and conditions under which End Users may obtain the
Service
- Billing and collection
- Bad debt
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EXHIBIT D
TRADEMARKS
1. "Powered by iii"
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EXHIBIT E
"POWERED BY iii" GUIDELINES FOR USE
i. THE VALUE OF "POWERED BY iii"
- - The "Powered by iii" Logo (the "Logo") is an effective way to identify
information services offering as incorporating the benefits and features of
the leading source of personalized content for wireless devices,
Intelligent Information Incorporated (III).
- - Use of the Logo also qualifies resellers to participate in III's advanced
business partner support programs.
ii. THE LOGO'S MEANING FOR BUSINESS PARTNER USE
- - The Logo conveys the value and excitement of personalized information
services provided by the III platform. Business partners are required to
use this Logo in advertising, point-of-purchase displays, and marketing
materials to promote information services. Use of the Logo is made
mandatory under the trademark license granted in the standard III Service
Agreement, and the Logo may only be used according to these Guidelines.
These Guidelines help ensure that the Logo continues to provide consumers
with a clear identification of information service quality.
- - To protect this valuable trademark, the business partner may not use the
Logo in any way other than as described in these guidelines or as may be
provided in writing by III from time to time. Any unauthorized use of the
Logo is an infringement of III's trademark rights.
iii. BUSINESS PARTNER LOGO ARTWORK
- - Do not use artwork provided by any source other than III. III will provide
approved Business Partners that agree to follow these guidelines with
electronic versions of the Logo. You may not alter this artwork in any way,
separate the words from the graphic, or replace the words with any others.
The trademark symbol (TM) must appear at the lower right corner of the
graphic portion of the Logo. Documents including the Powered by iii logo
must also include the footnote, in no less than 6 point text, "Powered by
iii is a trademark of Intelligent Information Incorporated."
iv. SIZING AND PLACEMENT REQUIREMENT
- - The Logo may be used only on materials that make accurate references to the
information services as provided by III. The Logo must be placed in close
proximity to headline copy or logo treatments dealing with information
services. The Logo cannot be larger or more prominent than your company
name, company logo, product name (if applicable), or service name.
- - The Logo may stand-alone, or be incorporated into your information services
logo if appropriate. If the Logo is used as a stand alone element, a
minimum amount of empty space must be left between the Logo and any other
object such as type, photography, borders, edges, etc. The required border
of
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empty space around the Logo must be 1/4x wide, where x equals the height of
the graphic, as measured from the highest point on the graphic portion of
the Logo to the lowest point on the graphic portion of the Logo.
- - Minimum size for the Logo is 3/8 of an inch high.
- - Business partners may not use the Logo in any manner that suggests that
advertising, point-of-purchase displays, or other marketing materials are
from III.
- - The footnote "Powered by iii is a trademark of Intelligent Information
Incorporated", in not less than 6 point type, must accompany each use of
the Logo.
- - Intelligent Information Incorporated reserves the right to object to unfair
uses or misuses of its trademarks or other violations of applicable law.
v. COLOR TREATMENT
- - You may not alter the colors of the Logo in any way from the treatments
provided by III, without the written approval of III.
vi. QUALITY CONTROL
- - III reserves the right to review business partner use of the Logo. Business
partner must correct any deficiencies in the use of the Logo upon
reasonable notice from III.
- - Address any questions concerning the Logo to the appropriate III Account
Manager or III's Director of Marketing.
Intelligent Information Incorporated reserves the right to change the Logo
and/or these guidelines at any time at its discretion. You must comply with the
guidelines as amended from time to time.
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EXHIBIT F
III CO-OP PROGRAM
INTELLIGENT INFORMATION INCORPORATED
CO-OPERATIVE ADVERTISING PROGRAM GUIDELINES
CO-OP PROGRAM ELIGIBILITY
All North American, Intelligent Information Incorporated (III) business partners
are eligible. To participate in the program, business partners must complete a
Co-op program registration form. This form is available from III account
managers.
CO-OP PROGRAM ACCRUALS
For the period April 1, 1998 through December 31, 1998, standard Co-op will
accrue at a rate equal to 3% of the actual amounts paid to business partner,
calculated on a quarterly basis. Accrued Co-op funds belong to III until
released for reimbursement of claims for eligible and approved activities.
All information services (content) billings are considered part of the
price. No money is accrued for programming fees, telecommunication connections,
or other expenses or fees.
III reserves the right to change the amount of the accrual and the eligible
products and options at any time upon sixty (60) days' prior written notice.
III reserves the right to introduce bonus programs throughout the program
year.
CO-OP PROGRAM GUIDELINES
1. The "Powered by iii" logo must appear in the advertising to qualify for
Co-op reimbursement.
2. III will provide "Powered by iii" logo and usage guidelines which must be
followed to qualify for reimbursement.
3. No competitors' information services products may be featured in the same
ad.
4. Reimbursement percentage for qualified ads is 50% of the net cost of the
business partner's advertising.
5. If ad is not dedicated to III's information services, III will reimburse
the pro-rated III information services portion of the ad only. In the event
existing materials are being replaced solely to include information
services then being provided, no proration applies.
6. To receive credit for print media, III requires a "tear-sheet" of the
advertisement and receipted copy of paid media invoice attached to the
Co-op claims submission form.
7. To receive credit for electronic media, III requires copies of commercial,
station affidavit of performance and receipted copy of paid station
invoices attached to the Co-op claims submission form.
8. All claims must be postmarked within 60 days from the date of the receipt
of the invoice for the advertising or other promotional programs.
9. III reserves the right to suspend payment of claims if business partner's
account (i.e., payments due to III) is not current. If account is not made
current prior to filing deadline, all money accrued will be forfeited.
Co-op funds can not be applied to amount owed.
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10. III reserves the right to change this program, including the amount of the
accrual and eligible products and options at any time upon sixty (60) days'
prior written notice.
11. Trade/barter ads, agency fees/commissions, discounts and taxes are not
reimbursable.
12. All advertising must be in compliance with local, state and federal laws
and must be in good taste. Each customer is solely responsible for any such
advertising. III expressly disclaims any liability or responsibility for
any advertising or promotion by the customer.
13. All claims and text regarding III information services must be truthful.
Any false or misleading representation will result in a denial of the co-op
claim.
14. Program participants can choose method of reimbursement on the claims
submission form. Options are credit applied to the next invoice after
approval, or check.
INTELLIGENT INFORMATION INCORPORATED CO-OP PROGRAM MEDIA USAGE GUIDELINES
<TABLE>
<CAPTION>
DOCUMENTATION ADVERTISING REQUIREMENTS
MEDIA TYPE EXPENSES COVERED REQUIRED
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRINT - Media Cost - Co-op Claims - Ad must conform
- - Newspapers - Production Submission Form to III Co-op
- - Magazines - 1 original ad program guidelines
per publication and "Powered by
showing name, date iii" logo usage
and location of guidelines
publication (tear - Prior approvals
sheet). are not required
- Photocopies are
not acceptable
- Copy of paid
invoice
- Multiple
Appearance Ads must
also include
"Newspaper Ad
Multiple Appearance
Certification Form"
DIRECT MAIL/RETAIL - Net Printing - Co-op Claims - Ad must conform
- - Statement Stuffers Cost Submission Form to III Co-op
- - Newsletters - Production - 2 original program guidelines
- - Postcards - Mailing List samples and "Powered by
- - Retail Collateral Purchase/Rental - Copy of paid iii" logo usage
- - Brochures invoice guidelines
- Prior approvals
are not required
TV & RADIO - Media Cost - Co-op Claims - "Powered by
Submission Form iii" must be
- Copy of paid mentioned at least
invoice with once.
details of spot - Prior approvals
length, air dates, are not required
number of spots
aired, cost per
spot, and total cost
</TABLE>
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<TABLE>
<S> <C> <C> <C>
- Station
affidavit and
notarized copy of
video/audiotape used
INTERNET - Banner - Co-op Claims - Ad must conform
Advertising Submission Form to III Co-op
- Copy of paid program guidelines
invoice and "Powered by
- Copy of iii" logo usage
advertisement guidelines
- Prior approvals
are not required
</TABLE>
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EXHIBIT G
SUBSCRIBER AGREEMENT
IMPORTANT: READ THIS AGREEMENT BEFORE USING THE SERVICE PROVIDED BY Intelligent
Information Incorporated (hereafter referred to as "III"). YOUR USE OF THE
SERVICE, OR SIGNED ACKNOWLEDGMENT, WILL INDICATE YOUR ACCEPTANCE OF ALL OF THE
FOLLOWING TERMS. If this Agreement is unacceptable to you, do not use the
Service. III is willing to provide you the Service only if you agree to be bound
by the following terms:
1. Information, data or messages provided through the Service, has been
independently obtained by III from various originators and consolidators of data
including securities markets, such as stock exchanges, their affiliates, and
others (collectively, hereafter referred to as "Information Providers" or
"IPs"), through sources believed to be reliable, but the accuracy, completeness,
timeliness, or correct sequencing of the Information is not guaranteed by III,
the IPs, or any parties transmitting or processing the Information (hereafter
referred to as "Information Processors"). (Hereafter, collectively III, the IPs
and Information Processors are referred to as "Disseminating Parties".) There
may be delays, omissions, or inaccuracies in the Information. NO DISSEMINATING
PARTY WILL BE LIABLE IN ANY WAY TO YOU OR ANY OTHER PERSON FOR (A) ANY
INACCURACY, ERROR OR DELAY IN, OR OMISSION OF, (I) ANY INFORMATION OR (II) THE
TRANSMISSION OR DELIVERY OF ANY SUCH INFORMATION; OR (B) ANY LOSS OR DAMAGE
ARISING FROM OR OCCASIONED BY (I) ANY SUCH INACCURACY, ERROR, DELAY OR OMISSION,
(II) NON-PERFORMANCE, OR (III) INTERRUPTION IN ANY SUCH INFORMATION, DUE EITHER
TO ANY NEGLIGENT ACT OR OMISSION BY ANY DISSEMINATING PARTY OR TO ANY "FORCE
MAJEURE" (I.E., ANY FLOOD, EXTRAORDINARY WEATHER CONDITIONS, EARTHQUAKE OR OTHER
ACT OF GOD, FIRE, WAR, INSURRECTION, RIOT, LABOR DISPUTE, ACCIDENT, ACTION OF
GOVERNMENT, COMMUNICATIONS OR POWER FAILURE, OR EQUIPMENT OR SOFTWARE
MALFUNCTION) OR ANY OTHER CAUSE BEYOND THE REASONABLE CONTROL OF THE
DISSEMINATING PARTIES. THERE IS NO WARRANTY OF MERCHANTABILITY, NO WARRANTY OF
FITNESS FOR A PARTICULAR USE, AND NO OTHER WARRANTY OF ANY KIND, EXPRESS, OR
IMPLIED, REGARDING THE INFORMATION OR ANY ASPECT OF THE SERVICE (INCLUDING BUT
NOT LIMITED TO ACCESS TO INFORMATION).
2. IN NO EVENT WILL ANY DISSEMINATING PARTY BE LIABLE TO YOU OR ANYONE ELSE FOR
ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES (INCLUDING BUT NOT
LIMITED TO LOST PROFITS, TRADING LOSSES, AND DAMAGES THAT RESULT FROM
INCONVENIENCE, DELAY OR LOSS OF THE USE OF THE SERVICE) EVEN IF ANY
DISSEMINATING PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR
LOSSES. YOU AGREE THAT THE LIABILITY OF ANY DISSEMINATING PARTY, ARISING OUT OF
ANY KIND OF LEGAL CLAIM (WHETHER IN CONTRACT, TORT OR OTHERWISE) IN ANY WAY
CONNECTED WITH THE SERVICE OR THE INFORMATION, WILL NOT EXCEED THE AMOUNT
CHARGED FOR RECEIVING THE INFORMATION. No Disseminating Party shall be liable
for any loss resulting from a cause over which such entity does not have
control, including but not limited to failure of electronic or mechanical
equipment or communication lines, telephone or other interconnect problems,
unauthorized access, theft, operator errors, severe weather, earthquakes,
floods, acts of war, and strikes or other labor problems.
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3. III, the IPs and others have proprietary interest in the Information. You
agree not to reproduce, re-transmit, disseminate, sell, distribute, publish,
broadcast, circulate or commercially exploit the Information in any manner
without the express written consent of III, and the relevant Information
Provider(s); nor to use the Information for any unlawful purpose. You agree to
comply with reasonable written requests from III, and to protect the IPs' and
III's respective contractual, statutory and common law rights to the Information
and the Service.
4. You acknowledge that neither the Service nor any of the Information is
intended to supply tax or legal advice. Although the Service may provide
Information about how to invest and what to buy, none of this Information is
recommended by any Disseminating Party. The Disseminating Parties do not
recommend any investment advisory service or product, nor offer any advise
regarding the nature, potential value, or suitability of any particular
security, transaction, or investment strategy.
5. You agree to immediately notify III if you become aware of any of the
following: (a) any loss or theft of your access number(s) and/or password(s), or
(b) any unauthorized use of any of your access number(s) and/or password(s), or
of the Service or any Information.
6. You agree to indemnify and hold the Disseminating Parties harmless from and
against any and all claims, losses, liabilities, costs and expenses (including
but not limited to attorneys' fees) arising from your violation of this
Agreement or any third party's rights.
7. III reserves the right to terminate your access to the Service or any portion
of it at its sole discretion, without notice and without limitation, for any
reason whatsoever, including but not limited to the unauthorized use of your
access number(s) and/or password(s), breach of this Agreement, discontinuance of
III or loss of access to any Information from any of the IPs. The Information
Processors and III shall have no liability to you; provided, however, that if
the termination is without cause, III shall refund the prorata portion of any
fee which may have been paid by you for the portion of the Service not furnished
to you as of the date of such termination.
8. As a condition of being approved to use the Service, you represent and agree
that you are making this Agreement in your own individual capacity and not on
behalf of a firm, corporation, partnership, trust or association, and you
further agree to receive advertising messages and e-commerce opportunities via
the Service when delivered at the discretion of the Disseminating Parties.
9. You acknowledge that, in providing you with the Service, III, has relied upon
your agreement to be bound by the terms of this Agreement. You further
acknowledge that this Agreement and all other present and future written
agreements between you and III, constitute the complete statement of the
agreement between you and III, and that the agreement does not include any other
or prior contemporaneous promises, representations or descriptions regarding the
Service or the Information even if it were contained in materials provided by
III. This Agreement may be modified only in writing; if III sends you written
notice of the modification, your use of the Service after receiving such notice
will indicate your acceptance of the modification. If any provision of this
Agreement is invalid or unenforceable under applicable laws, it is, to that
extent, deemed omitted and the remaining provisions will continue in full force
and effect. This Agreement and performance hereunder will be governed by and
construed in accordance with the laws of the State of New York, as applied to
agreements entered into, no matter where you might legally reside.
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10. The terms and conditions of Sections 1, 2, 3 and 6 of this Agreement shall
survive any termination of this Agreement.
EXHIBIT H
COPYRIGHT NOTICES
The Copyright notice, with current year inserted, is as follows:
1. Copyright (C) 199__ INTELLIGENT INFORMATION INCORPORATED. All rights
reserved.
2. If Dow Jones & Company, Inc. information is to be included, then the
following notice must be included: "Copyright 199__ Dow Jones & Company, Inc.
All Rights Reserved. Distributed by Intelligent Information under license from
Dow Jones & Company, Inc. The headlines contained in this Intelligent
Information Service are the sole and exclusive property of Dow Jones & Company,
Inc. and are protected by copyright. Such headlines may not be copied,
republished or redistributed without the prior written consent of Dow Jones &
Company, Inc."
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EXHIBIT 10.11
INTELLIGENT INFORMATION INCORPORATED SERVICE AGREEMENT
THIS AGREEMENT is entered into by and between Intelligent Information
Incorporated, a Delaware corporation (hereinafter referred to as "III") and BELL
MOBILITY CELLULAR INC., a corporation incorporated pursuant to the laws of
Canada (hereinafter referred to as "Reseller"). The effective date of this
agreement is May 12, 1998.
WHEREAS, III owns computer software and hardware and has related procedures
(hereinafter referred to as "Systems") and by utilizing these Systems provides
"Products" in the form of "Services" and "Packages" that deliver "intelligent
information" based on data from various sources (hereinafter referred to as
"Information Providers") to text displaying wireless devices either at
prearranged times, as data conditions change by prearranged parameters or
on-demand; and
WHEREAS, Reseller is desirous of providing these Products to its customers
[hereinafter such customers receiving Product(s) are referred to as
"Subscribers"]; and
WHEREAS, the parties agree to enter into certain arrangements, as set forth
herein, for that purpose;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, it is agreed as follows:
1) TERM
The term of this agreement is one (1) year beginning on the effective date
of this agreement. This entire agreement shall automatically renew itself
annually for additional one (1) year terms unless either party sends notice
of termination to the other party sixty (60) days before the anniversary of
the effective date of this agreement, by certified mail or confirmed
receipt delivery service.
2) PROVISION OF PRODUCTS
III shall provide the Products as set forth in Appendix B to Reseller
Subscribers with modifications from time to time as mutually determined and
agreed to in writing by the parties hereto. Reseller will provide
reasonable feedback to III on use of the Products by Subscribers.
3) PRODUCT MATERIALS
III will cooperate with Reseller in the development and production of
promotional or instructional literature or information relating to the
Products.
Intelligent Information Incorporated - 1 - CONFIDENTIAL
<PAGE> 2
4) COMMUNICATIONS
Reseller shall provide and maintain at its cost, mutually agreeable
communications protocol(s) and communications connection(s) with III for
the purposes of providing the Products to Subscribers.
5) PROFILE MAINTENANCE
Reseller acknowledges its responsibility to provide a mechanism to serve
Subscribers for the purpose of adding, changing and deleting parameters in
the Subscriber's database maintained in III Systems. III will be responsible
for receiving and effecting any additions, changes or deletions in
Subscriber information within twenty-four (24) hours of receipt of written
requests from the Reseller. III will maintain a facsimile machine for
receipt of such requests.
6) SUBSCRIBER AGREEMENT
For each Subscriber, III shall have executed a Subscriber Agreement (hereto
annexed as Appendix A) prior to delivery of service.
a) III shall maintain a record of the electronic acceptance, i.e., execution,
of the Subscriber Agreement by the Subscriber, for the duration of service to
the Subscriber, plus three (3) years.
b) Reseller agrees not to activate or support two (2) or more wireless devices
with the same identification number so as to allow a single registration in the
System for more than one wireless device.
7) PATENT AND COPYRIGHT
a) III shall defend, at its own expense, all suits, claims or actions
against Bell Mobility and its Subscribers for infringement of any
Canadian, U.S. or other Intellectual Property rights by any of the
Service, part thereof or the use thereof by Bell Mobility. III shall
pay forthwith all amounts which Bell Mobility or its Subscribers must
pay, whether by final judgment, award or settlement, provided that III
is given:
i. notice of any such suit, claim or action brought or threatened
against Bell Mobility or its Subscriber's;
ii. authority to assume the sole defense thereof through its own
counsel and to compromise or settle any such suit, claim or
action provided that such is without prejudice to Bell Mobility's
or its Subscriber's right to continue to use, as contemplated,
the Service.
a) If III does not defend such suit, claim or action according to the
foregoing, then Bell Mobility and/or its Subscribers may do so, at
Bell Mobility's option but at III's sole cost and expense, without
prejudice to any of Bell Mobility's or its Subscriber's other remedies
hereunder.
b) If in any such suit, claim or action any part of the Service or the
use thereof is held to constitute an infringement or its use is
otherwise enjoined, or if in the light of any such suit, claim or
action III deems it advisable to do so, III shall forthwith do one of
the following, at III's sole expense:
i. use its best efforts to procure the right for Bell Mobility and
its Subscriber's to continue to use the Service as contemplated
by this Agreement;
Intelligent Information Incorporated - 2 - CONFIDENTIAL
<PAGE> 3
ii. if III after using its best efforts, is unable to comply with
clause (i), then use its best efforts to forthwith replace the
infringing Service or part thereof with non-infringing services
which are functionally equivalent to the infringing Service and
which conform in all material respects with Appendix B.
c) Reseller shall take appropriate measures to insure that proper
copyright notice is made known to all Subscribers, including
displaying the copyright notice with each Subscriber or Customer
Agreement and in all instructions for use of the Packages and
Services. Requirements for copyright notice are set forth in Appendix
D
8) REPORTING
Prior to the fifth (5th) day of each month this agreement is effective, III
shall provide to the Reseller a count of all Subscribers on III Systems by
Package and/or Service type for the prior calendar month and a total
message sent count for Services for the prior calendar month.
9) PAYMENT
Prior to the fifth (5th) day of the month, III shall render to Reseller an
invoice, based on the report described in paragraph 8. Within thirty (30)
days from the date of a Correct Invoice Reseller shall remit in U. S.
dollars, using a form or method acceptable to III, payment for its
Subscribers. The amount of the payment due is the total number of
Subscribers, based on the report described in paragraph 8, times the rate
per Subscriber for each Package and Service, plus the setup charge for each
new Subscriber, plus message charges. The Package and Service rates per
Subscriber, setup charges, message charges and associated conditions are as
listed in Appendix B. Any preexisting Reseller related Subscribers, e.g.,
executives, demos, etc., are not to be subject to the setup fee provisions
of Appendix B, however each one of these Subscribers will be assigned to a
Package or Service, subject to the appropriate charges, upon execution of
this Agreement. A Correct Invoice is an invoice that, when reviewed with
the report described in paragraph 8, includes sufficient information or
detail as maybe reasonably requested by Reseller to reconcile invoice
amounts and contains no additional Terms and Conditions located on the
reverse of such invoice which supersede those in the signed agreement. No
term or condition of any such invoice shall be binding upon Customer unless
the invoice term or condition has been previously agreed to by both
parties.
If the Reseller fails to make payment as due hereunder, and said payment is
not actually received by III within ten (10) days of a written notice
mailed to Reseller by III informing Reseller that the payment has not been
made as agreed, III's further performance under this agreement shall be
excused and the Reseller's liability for damages shall continue. If any
dispute exists with respect to an amount invoiced by III, this Agreement
shall not be terminated. Reseller shall pay the amount not in dispute to
III and provide III with a written memorandum specifying the disputed
portion of the invoiced amount and the basis for such dispute. Reseller and
III agree to use their best efforts to discuss in good faith and promptly
resolve any such disputes. Any refund or credit due to Reseller will be
applied to Reseller's account.
10) TAXES
The charges payable by Reseller are exclusive of federal, provincial,
sales, duty or other taxes now or hereafter levied or imposed on the
performance of this Agreement or on services provided hereunder. Reseller
shall be responsible for and shall pay any taxes levied or imposed by the
jurisdiction in
Intelligent Information Incorporated - 3 - CONFIDENTIAL
<PAGE> 4
which the services are provided and that are based upon the services
performed by III in connection therewith. Any other taxes, including
personal property taxes and any taxes or amounts due in whole or in part
because of any failure by III or its agents to file any return or
information required by law, rule or regulation, shall be borne by III. All
taxes included in a correct invoice submitted to Reseller by III shall be
listed as a separate line item.
11) DISTRIBUTION RIGHTS
With the exception of that which has been developed exclusively for
Reseller, III shall have the right, at its sole discretion to sell or
license the Products to any other person or company for any purpose.
12) NO RESTRICTIONS
The parties acknowledge that Reseller and/or its Affiliates is currently
reviewing and/or may in the future review similar technology which is the
subject matter of this agreement (the "Subject Matter") with other proposed
vendors. In the event that Reseller or its Affiliates enter into such an
agreement with a third party vendor for the Subject Matter, then that will
not be considered to be a breach or violation of this agreement.
Nothing in this Agreement shall prohibit or restrict either parties right
to develop, use or market products or services similar to or competitive
with those disclosed in the Confidential Information as long as it shall
not thereby breach this Agreement. Each party acknowledges that the other
may already posses or have developed products or services similar to or
competitive with those disclosed in the Confidential Information. Each
party shall be free to use in the course of its business its general
knowledge, skills and experience incurred before, during and after the
activities hereunder.
13) TRADEMARKS
Reseller shall use the trademarks, service marks, and logos as listed in
Appendix C (the "Trademarks") in connection with the marketing and
providing of Products to Subscribers.
a) Reseller shall use and clearly show in connection with the Products,
associated advertising, labels and packaging, the Trademarks and any
appropriate legends, markings, and/or notices of property right as may
be reasonably required by III from time to time. Depending on the
trademarks used, the current legend or notice requirements are:
i) A TM should appear adjacent to the Trademarks.
ii) A legend should appear indicating that the Trademark is a
trademark of Intelligent Information Incorporated. For example,
"Quote Alert is a trademark of Intelligent Information
Incorporated".
b) Reseller agrees to submit to III a sample of the proposed use of the
Trademarks on or with the Products, boxes, containers and/or packaging,
and III shall have approved such proposed use in writing prior to any
sale of the Products using such Trademarks in the proposed manner or
any other public use of the Trademarks in the proposed manner by
Reseller. Approval will not be unreasonably withheld, and if III does
not provide a written response within ten days of the receipt of such a
request, approval shall be considered granted.
Intelligent Information Incorporated - 4 - CONFIDENTIAL
<PAGE> 5
c) Reseller shall not remove or permit to be removed from any Products,
or cover or permit to be covered in any way, and Licensee shall at all
times use and clearly show on all Products and all packaging and
advertising for Products, the Trademarks and applicable product names
for such Products.
d) Licensee will not harm, misuse or bring into disrepute the Trademarks.
e) The III acknowledges that all "Marks" which include the "Bell
Mobility" trade-mark, trade name and all other trade-marks, trade
names, other commercial symbols, designs and logos owned, used or
claimed by Reseller from time to time are the exclusive property of
Reseller, and that neither this Agreement nor the carrying on of
business by the III shall in any way give or be deemed to give to the
III any interest or ownership in any of the Marks, promotional
advertising or other written materials relating to the Service or the
Products, except for the right to use the Marks strictly in accordance
with the terms and conditions of this Agreement. All goodwill
associated with the Marks shall enure exclusively to the benefit of
Reseller.
14) APPROVALS
Reseller agrees to submit to III for written approval all advertising or
other promotional materials that use any Trademarks, Logos, other service
marks or company names or make reference to any understanding or
relationship in this Agreement no fewer than fifteen (15) days before
proposed use. Approval will not be unreasonably withheld, and if III does
not provide a written response within ten (10) days of the receipt of such
a request, approval shall be considered granted.
III agrees not to use Resellers name or refer to Reseller directly or
indirectly in any advertisement, sales promotion, news release to any
professional or trade publication without receiving Resellers specific
prior written authorization. Such authorization will not be unreasonably
withheld.
15) IP REPORTING
Reseller acknowledges that III is required to provide certain information
relating to the usage of the Products to the Information Providers (IP).
III warrants to Reseller that any such data pertaining to Subscriber
identification will remain proprietary and confidential with the exception
of satisfying III's reporting requirements to the Information Providers or
their agencies. Such information may include:
a) the number of Subscribers registered in III Systems at midnight of
each day;
b) the number and types of messages sent by III Systems;
c) the number and types of Subscriber requests registered in III Systems;
and
d) any additional information as required by the Information Providers,
from time-to-time.
16) AUDIT
Additionally, Reseller hereby authorizes III, the Information Providers or
their agents, during Reseller's regular business hours, access to
Reseller's business records related to III Services for the purpose of
verifying the authorized distribution of Information. Reseller further
agrees to maintain such business records for not less than three (3) years.
Intelligent Information Incorporated - 5 - CONFIDENTIAL
<PAGE> 6
17) UNAUTHORIZED USE OF PRODUCTS
The information provided by III shall not be used by Reseller or its agents
for any other purpose other than the specified use of the distribution of
the Products through wireless devices. In the event that Reseller becomes
aware that any third party is improperly using the information or the
Products, including, without limitation, providing or about to provide the
information to Reseller, Reseller shall immediately notify III of the facts
of which it is aware in connection with such actual or potential
unauthorized use and shall provide III with any documents in its possession
with respect to the same. The parties shall cooperate to the fullest extent
possible to take all actions necessary to eliminate such unauthorized use
as expeditiously as possible.
18) LIABILITY
a) III AND THE INFORMATION PROVIDERS SHALL HAVE NO LIABILITY FOR CLAIMS
OR DAMAGES, INCLUDING BUT NOT LIMITED TO ANTICIPATED OR LOST PROFITS
OR ANY ACTUAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
TO RESELLER OR ANY OF ITS AGENTS OR SUBSCRIBERS FOR ANY DEFECTS,
DELAYS OR FAILURES OF TRANSMISSION OR RECEPTION OF INFORMATION
PROCESSED OR TO BE PROCESSED IN ANY WAY OR MANNER BY III SYSTEMS,
INCLUDING, BUT NOT LIMITED TO, DAMAGES OF ANY NATURE ARISING FROM ANY
NEGLIGENCE OF III, AND/OR THE INFORMATION PROVIDERS, THEIR CUSTOMERS,
OFFICERS, AGENTS, DIRECTORS AND EMPLOYEES. IN NO EVENT SHALL LIABILITY
BY III AND THE INFORMATION PROVIDERS FOR ANY CLAIM ARISING OUT OF THIS
AGREEMENT EXCEED THE AMOUNT PAID TO III BY RESELLER UNDER THIS
AGREEMENT WITHIN THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING
THE ACCRUAL OF SUCH CLAIM.
b) In no event shall either party be liable for any indirect, incidental,
consequential or special damages, including without limitation loss of
revenue or loss of profits, for any reason whatsoever, to the extent
such may be disclaimed by law, whether arising out of breach of
warranty, breach of condition, breach of contract, tort or otherwise,
whether foreseeable or not, and whether or not advised of the
possibility thereof.
19) WARRANTY
a) Personnel: III represents and warrants that, during the term of this
Agreement, they and all relevant Personnel possess the knowledge,
skill and experience necessary for the provision of Services as stated
in this Agreement.
b) Ownership: During the term of this Agreement, III warrants that it is
the owner of such Software and/or has the right to use such Software
employed by III to provide the Service. III does not warrant that the
operation of the Software will be uninterrupted or error free except
that III will correct all program errors and defects which relate to a
defective in the Software.
c) Millennium:
i) Software/Hardware: III warrants that its Software and/or Hardware
is "Year 2000 compliant", which means that the Software and/or
Hardware shall operate without error relating to date data,
specifically including any error relating to date data which
represents or references
Intelligent Information Incorporated - 6 - CONFIDENTIAL
<PAGE> 7
different centuries or more than a century, will not abnormally
end and will be able to accurately process date data (including,
but not limited to, calculating, comparing, and sequencing) from,
into, and between the twentieth and twenty-first centuries,
including leap year calculations, when used in accordance with
their specifications, provided that all products (e.g. hardware,
software, middleware and firmware) which interconnect with or
which are used in combination with the Software and Hardware are
Year 2000 Compliant and properly exchange date data with them.
ii) Services: III further warrants during the term of this Agreement
that any software and/or hardware products used by III in support
of the processes and services necessary in the delivery of III's
obligations as contained in this Agreement are year 2000
compliant and that the provision of services under this Agreement
will be uninterrupted.
iii) Testing: III will, from time to time provide Reseller with the
results of testing done by III on the Software to verify that the
Software is Year 2000 compliant in accordance with the terms of
this warranty. Should the results of testing reveal that the
Software is not Year 2000 compliant in accordance with the terms
of this warranty, III shall, without charge to Reseller, repair
or replace the non-compliant components of the Software within
the period of time to be specified by Reseller (which shall in
any event be a reasonable period of time). If such repair or
replacement is not completed within the time specified, Reseller
shall have the right to have any necessary changes or repairs
performed itself and III shall reimburse Reseller for any expense
incurred thereby.
d) In the event of a breach of the Year 2000 warranty herein, and
notwithstanding anything to the contrary in the Agreement, III shall
assume all risks and responsibilities inherent to such warranty and
shall indemnify and save harmless Reseller and its customers from and
against any and all claims, demands, suits, actions, or causes of
actions, of any kind whatsoever, for direct or indirect damages,
losses, costs, injuries, death, property damage, claims and/or
expenses resulting from this Agreement, and shall also include all
reasonable legal fees and disbursements incurred by Reseller arising
from such breach.
20) ASSIGNMENT
This agreement may not be assigned by either party without the prior
written consent of the other party where such consent will not be
unreasonably withheld, and such assignment does not relieve that party of
their obligations hereunder, unless expressly agreed in writing. Reseller
may assign this agreement to a purchaser of all or substantially all of
Reseller's assets, or other successor in interest through merger,
consolidation or other business combination, or to an Affiliate (including
Parents or Subsidiaries of Reseller). "Parent" means an entity having
control of Reseller and "Subsidiary" means an entity that Reseller
controls, with in both cases control meaning ownership of a majority of
shares or other voting interests.
21) TERMINATION
Any party may terminate this Agreement upon not less than thirty (30) days
prior written notice to the other party if:
a) Any other party makes an assignment for the benefit of its creditors;
or
Intelligent Information Incorporated - 7 - CONFIDENTIAL
<PAGE> 8
b) Any petition shall be filed by or against such other party under any
Section or Chapter of the Federal Bankruptcy Act as amended or as may be
amended or any similar law or statute of the United States or any state
thereof which is not dismissed within thirty-five (35) days after filing;
or
c) The III Systems fails to materially perform or becomes materially
defective, and such defect(s) or failure(s) of performance cannot be
remedied by III in ten (10) working days from the receipt of notice to III
of the failure or defect.
22) ADDRESSES
Any and all notices or other information to be given by one of the parties
to the other shall be deemed sufficiently given when forwarded by prepaid
registered or certified first class mail or by facsimile or hand delivery
to the other party at the following address:
<TABLE>
<S> <C>
If to Bell Mobility If to Intelligent Information Incorporated
Att: Peter Winn Att: General Counsel
Services Development One Dock Street, Suite 500
2920 Matheson Blvd Stamford, CT
Missisauga, Ontario USA 06902
L4W 5J4
Canada
</TABLE>
and such notices shall be deemed to have been received ten (10) business
days after mailing if forwarded by mail, and the following business day if
forwarded by facsimile or hand delivery.
23) LAW
This Agreement shall be governed and construed in accordance with the laws
of the State of New York and venue shall be maintained only in a Federal or
State Court having subject matter jurisdiction located in New York County,
New York State. In any action between the parties to enforce any of the
terms of this Agreement, the prevailing party shall be entitled to recover
reasonable expenses, including reasonable attorneys' fees.
24) CONTRACTORS
It is expressly agreed that III and Reseller are acting hereunder as
independent contractors. Under no circumstances shall any of the employees
of one party be deemed the employees of the other for any purpose.
25) NO AFFECT
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid or unenforceable, such determination shall not
affect the validity or enforceability of any other part or provision of
this Agreement. A waiver by either party of any term or condition of this
Agreement in any instance shall not be deemed or construed as a waiver of
such term or condition for the future, or of any subsequent breach thereof.
All remedies, rights, undertakings, obligations and agreements contained in
this Agreement shall be cumulative, and none of them shall be in limitation
of any other remedy, right, undertaking, obligation or agreement of either
party set forth herein.
Intelligent Information Incorporated - 8 - CONFIDENTIAL
<PAGE> 9
26) RIGHT TO MODIFY INFORMATION
Except as provided in this Agreement, Reseller shall have no right to
delete, modify or revise the information provided by III or the Information
Providers.
27) CONFIDENTIALITY
The following is agreed to for the treatment of confidential information:
a) III and Reseller agree to keep confidential all confidential and
proprietary information and materials (a) prepared or developed by or
for it (including the financial terms of this Agreement) and (b)
supplied by one party to the other under this Agreement, provided that
information and materials intended to be held in confidence are (i)
designated as "Confidential" and (ii) are not available in the public
domain.
b) Confidential information may be disclosed as necessary to enforce a
party's rights under this Agreement and to comply with any legal or
governmental action. In the event of legal or governmental action, the
disclosing party shall promptly notify the other and shall cooperate
in any reasonable manner with the other in contesting such disclosure.
28) ENTIRE AGREEMENT
This Agreement, including the Appendices attached hereto, constitutes the
entire agreement between the parties with respect to this subject matter
and supersedes all previous proposals, both oral and written, negotiations,
representations, commitments, writings and all other communications between
the parties. This Agreement may not be released, discharged or modified
except by an instrument in writing signed by the parties.
IN WITNESS WHEREOF, the parties have hereto hereby execute this Agreement.
Authorized Reseller Signature Authorized III Signature
/s/ R.J. Reynolds /s/ Stephen G. Maloney
- ------------------------------ ------------------------------------
Name Name
Randall J. Reynolds Stephen G. Maloney
Title Title
President and COO President
Date Date
May 22, 1998 May 26, 1998
Intelligent Information Incorporated - 9 - CONFIDENTIAL
<PAGE> 10
APPENDIX A
SUBSCRIBER AGREEMENT
IMPORTANT: READ THIS AGREEMENT BEFORE USING THE SERVICE PROVIDED BY BELL
MOBILITY CELLULAR INC. (hereafter referred to as "BMC"). YOUR USE OF THE
SERVICE, OR ACKNOWLEDGMENT TO AGREE WILL INDICATE YOUR ACCEPTANCE OF ALL OF THE
FOLLOWING TERMS. If this agreement is unacceptable to you, do not use the
Service. BMC is willing to provide you the Service only if you agree to be bound
by the following terms:
1. Information, data or messages provided through the Service, including but not
limited to, prices or values of various items such as stocks, bonds, options,
futures and currencies, or relating to horoscopes, traffic reports, personal
reminder information, weather forecasts or any other type of information, data
or messages delivered via the Service (hereafter referred to as "Information"),
has been independently obtained by BMC from various securities markets, such as
stock exchanges, or such other third party Information suppliers (collectively,
hereafter referred to as "Information Providers" or "IPs" ), through sources
believed to be reliable, but the accuracy, completeness, timeliness, or correct
sequencing of the Information is not guaranteed by BMC, the IPs, or any parties
transmitting or processing the Information (hereafter referred to as
"Information Processors"). (Hereafter, collectively BMC, the IPs and Information
Processors are referred to as "Disseminating Parties".) There may be delays,
omissions, or inaccuracies in the Information. NO DISSEMINATING PARTY WILL BE
LIABLE IN ANY WAY TO YOU OR ANY OTHER PERSON FOR (A) ANY INACCURACY, ERROR OR
DELAY IN, OR OMISSION OF, (I) ANY INFORMATION OR (II) THE TRANSMISSION OR
DELIVERY OF ANY SUCH INFORMATION` OR (B) ANY LOSS OR DAMAGE ARISING FROM OR
OCCASIONED BY (I) ANY SUCH INACCURACY, ERROR, DELAY OR OMISSION, (II)
NON-PERFORMANCE, OR (III) INTERRUPTION IN ANY SUCH INFORMATION, DUE EITHER TO
ANY NEGLIGENT ACT OR OMISSION BY ANY DISSEMINATING PARTY OR TO ANY "FORCE
MAJEURE" (I.E., ANY FLOOD, EXTRAORDINARY WEATHER CONDITIONS, EARTHQUAKE OR OTHER
ACT OF GOD, FIRE, WAR, INSURRECTION, RIOT, LABOR DISPUTE, ACCIDENT, ACTION OF
GOVERNMENT, COMMUNICATIONS OR POWER FAILURE, OR EQUIPMENT OR SOFTWARE
MALFUNCTION) OR ANY OTHER CAUSE BEYOND THE REASONABLE CONTROL OF THE
DISSEMINATING PARTIES. THERE IS NO WARRANTY OF MERCHANTABILITY, NO WARRANTY OF
FITNESS FOR A PARTICULAR USE, AND NO OTHER WARRANTY OF ANY KIND, EXPRESS, OR
IMPLIED, REGARDING THE INFORMATION OR ANY ASPECT OF THE SERVICE (INCLUDING BUT
NOT LIMITED TO ACCESS TO INFORMATION).
2. IN NO EVENT WILL ANY DISSEMINATING PARTY BE LIABLE TO YOU OR ANYONE ELSE FOR
ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES (INCLUDING BUT NOT
LIMITED TO LOST PROFITS, TRADING LOSSES, AND DAMAGES THAT RESULT FROM
INCONVENIENCE, DELAY OR LOSS OF THE USE OF THE SERVICE) EVEN IF ANY
DISSEMINATING PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR
LOSSES. YOU AGREE THAT THE LIABILITY OF ANY DISSEMINATING PARTY, ARISING OUT OF
ANY KIND OF LEGAL CLAIM (WHETHER IN CONTRACT, TORT OR OTHERWISE) IN ANY WAY
CONNECTED WITH THE SERVICE OR THE INFORMATION, WILL NOT EXCEED THE AMOUNT
CHARGED FOR RECEIVING THE INFORMATION. No Disseminating Party shall be liable
for any loss resulting from a cause over which such entity does not have
control, including but not limited to failure of electronic or mechanical
equipment or communication lines, telephone or other
Intelligent Information Incorporated - 10 - CONFIDENTIAL
<PAGE> 11
interconnect problems, unauthorized access, theft, operator errors, severe
weather, earthquakes, floods, acts of war, and strikes or other labor problems.
3. BMC, the IPs and others have proprietary interest in the Information. You
agree not to reproduce, re-transmit, disseminate, sell, distribute, publish,
broadcast, circulate or commercially exploit the Information in any manner
without the express written consent of BMC, and the relevant Information
Provider(s); nor to use the Information for any unlawful purpose. You agree to
comply with reasonable written requests from BMC, and to protect the IPs' and
BMC's respective contractual, statutory and common law rights to the Information
and the Service.
4. You acknowledge that neither the Service nor any of the Information is
intended to supply tax or legal advice. Although the Service may provide
Information about how to invest and what to buy, none of this Information is
recommended by any Disseminating Party. The Disseminating Parties do not
recommend any investment advisory service or product, nor offer any advise
regarding the nature, potential value, or suitability of any particular
security, transaction, or investment strategy.
5. You agree to immediately notify BMC if you become aware of any of the
following: (a) any loss or theft of your access number(s) and/or password(s), or
(b) any unauthorized use of any of your access number(s) and/or password(s), or
of the Service or any Information.
6. You agree to indemnify and hold the Disseminating Parties harmless from and
against any and all claims, losses, liabilities, costs and expenses (including
but not limited to attorneys' fees) arising from your violation of this
Agreement or any third party's rights.
7. BMC reserves the right to terminate your access to the Service or any portion
of it at its sole discretion, without notice and without limitation, for any
reason whatsoever, including but not limited to the unauthorized use of your
access number(s) and/or password(s), breach of this Agreement, discontinuance of
BMC or loss of access to any Information from any of the IPs. The Information
Processors and BMC shall have no liability to you; provided, however, that if
the termination is without cause, BMC shall refund the prorata portion of any
fee which may have been paid by you for the portion of the Service not furnished
to you as of the date of such termination.
8. As a condition of being approved to use the Service, you represent and agree
that you are making this Agreement in your own individual capacity and not on
behalf of a firm, corporation, partnership, trust or association.
9. You acknowledge that, in providing you with the Service, BMC has relied upon
your agreement to be bound by the terms of this Agreement. You further
acknowledge that this Agreement and all other present and future agreements
between you and BMC constitute the complete statement of the agreement between
you and BMC, and that the agreement does not include any other or prior
contemporaneous promises, representations or descriptions regarding the Service
or the Information even if it were contained in materials provided by BMC. This
Agreement may be modified only in writing; if BMC sends you written notice of
the modification, your use of the Service after receiving such notice will
indicate your acceptance of the modification. If any provision of this Agreement
is invalid or unenforceable under applicable laws, it is, to that extent, deemed
omitted and the remaining provisions will continue in full force and effect.
This Agreement and performance hereunder will be governed by and construed in
accordance with the laws of the Province of Ontario and the applicable laws of
Canada, as applied to agreements entered into, no matter where you might
legally reside.
Intelligent Information Incorporated - 11 - CONFIDENTIAL
<PAGE> 12
10. The terms and conditions of Sections 1, 2, 3 and 6 of this Agreement shall
survive any termination of this Agreement.
Intelligent Information Incorporated - 12 - CONFIDENTIAL
<PAGE> 13
APPENDIX B
PRODUCT DESCRIPTION AND RATES
1) The services are defined as follows:
a) Horoscope - receive daily horoscope according to astrological sign.
b) Weather - receive daily weather forecast for local area.
c) Traffic - receive traffic updates for selected areas or roads of
interest.
d) Reminder - receive reminder based on input from subscriber.
2) The service includes all four (4) services. Bell Mobility will remit to III
a sum, each month, equal to the number of subscribers activated on the
service, times the rate, where the rate is defined by the following
schedule:
<TABLE>
<CAPTION>
Total Subscribers Price per subscriber per month
----------------- ------------------------------
<S> <C>
Total number of subscribers less than 5000 $1.80 US
5000 - 19999 $1.65 US
20000 - 29999 $1.55 US
30000 - 39999 $1.45 US
Total number of subscribers greater than 40000 $1.25 US
</TABLE>
3) Bell Mobility will enter a promotional period immediately following launch
on May 12, 1998. During this period, III will offer Bell Mobility a
promotional period price of $1.15 US per subscriber, regardless of volume.
This pricing will be in effect until August 31, 1998 at which point, the
table in (2) above will govern pricing.
4) Bell Mobility and III agree to investigate advertising opportunities
associated with this service as a way of generating additional revenue.
Intelligent Information Incorporated - 13 - CONFIDENTIAL
<PAGE> 14
APPENDIX C
TRADEMARKS
"Powered by iii"
Reseller shall follow "Powered by iii" Guidelines for Use, Exhibit 1.
Intelligent Information Incorporated - 14 - CONFIDENTIAL
<PAGE> 15
APPENDIX D
COPYRIGHTS
The Copyright notice, with current year inserted, is as follows:
1. Copyright (C) 199__ INTELLIGENT INFORMATION INCORPORATED. All rights
reserved.
2. If Dow Jones & Company, Inc. information is to be included, then the
following notice must be included: "Copyright 199__ Dow Jones & Company, Inc.
All Rights Reserved. Distributed by Intelligent Information (or _________ name)
under license from Dow Jones & Company, Inc. The headlines contained in this
Intelligent Information Service are the sole and exclusive property of Dow Jones
& Company, Inc. and are protected by copyright. Such headlines may not be
copied, republished or redistributed without the prior written consent of Dow
Jones & Company, Inc."
Intelligent Information Incorporated - 15 - CONFIDENTIAL
<PAGE> 16
EXHIBIT 1
"POWERED BY iii" GUIDELINES FOR USE
The Value of "Powered by iii"
The "Powered by iii" Logo (the "Logo") is an effective way to identify
information services offering as incorporating the benefits and features of the
leading source of personalized content for wireless devices, Intelligent
Information Incorporated (III). Use of the Logo also qualifies resellers to
participate in III's advanced business partner support programs.
The Logo's Meaning for Business Partner Use
The Logo conveys the value and excitement of personalized information services
provided by the III platform. Business partners are required to use this Logo in
advertising, point-of-purchase displays, and marketing materials to promote
information services. Use of the Logo is made mandatory under the trademark
license granted in the standard III Service Agreement, and the Logo may only be
used according to these Guidelines. These Guidelines help ensure that the Logo
continues to provide consumers with a clear identification of information
service quality.
To protect this valuable trademark, the business partner may not use the Logo in
any way other than as described in these guidelines or as may be provided in
writing by III from time to time. Any unauthorized use of the Logo is an
infringement of III's trademark rights.
Business Partner Logo Artwork
Do not use artwork provided by any source other than III. III will provide
approved Business Partners that agree to follow these guidelines with electronic
versions of the Logo. You may not alter this artwork in any way, separate the
words from the graphic, or replace the words with any others. The trademark
symbol(TM) must appear at the lower right corner of the graphic portion of
the Logo. Documents including the Powered by iii logo must also include the
footnote, in no less than 6 point text, "Powered by iii is a registered
trademark of Intelligent Information Incorporated."
Sizing and Placement Requirement
The Logo may be used only on materials that make accurate references to the
information services as provided by III. The Logo must be placed in close
proximity to headline copy or logo treatments dealing with information services.
The Logo cannot be larger or more prominent than your company name, company
logo, product name (if applicable), or service name.
The Logo may stand-alone, or be incorporated into your information services logo
if appropriate. If the Logo is used as a stand alone element, a minimum amount
of empty space must be left between the Logo and any other object such as type,
photography, borders, edges, etc. The required border of empty space around the
Logo must be 1/4x wide, where x equals the height of the graphic, as measured
from the highest point on the graphic portion of the Logo to the lowest point on
the graphic portion of the Logo.
Minimum size for the Logo is 3/8 of an inch high.
Intelligent Information Incorporated - 16 - CONFIDENTIAL
<PAGE> 17
Business partners may not use the Logo in any manner that suggests that
advertising, point-of-purchase displays, or other marketing materials are from
III.
The footnote "Powered by iii is a registered trademark of Intelligent
Information Incorporated", in not less than 6 point type, must accompany each
use of the Logo.
Intelligent Information Incorporated reserves the right to object to unfair uses
or misuses of its trademarks or other violations of applicable law.
Color Treatment
You may not alter the colors of the Logo in any way from the treatments provided
by III, without the written approval of III.
Quality Control
III reserves the right to review business partner use of the Logo. Business
partner must correct any deficiencies in the use of the Logo upon reasonable
notice from III.
Address any questions concerning the Logo to the appropriate III Account Manager
or III's Director of Marketing.
Intelligent Information Incorporated reserves the right to change the Logo
and/or these guidelines at any time at its discretion. You must comply with the
guidelines as amended from time to time.
Intelligent Information Incorporated - 17 - CONFIDENTIAL
<PAGE> 1
Exhibit 10.12
INTELLIGENT INFORMATION INCORPORATED SERVICE RESELLER AGREEMENT
THIS AGREEMENT is entered into by and between Intelligent Information
Incorporated, a Delaware corporation (hereinafter referred to as "III") and
Omnipoint Communications Inc., a Delaware Corporation (hereinafter referred to
as the "Reseller"). The effective date of this agreement is November 8, 1996.
WHEREAS, III owns computer software and has related procedures
(hereinafter referred to as "Systems") and by utilizing these Systems provides
"Products" in the form of "Services" and "Packages" that deliver "intelligent
information" based on data from various sources (hereinafter referred to as
"Information Providers") to text displaying wireless devices either at
prearranged times or as data conditions change by prearranged parameters; and
WHEREAS, Reseller is desirous of providing these Products to customers of
its PCS services and to customers of PCS networks owned or managed by entities
controlling, controlled by, or under common control with Reseller (which
customers are hereinafter referred to as "Subscriber(s)"); and
WHEREAS, the parties agree to enter into certain arrangements, as set
forth herein, for that purpose;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby confessed and acknowledged, it is agreed as follows;
1. The term of this agreement is three (3) years beginning on the effective date
of this agreement. This entire agreement shall automatically renew itself
annually for additional one (1) year terms unless either party sends notice of
termination to the other party sixty (60) days before the anniversary of the
effective date of this agreement, by certified mail.
2. Reseller shall provide and maintain computer access ports into its systems
for use by III in delivering messages containing information addressed to
Reseller's Subscribers and for sending customer profile updates to III. The
protocol used on these ports shall be mutually agreeable to Reseller and III.
Reseller shall reimburse III for the communications charges III actually and
reasonably incurs to deliver messages to Reseller's computer access port and to
receive customer activations and updates as contemplated by this Agreement.
3. Reseller shall deliver a subscriber agreement in a form mutually agreed to by
the parties to each Subscriber (hereinafter referred to as the "Subscriber
Agreement", hereto annexed as Appendix A) prior to activation of service along
with any description of the services delivered to the Subscribers. Reseller may
activate or support more than one wireless device with the same identification
number, but payment for the charges associated with each such device shall be in
accordance with Appendix B of this Agreement
RESELLER HEREBY AGREES TO INDEMNIFY AND HOLD, III AND/OR ANY INFORMATION
PROVIDERS HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES, LOSSES, OR EXPENSES
SUFFERED OR PAID AS A RESULT OF ANY CLAIMS, DEMANDS, SUITS, CAUSES OF ACTION,
PROCEEDINGS, AWARDS, JUDGMENTS, AND LIABILITIES (INCLUDING REASONABLE ATTORNEY'S
FEES) INCURRED IN LITIGATION, ARBITRATION OR OTHERWISE, ASSESSED, INCURRED, OR
SUSTAINED BY OR AGAINST III AND/OR ANY INFORMATION PROVIDERS BY REASON OF
RESELLER'S FAILURE TO DELIVER THE SUBSCRIBER AGREEMENT TO ANY SUBSCRIBER.
RESELLER FURTHER AGREES TO REIMBURSE III FOR ALL LOSSES, COSTS, DAMAGES AND
EXPENSES INCURRED, INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEY'S FEES AND
COURT COSTS, IN OBTAINING INDEMNIFICATION FROM RESELLER. RESELLER FURTHER AGREES
TO DISTRIBUTE FROM TIME-TO-TIME MODIFIED OR SUPPLEMENTED SUBSCRIBER AGREEMENTS
AS REQUIRED BY THE INFORMATION PROVIDERS.
II. HEREBY AGREES TO INDEMNIFY AND HOLD RESELLER HARMLESS FROM AND AGAINST
ANY AND ALL DAMAGES, LOSSES, OR EXPENSES SUFFERED OR PAID AS A RESULT OF ANY
CLAIMS, DEMANDS, SUITS, CAUSES OF ACTION, PROCEEDINGS, AWARDS, JUDGMENTS, AND
LIABILITIES (INCLUDING REASONABLE ATTORNEY'S FEES) INCURRED IN LITIGATION,
ARBITRATION OR. OTHERWISE, ASSESSED, INCURRED, OR SUSTAINED BY OR AGAINST
RESELLER
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<PAGE> 2
BY ANY THIRD PARTY, INCLUDING INFORMATION PROVIDERS OR THEIR AGENTS, EXCEPT
THOSE INFORMATION PROVIDERS OR AGENTS DIRECTLY UNDER CONTRACT BY RESELLER,
ALLEGING THAT THE MARKETING, DISTRIBUTION, TRANSMISSION OR USE OF THE PRODUCTS
OR SERVICES CONTEMPLATED BY THIS AGREEMENT CONSTITUTES AN INFRINGEMENT OF
COPYRIGHT, TRADEMARK RIGHT OR OTHER INTELLECTUAL PROPERTY RIGHT; DEFAMATION;
INFRINGEMENT OF ANY RIGHT OF PRIVACY OR PUBLICITY; OR ANY SIMILAR RIGHT OR
PRIVILEGE, III FURTHER AGREES TO REIMBURSE RESELLER FOR ALL LOSSES, COSTS,
DAMAGES, AND EXPENSES INCURRED, INCLUDING, BUT NOT LIMITED TO, REASONABLE
ATTORNEY'S FEES AND COURT COSTS, IN OBTAINING INDEMNIFICATION FROM III.
EITHER PARTY'S OBLIGATION TO INDEMNIFY AGAINST ANY SUCH CLAIM IS
CONTINGENT UPON RECEIPT OF PROMPT WRITTEN NOTICE OF ANY EVENT GIVING RISE TO AN
OBLIGATION TO INDEMNIFY AND GRANT OF THE RIGHT TO DEFEND AND SETTLE ANY SUCH
CLAIM BY THE INDEMNIFIED PARTY.
4. Prior to the fifth (5th) day of each month this agreement is effective,
Reseller shall provide to III a count of all Subscribers not on Resellers Basic
or entry level service plan.
5. Prior to the last day of the month, based on the report described in
paragraph 4, Reseller shall remit in U.S. dollars, using a form or method
acceptable to III, payment for its Subscribers. The amount of the payment due is
the total number of Subscribers, without regard for usage, times the rate per
Subscriber for each Package and Service, plus the setup charge for each new
Subscriber, plus message charges. The Package and Service rates per Subscriber,
setup charges, message charges and associated conditions are as listed in
Appendix B. Any preexisting Reseller related Subscribers, e.g., executives,
demos, etc., are not be subject to the setup fee provisions of Appendix B,
however each one of these Subscribers will be assigned to a Package or Service,
subject to the appropriate charges, upon execution of this Agreement.
6. III shall have the right, at its sole discretion to sell or license the
Products to any other person or company for any purpose. Computer software
systems provided by III to Reseller shall remain the sole property of III. Such
software shall not be reproduced, except for backup purposes or use at multiple
Reseller locations, or distributed by Reseller. In the event of the termination
of this Agreement all software provided to Reseller by III shall be returned to
III.
7. Reseller shall take appropriate measures to insure that the following
copyright notice, and those defined for each Product or Service in Appendix B,
are made known to all Subscribers, including displaying such copyright notice in
all instructions for use of the Packages and Services.
"COPYRIGHT NOTICES: News Alert System, Sports Alert System, Weather Alert System
and Quote Alert System Copyright 199__ Intelligent Information Incorporated. All
rights reserved. Copyright 19__ Dow Jones & Company, Inc. All Rights Reserved.
Distributed by Intelligent Information Incorporated under license from Dow Jones
& Company, Inc. The headlines (Company News) contained in this Intelligent
Information Service are the sole and exclusive property of Dow Jones & Company,
Inc. and are protected by copyright. Such headlines may not be copied,
republished or redistributed without the prior written consent of Dow Jones &
Company, Inc."
Reseller agrees to submit to III for its approval, all advertising or other
promotional materials that reference any of the Products or any understanding or
relationship contemplated under this Agreement no fewer than 5 days before
proposed use. III's approval will not be unreasonably withheld, and shall be
deemed granted unless III within such 5 day period notifies Reseller of the
reasons for rejection and proposes reasonable changes which, if adopted, would
render the request acceptable.
8. Resell acknowledges that III is required to provide certain information
relating to the usage of the Products to the Information Providers. Such
information may include:
(a) the number of Subscribers registered in III Systems at midnight of
each day;
(b) the number and types of messages sent by III Systems;
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<PAGE> 3
(c) the number and types of Subscriber requests registered in III
Systems; and
(d) any additional information as required by the Information Providers,
from time-to-time. III warrants to Reseller that any such data pertaining to
Subscriber identification will remain proprietary and confidential with the
exception of satisfying III's reporting requirements to the Information
Providers or their agents.
(e) Reseller shall grant access to III, acting on its behalf or on behalf
of the Information Providers, or their agents, to Reseller's business records
related to III's Services, during regular business hours and upon three (3) days
written notice to Reseller, for the purpose of verifying the extent of
distribution of Products to Subscribers. Any such data shall remain the sole and
exclusive property of Reseller and shall be used by III solely for the purpose
of confirming Reseller's distribution of III's Services to determine the payment
due by Reseller. Reseller agrees to maintain such records for not less than
three (3) years.
Without limiting III's other obligations under this Agreement, all
information obtained by III in the course of inspecting Reseller's records shall
be deemed Reseller's Confidential Information. III shall only provide each
Information Provider and its agents with data sufficient to confirm the extent
to which Reseller has supplied the Products of such Information Provider to
Subscribers of Reseller, and shall not otherwise provide the same with any
proprietary or confidential information of Reseller without Reseller's express
written consent.
9. Reseller shall designate a customer representative to coordinate and review
III's process of updating changes to Subscriber information, however, III will
be responsible for receiving and effecting any additions, changes or deletions
in Subscriber information within twenty four (24) hours of receipt of written
requests from the Reseller. III will maintain a facsimile machine for receipt of
such requests.
10. III AND THE INFORMATION PROVIDERS SHALL HAVE NO LIABILITY TO RESELLER FOR
INDIRECT, CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES EVEN
IF THEY HAVE BEEN ADVISED OF THE POSSIBILITIES OF SUCH DAMAGES WITH RESPECT TO
THEIR OBLIGATIONS UNDER THIS AGREEMENT. IN ANY EVENT, THE LIABILITY OF III AND
THE INFORMATION PROVIDERS TO RESELLER FOR ANY REASON AND UPON ANY CAUSE OF
ACTION SHALL BE LIMITED TO GENERAL MONEY DAMAGES IN AN AMOUNT NOT TO EXCEED THE
AMOUNT OF THREE MONTH'S PAYMENTS FOR SUBSCRIBERS RECEIVED BY III. THIS
LIMITATION APPLIED TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING, WITHOUT
LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT
LIABILITY, MISREPRESENTATION AND OTHER TORTS.
11. Reseller shall not assign this Agreement without III's prior written
consent. Notwithstanding the foregoing, Reseller shall be entitled without III's
consent to assign or transfer its rights under this Agreement, to any person or
business entity which is a parent, or subsidiary of Reseller, controls or is
controlled by or under common control with Reseller, is merged or consolidated
with Reseller or purchases more than fifty (50%) interest in the ownership or
assets of Reseller to which this Agreement relates.
12. Either party may terminate this Agreement upon not less than thirty (30)
days prior written notice to the other parties, i.:
(A) The other party makes an assignment for the benefit of its creditors;
or
(B) Any petition shall be filed by or against such other party under any
Section or Chapter of the Federal Bankruptcy Act as amended or as may be amended
or any similar law or statute of the United States or any state thereof, which
is not dismissed within thirty five (35) days after filing; or
(C) Reseller shall have the right to terminate this Agreement by written
notice to take effect immediately if III's Systems fail to perform or become
defective, and such defect(s) or failure(s) cannot be remedied by III within ten
(10) working days.
13. III shall have the right to terminate this Agreement by written notice to
take effect immediately if Reseller fails to make any payment when due and does
not cure such failure within ten (10) days of III's notice thereof and,
effective upon such termination, III shall have no further obligation to perform
under this Agreement.
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<PAGE> 4
14. The mailing address of III is One Dock Street, Suite 500, Stamford, CT
06902. The mailing address of Reseller is specified below. All notices of
default or failure of obligation hereunder shall be mailed to the other party
first class, certified mail, return receipt requested to the address of III and
Reseller set forth in this Agreement. Either Party may change the address for
receipt of notice by providing written notice to the other party.
15. This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
16. III warrants with respect to each of the Services and Products it supplies
pursuant to this Agreement that (i) such Service or Product shall be available
to Reseller 99.99 percent of each day during the term of this Agreement
(excluding scheduled downtime for maintenance); (ii) the content of such Service
or Product shall be delivered to Reseller's computer data port as contemplated
by Section 2 of this Agreement with 99.9 percent accuracy within two minutes of
III's receipt of the content of the same from the applicable information
Provider, provided any failure to do so is not caused by reseller's failure.
III warrants that neither Services and Products, nor Reseller's marketing,
distribution, transmission and use of the same as contemplated by this
Agreement, will infringe any copyright, trademark or other intellectual property
right; in fringe any right of privacy or publicity; or give rise to any claim of
defamation or similar claims of any third party, including any Information
Providers or their agents.
17. III represents that the terms set forth in this Agreement (including
pricing) are as favorable to Reseller as the terms previously granted to any
other provider of wireless telecommunications services operating in whole or
part in the same service area with respect to which Reseller receives the
Services or Products pursuant to this Agreement and shall be so for as long as
the Services and Products and their bundling in Reseller's packages remains
materially unchanged. III covenants and agrees that, in the event III extends
any more favorable terms or conditions to any such other provider, III shall
promptly notify Reseller of the same and, at Reseller's option, shall grant
those same terms and conditions to Reseller effective as of the date such terms
were extended to the other provider.
18. III agrees that any confidential or proprietary information disclosed by
Reseller to III, including, without limitation, any information or data
regarding the Subscribers such as their names, information regarding their
parameters or their preferences, shall remain the sole and exclusive property of
Reseller. III shall not disclose any such information, to any third party,
including the Information Providers and their agents, except as otherwise
provided in this Agreement, unless (i) Reseller consents to such disclosure in
writing, and (ii) III has entered into an agreement with that party that
requires them to keep such information confidential.
IN WITNESS WHEREOF, the parties have hereto hereby execute this Agreement.
- ------------------------------------- -------------------------------------
Authorized Reseller Signature Authorized Signature
/s/ Harry Plonskier /s/ Stephen G. Maloney
- ------------------------------------- -------------------------------------
Name Name
HARRY PLONSKIER STEPHEN G. MALONEY
- ------------------------------------- -------------------------------------
Title Title
VICE PRESIDENT PRESIDENT
- ------------------------------------- -------------------------------------
Date Date
11/8/96 11/8/96
- ------------------------------------- -------------------------------------
Reseller's Mailing Address
49 Old Bloomfield Road
- -------------------------------------
Mountain Lakes, NJ 07046
- -------------------------------------
4
<PAGE> 5
APPENDIX A
SUBSCRIBER AGREEMENT
IMPORTANT: READ THIS AGREEMENT BEFORE USING THE SERVICE PROVIDED BY OMNIPOINT
(hereafter referred to as "OCI"). YOUR USE OF THE SERVICE WILL INDICATE YOUR
ACCEPTANCE OF ALL OF THE FOLLOWING TERMS. If this agreement is unacceptable to
you, do not use the Service. OCI is willing to provide you the Service only if
you agree to be bound by the following terms:
1. Information, data or messages provided through the Service, including but
not limited to, prices or values of various items (e.g., stocks, bonds,
options, futures and currencies), the numbers of shares traded in a given time
period of various items and the times at which the prices or values, or the
numbers of shares traded of various items fall within preset ranges (hereafter
referred to as "Information") has been independently obtained by OCI, from
various securities markets, such as stock exchanges, their affiliates, and
others (collectively, hereafter referred to as "Information Providers") through
sources believed to be reliable, but the accuracy, completeness, timeliness, or
correct sequencing of the Information is not guaranteed by OCI, the Information
Providers, or any parties transmitting or processing the Information (hereafter
referred to as "Information Processors"). (Hereafter, collectively OCI, the
Information Providers and Information Processors are referred to as
"Disseminating Parties".) There may be delays, omissions, or inaccuracies in the
Information. NO DISSEMINATING PARTY WILL BE LIABLE IN ANY WAY TO YOU OR ANY
OTHER PERSON FOR (A) ANY INACCURACY, ERROR OR DELAY IN, OR OMISSION OF, (I) ANY
INFORMATION OR (II) THE TRANSMISSION OR DELIVERY OF ANY SUCH INFORMATION, OR
(B) ANY LOSS OR DAMAGE ARISING FROM OR OCCASIONED BY (I) ANY SUCH INACCURACY,
ERROR, DELAY OR OMISSION, (II) NON-PERFORMANCE, OR (III) INTERRUPTION IN ANY
SUCH INFORMATION, DUE EITHER TO ANY NEGLIGENT ACT OR OMISSION BY ANY
DISSEMINATING PARTY OR TO ANY "FORCE MAJEURE" (I.E., ANY FLOOD, EXTRAORDINARY
WEATHER CONDITIONS, EARTHQUAKE OR OTHER ACT OF GOD, FIRE, WAR, INSURRECTION,
RIOT, LABOR DISPUTE, ACCIDENT, ACTION OF GOVERNMENT, COMMUNICATIONS OR POWER
FAILURE, OR EQUIPMENT OR SOFTWARE MALFUNCTION) OR ANY OTHER CAUSE BEYOND THE
REASONABLE CONTROL OF THE DISSEMINATING PARTIES. THERE IS NO WARRANTY OF
MERCHANT-ABILITY, NO WARRANTY OF FITNESS FOR A PARTICULAR USE, AND NO OTHER
WARRANTY OF ANY KIND, EXPRESS, OR IMPLIED, REGARDING THE INFORMATION OR ANY
ASPECT OF THE SERVICE (INCLUDING BUT NOT LIMITED TO ACCESS TO INFORMATION).
2. IN NO EVENT WILL ANY DISSEMINATING PARTY BE LIABLE TO YOU OR ANYONE ELSE FOR
ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES (INCLUDING BUT NOT
LIMITED TO LOST PROFITS, TRADING LOSSES, AND DAMAGES THAT RESULT FROM
INCONVENIENCE, DELAY OR LOSS OF THE USE OF THE SERVICE), EVEN IF ANY
DISSEMINATING PARTY AS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR
LOSSES. YOU AGREE THAT THE LIABILITY OF ANY DISSEMINATING PARTY, ARISING OUT OF
ANY KIND OF LEGAL CLAIM (WHETHER IN CONTRACT, TORT OR OTHERWISE) IN ANY WAY
CONNECTED WITH THE SERVICE OR THE INFORMATION, WILL NOT EXCEED THE AMOUNT
CHARGED FOR RECEIVING THE INFORMATION. No Disseminating Party shall be liable
for any loss resulting from a cause over which such entity does not have
control, including but not limited to failure of electronic or mechanical
equipment or communication lines, telephone or other interconnect problems,
unauthorized access, theft, operator errors, severe weather, earthquakes,
floods, acts of war, and strikes or other labor problems.
3. OCI, the Information Providers and others have proprietary interest in the
Information. You agree not to reproduce, re transmit, disseminate, sell,
distribute, publish, broadcast, circulate or commercially exploit the
Information in any manner without the express written consent of OCI, and the
relevant Information Provider(s); nor to use the Information for any unlawful
purpose. You agree to comply with reasonable written requests from OCI, and to
protect the Information Providers' and OCI's respective contractual, statutory
and common law rights to the Information and the Service.
4. You acknowledge that neither the Service nor any of the Information is
intended to supply tax or legal advice. Although the Service may provide
Information about how to invest and what to buy, none of this Information is
recommended by any Disseminating Party. The Disseminating Parties do not
recommend any investment advisory
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<PAGE> 6
service or product, nor offer any advise regarding the nature, potential value,
or suitability of any particular security, transaction, or investment strategy.
5. You agree to immediately notify OCI, if you become aware of any of the
following: (a) any loss or theft of your access number(s), and/or password(s),
or (b) any unauthorized use of any of your access number(s) and/or password(s),
or of the Service or any Information.
6. You agree to indemnify and hold the Disseminating Parties harmless from and
against any and all claims, losses, liabilities, costs and expenses (including
but not limited to attorneys' fees) arising from your violation of this
Agreement or any third party's rights.
7. OCI reserves the right to terminate your access to the Service or any portion
of it at its sole discretion, without notice and without limitation, for any
reason whatsoever, including but not limited to the unauthorized use of your
access number(s) and/or password(s), breach of this Agreement, discontinuance of
OCI or loss of access to any Information from any of the Information Providers.
The Information Processors and OCI shall have no liability to you; provided,
however, that if the termination is without cause, OCI shall refund the prorata
portion of any fee which may have been paid by you for the portion of the
Service not furnished to you as of the date of such termination.
8. As a condition of being approved to use the Service, you represent and agree
that you are making this Agreement in your own individual capacity and not on
behalf of a firm, corporation, partnership, trust or association.
9. You acknowledge that, in providing you with the Service, OCI, has relied upon
your agreement to be bound by the term of this Agreement. You further
acknowledge that this Agreement and all other present and future written
agreements between you and OCI, constitute the complete statement of the
agreement between you and OCI, and that the agreement does not include any
other or prior contemporaneous promises, representations or descriptions
regarding the Service or the Information even if it were contained in materials
provided by OCI. This Agreement may be modified only in writing; if OCI sends
you written notice of the modification, your use of the Service after receiving
such notice will indicate your acceptance of the modification. If any provision
of this Agreement is invalid or unenforceable under applicable laws, it is, to
that extent, deemed omitted and the remaining provisions will continue in full
force and effect. This Agreement and performance hereunder will be governed by
and construed in accordance with the laws of the State of New York, as applied
to agreements entered into, no matter where you might legally reside.
10. The terms and conditions of Sections 1, 2, 3 and 6 of this Agreement shall
survive any termination of this Agreement
"COPYRIGHT NOTICES: News Alert System, Sports Alert System, Weather Alert System
and Quote Alert System Copyright 199__ Intelligent Information Incorporated. All
rights reserved. Copyright 19__ Dow Jones & Company, Inc. All Rights Reserved.
Distributed by Intelligent Information Incorporated under license from Dow Jones
& Company, Inc. The headlines (Company News) contained in this Intelligent
Information Service are the sole and exclusive property of Dow Jones & Company,
Inc. and are protected by copyright. Such headlines may not be copied,
republished or redistributed without the prior written consent of Dow Jones &
Company, Inc."
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Information Services
- --------------------------------------------------------------------------------
APPENDIX B
Schedule 1
- --------------------------------------------------------------------------------
Product Pricing
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New York Times General News Processing - Group Approach: $950 per month
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value Package(1): $1.00
Choose from one of the following:
1. Weather Forecast
2. Lottery
3. Horoscope
4. Sports
5. General Business News
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Advanced Package(1): $2.00
Choose a total of two from the value and advanced packages:
6. Health News
7. Company News
8. Sports
9. Quotes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A La Carte: $1.50
Choose any of the following:
10. 20 On Demand Quotes
11. Company News
12. Sports
13. Weather
14. Quotes
15. Horoscope
16. Lottery
17. General Business News
18. Health News
$3.00 19. 40 On Demand Quotes - note: $0.15 per add'l quote
- --------------------------------------------------------------------------------
Notes: All Omnipoint customers not on the basic or entry level service as
described in Omnipoint marketing and sales materials, shall be assigned
to one of these two packages or future variations thereof.
- --------------------------------------------------------------------------------
Omnipoint Communications Inc. & Intelligent Information: Proprietary 7 11/8/96
<PAGE> 8
Information Services
- --------------------------------------------------------------------------------
Schedule 2
Product Description
- --------------------------------------------------------------------------------
Medium Package:
1. Weather Forecast - provides daily city weather forecast.
2. Lottery - provides daily results of prior's day lottery from
one state.
3. Horoscope - provides daily horoscope based on customer's sign.
4. Sports - provides final scores on one team from each of four
major sports.
5. General Business News - provides business headlines daily
during business week.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Premium Package:
6. Health News - provides daily health & wellness update.
7. Company News - provides news headlines on up to three
companies.
8. Sports - provides final scores on one team from each of four
major sports.
9. Quotes - one timed update or price parameter alert plus an end
of day quote (choose 3 companies).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A La Carte
10. 20 On Demand Quotes - up to 20 mobile originated real-time
quotes per month.
11. Company News - provides news headlines on up to three
companies.
12. Sports - provides final scores on one team from each of four
major sports.
13. Weather - provides daily city weather forecast.
14. Quotes - one timed update or price parameter alert plus an
end of day quote (choose 3 companies).
15. Horoscope - provides daily horoscope based on customer's sign.
16. Lottery - provides daily results of prior's day lottery from
one state each morning.
17. General Business News - provides business headlines daily
during business week.
18. Health News - provides daily health & wellness update.
19. 40 On Demand Quotes - up to 40 mobile originated real-time
quotes per month
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Omnipoint Communications Inc. & Intelligent Information: Proprietary 8 11/8/96
<PAGE> 9
Information Services
- --------------------------------------------------------------------------------
Schedule 3
III will provide to Omnipoint customer information services support options. The
options are Operator Customer Service, Internet and IVR, the cost ongoing of
which is included in the Schedule 1 fees.
The cost to develop the Operator Customer Service will be III's expense. III
will provide 24 hour a day, seven day a week customer service to handle updates
of subscriber profiles. A soft hand off from Omnipoint Customer Service may be
the link used to forward subscribers to III's operators. A toll free number
could be provided to subscribers to call III directly as well.
The Internet solution is to be utilized directly by the end user. This solution
would allow the subscriber to go onto the Omnipoint home page, and hot key over
to a customized profile update page. This page will be developed and maintained
by III, but made to look and feel like the Omnipoint home page. The cost of
implementing the Internet generic profile updating page will be at III's
expense. The cost of modifying the generic profile updating page, if needed, is
a factor of the amount of change required and would be by separate agreement.
III's Internet partner, Interport Communications Corp. will provide a quote on
making these changes once the definition has been provided.
III can also provide an integrated IVR to Omnipoint. The capabilities of this
system would be varied. The most simple form would be a system for a subscriber
to call into in order to update their customer profile. The IVR could be
enhanced for mobile initiation of a subscriber profile. The IVR could also allow
the subscriber the ability to request specific information be sent through the
SMS to their handset. Ultimately, this IVR could allow the customer the
opportunity to retrieve information in an audio format. The level of services
available would be determined based on the customer's level of service (basic,
value, advanced). The cost of implementing the basic level of a profile updating
IVR will be at III's expense.
- --------------------------------------------------------------------------------
Omnipoint Communications Inc. & Intelligent Information: Proprietary 9 11/8/96
<PAGE> 10
Information Services
- --------------------------------------------------------------------------------
Schedule 4
Volume Discounts
# of subs
- ---------
40,000 - 59,999 4%
60,000 - 79,999 5%
80,000 - 99,999 6%
100,000+ 7%
Schedule 5
Miscellaneous
III will provide up to 500 demos, value or advanced at any one time at no
charge to Omnipoint for use by its affiliates or employees.
III will provide up to 12 on demand information services accounts to Omnipoint
for use by senior management.
III will participate with Omnipoint promotions on an ad hoc basis.
- --------------------------------------------------------------------------------
Omnipoint Communications Inc. & Intelligent Information: Proprietary 10 11/8/96
<PAGE> 1
Exhibit 10.12a
FIRST AMENDMENT TO INTELLIGENT INFORMATION INCORPORATED SERVICE
RESELLER AGREEMENT
THIS FIRST AMENDMENT is made this 1st day of JULY, 1998, by and between
Intelligent Information Incorporated ("III"), a Delaware corporation and
Omnipoint Communications Services, LLC, a Delaware limited liability company,
assignee of Omnipoint Communications, Inc. ("Omnipoint"), to the Intelligent
Information Incorporated Service Reseller Agreement by and between III and
Omnipoint Communications, Inc.
WHEREAS III and Omnipoint have mutually agreed to engage in the delivery
of new and/or additional services, promotions and activities relating to
intelligent information based on data from various sources ("Information
Providers") to Omnipoint subscribers owning text displaying wireless devises
either at prearranged times or as data conditions change by prearranged
parameters; and
WHEREAS the parties have agreed to a pricing structure to govern the new
and/or additional information service offerings of III;
NOW, THEREFORE for good and valuable consideration, the receipt and
sufficiency of which is hereby upon, the parties hereby agree as follows:
1. Effective upon the date above, Appendix B of the Agreement is amended to
include, in addition to its current contents, Schedules 6, 7 and Exhibit
1, hereof.
2. The parties hereby agree to take part in the activities described in
Schedule 7 hereof, which are aimed toward the growth and development of
information services. All costs for any given program shall be discussed
and agreed to by the parties prior to implementation of such program.
Neither party shall be obligated for any costs not expressly agreed to by
the party.
3. III shall establish and maintain until modified or terminated by mutual
agreement of the parties, within ninety (90) days of the date of this
Amendment, a cooperative advertising fund described in Exhibit 1 hereof.
4. The terms of this Amendment are hereby deemed confidential according to
the terms of the Non-Disclosure Agreement executed between the parties.
5. In the event of conflict between this Amendment and the Agreement, this
Amendment shall prevail.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound have hereby
cause this First Amendment to the Agreement to be duly signed the day and year
first above written.
Omnipoint Communications Services, LLC
By: /s/ Gary D. Cuccio
-------------------------------
Name/Title: Gary D. Cuccio Date 6/29/98
------------------------ -------------
Intelligent Information Incorporated
By: /s/ Stephen G. Maloney
-------------------------------
Name/Title: STEPHEN MALONEY/PRES. Date 7/5/98
------------------------ -------------
Omnipoint Confidential 1
<PAGE> 2
SCHEDULE 6
1. III will cooperate with Omnipoint in the process of moving existing
Subscribers to the Products described in Schedules 1 and 2, to the new
Services described herein.
2. III will report to Omnipoint monthly by the fifth day of each month the
number of Subscribers on its systems by type of Service. Omnipoint will no
longer be required to prepare this monthly report to III. III will prepare
a detailed reconciliation report, in order that the Subscribers, reported
by Omnipoint and invoiced by III heretofore, can be reconciled. The
parties will cooperate to reconcile the account.
Service Provisions and Cost Schedule
A. III will provide to Omnipoint the ability to offer its
subscribers a choice of one of the following FOX-branded Basic
Services at a cost to Omnipoint of $0.10 per subscriber per month:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Choice of One Basic Service Content ad Delivery
Plus Reminder Alert
- --------------------------------------------------------------------------------
<S> <C>
FOX News Headlines 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
FOX Business News 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
FOX Sports 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
TV Guide Entertainment 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
Reminder Alert As required by Subscriber
- --------------------------------------------------------------------------------
</TABLE>
B. In addition, Omnipoint Subscribers may elect to subscribe to any
number of the III "Single Service Selection" services below at the
following cost to Omnipoint:
<TABLE>
<CAPTION>
---------------------------------------------------------
Aggregate Single Cost to Omnipoint per Subscriber
Service Selection per month per Selection
Subscriber Volume
---------------------------------------------------------
<S> <C>
0 to 9,999 $.60
---------------------------------------------------------
10,000 to 19,999 .55
---------------------------------------------------------
20,000+ .50
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Single Service Selections Delivery
- --------------------------------------------------------------------------------
<S> <C>
FOX News Headlines 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
FOX Business News 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
FOX Sports 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
TV Guide Entertainment 2 messages per day, plus breaking news
- --------------------------------------------------------------------------------
Reminder Alert As required by Subscriber
- --------------------------------------------------------------------------------
Company News 3 publicly traded companies delivered as news occurs
- --------------------------------------------------------------------------------
Stock Quotes 3 publicly traded companies as news occurs
- --------------------------------------------------------------------------------
Horoscopes 1 sign delivered daily
- --------------------------------------------------------------------------------
Health News As occurs
- --------------------------------------------------------------------------------
Lottery Daily, by state
- --------------------------------------------------------------------------------
Golf Report Leaderboard Finals
- --------------------------------------------------------------------------------
Tennis Line TBD
- --------------------------------------------------------------------------------
In-game Sports Scores one team, end of period, quarter, plus final score
- --------------------------------------------------------------------------------
</TABLE>
Omnipoint Confidential 2
<PAGE> 3
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Weather Reports 3-day report, daily, plus breaking weather
- --------------------------------------------------------------------------------
Severe Weather Reports Hurricane, Tornado, Flood warnings and watches
- --------------------------------------------------------------------------------
Marine Forecast Current conditions and forecast by city
- --------------------------------------------------------------------------------
Ski Reports Resort area, daily conditions in season
- --------------------------------------------------------------------------------
</TABLE>
C. Omnipoint Subscribers may additionally elect to receive the
following Information Service Packages at the following cost to
Omnipoint:
<TABLE>
<CAPTION>
-----------------------------------------------------------
Aggregate Information Cost to Omnipoint per subscriber
Service Package per Package per month
Subscriber Volumes
-----------------------------------------------------------
<S> <C>
0 to 4,999 $1.05
-----------------------------------------------------------
5,000 to 9,999 .99
-----------------------------------------------------------
10,000+ .95
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Information Service Content and Delivery
Packages* (See Basic and Single Service for descriptions)
- --------------------------------------------------------------------------------
<S> <C>
FOX News Package FOX News, Business Report, Sports News, TV Guide
- --------------------------------------------------------------------------------
Pro and College Sports Choice of 4 Teams: in-game scores, pre and
post-game news
- --------------------------------------------------------------------------------
Entertainment Package Horoscope, Soap Operas, TV Guide
- --------------------------------------------------------------------------------
Business Package FOX Business Report, Stocks Quotes, Dow Jones Update
- --------------------------------------------------------------------------------
Health Package Professional/Consumer: TBD
- --------------------------------------------------------------------------------
</TABLE>
* Each Information Service Package includes Reminder Alert Service
D. Omnipoint Subscribers may additionally elect to receive the
following Premium Service Packages at a cost to Omnipoint per
subscriber per month as indicated below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Premium Information Content
Service Packages
- --------------------------------------------------------------------------------
<S> <C>
Financial Reporter o Stock Alerts (5 Publicly Trade Companies), parameters
$4.95 providing up to two Alters per day.
o Company News (5 Publicly Trade Companies)
o Stock Quotes (5 Publicly Trade Companies)
o Reminder Alert Service
- --------------------------------------------------------------------------------
</TABLE>
E. Omnipoint Subscribers may elect to receive the following
"On-Demand" Services at a cost to Omnipoint of $0.08 per
transaction:
--------------------------------------
On-Demand Services
--------------------------------------
A Stock Quote
--------------------------------------
A Weather Forecast for one city
--------------------------------------
A Sports Score for one team
--------------------------------------
F. Nothing in this agreement shall restrict or limit Omnipoint's
ability to determine pricing charged to its subscribers for any of
the Services. Omnipoint is free to market the services under product
names of its own choosing.
Omnipoint Confidential 3
<PAGE> 4
G. III certifies that it will test to ensure the systems and
services provided to Omnipoint under this agreement will continue to
perform correctly through the year 2000 transition. Such testing
shall occur prior to 4th Quarter 1999; III will provide Omnipoint
the opportunity to review the test plan prior to testing, after
which III shall implement and report upon the status of said tests.
Omnipoint Confidential 4
<PAGE> 5
SCHEDULE 7
Marketing and Promotional Activities
1. Upon the execution of this Amendment, III will issue a $0.10 credit each
month to Omnipoint for each Subscriber receiving one or more Basic
Services.
2. The parties will periodically introduce new service offerings, including
promotional services (e.g., World Cup, PGA Tour, US Open, NFL packages).
3. III will attach ("tag") advertising phrases and/or an advertiser's name to
messages generated by the services. III shall notify Omnipoint of the
final text of any proposed advertising phrase and/or advertiser name no
less than three business days prior to execution.
o Omnipoint shall have the right to refuse, in its sole discretion,
the delivery of any advertiser and/or message tag, to all or any
subset, including individual Subscribers, of Omnipoint's Subscriber
base.
o Notwithstanding this provision, Omnipoint agrees that the parties
will strive to deliver a minimum of one (1) advertising `tag' per
day per Subscriber.
o III will credit to Omnipoint 20% of the net revenue derived from
advertising and commerce.
o Omnipoint may insert advertising tags on 1/3 of the messages sent to
all Subscribers. III may not alter Omnipoint's provided tags.
Omnipoint may direct the distribution of messages for such tags.
4. Omnipoint will create quarterly communications to the existing subscriber
base utilizing some or all of the following:
o Direct Mail
o Bill Inserts, Bill Messages
o Customer Newsletter
o Press releases, where appropriate
5. Omnipoint will create new collateral detailing the information services
described in Schedule 6.
6. III will work with Omnipoint to create and deliver advertising messages to
promote information services.
7. Omnipoint will explore the development of an IVR Option within the
Customer Care Automated Response System Menu (i.e., press `X' to order -->
route to Y CC team).
8. Omnipoint will explore commissioning the sales force for the sale of
information services.
9. Omnipoint will explore the option of promoting "Start your day with
Omnipoint's Wireless News Service," or similar information services
campaign.
Implementation Details
1. III will design and implement updated Customer Care Provisioning Screens,
including a conversion feature to allow the Subscriber to move from their
existing product(s) to the new services by selecting the new services and
thereby deleting their old selections, prior to the commercial launch of
the proposed services contained herein.
2. The parties will address III Provisioning Functionality and Billing/TRIS+
integration requirements.
3. The parties will update existing Service Menu Offerings, including
deleting or changing services over time, as appropriate.
4. III will develop end-user Internet solution with billing system interface.
5. III will increase the number of characters per SMS message (i.e., towards
utilizing between 150 and 160 characters per message).
6. Omnipoint will develop Customer Care on-hold message educating listeners
about the availability of information services.
7. Omnipoint will update the information services portion of the current
omnipoint.com web site.
8. III will develop an end-user Internet solution and Omnipoint will assist
with billing system and Internet interface.
9. III will augment the single selection services with additional FOX content
(e.g., Health and Sci-Tech).
Omnipoint Confidential 5
<PAGE> 6
10. Omnipoint will retain the right to request the omission of specific
companies from the FOX Business Report category; III will respond to such
requests by omitting the named companies or message entirely.
11. Omnipoint will increase its communications and SMSC throughput and backup
facilities to accommodate the volume of messages anticipated by the
changes contemplated herein.
Transitional Payment Obligations
1. Upon migration of existing Value and Advanced Subscribers to the new
Services described in Schedule 6, Omnipoint's cost will be as described
in Schedule 6 for such services.
2. Schedules 1 through 5 are not applicable to or for Subscribers receiving
the new services provided in Schedule 6.
Omnipoint Confidential 6
<PAGE> 7
EXHIBIT 1
III Co-operative Advertising Program Guidelines
Co-op Program Eligibility
All North American, Intelligent Information Incorporated (III) business partners
are eligible. To participate in the program, business partners must complete a
Co-op program registration form.
Co-op Program Accruals
For the period July 1, 1998 through December 31, 1998, standard Co-op will
accrue at a rate equal to 3% of the actual amounts invoiced for the period,
calculated on a quarterly basis. Accrued Co-op funds belong to III until
released for reimbursement of claims for eligible and approved activities. For
the purposes of this agreement, the Omnipoint-III Co-op fund will be maintained
separately and used exclusively for Omnipoint Co-op activities.
All information services (content) billings are considered part of the
price. No money is accrued for programming fees, telecommunication connections,
or other expenses or fees.
III reserves the right to change the amount of the accrual and the
eligible products and options at any time with sixty days (60) prior written
notice.
III reserves the right to introduce bonus programs throughout the program
year.
Co-op Program Guidelines
1. The "Powered by III" logo must appear in all advertising to qualify for
Co-op reimbursement.
2. III will provide "Powered by III" logo and usage guidelines which must be
followed to qualify for reimbursement.
3. No competitors' information services products may be featured in the same
ad.
4. Reimbursement percentage for qualified ads is 50% of the net cost of the
business partner's advertising.
5. If ad is not dedicated to III's information services, III will reimburse
the pro-rated III information services portion of the ad only.
6. To receive credit for print media, III requires a "tear-sheet" of the
advertisement and receipt copy of paid media invoice attached to the Co-op
claims submission form.
7. To receive credit for electronic media, III requires copies of commercial,
station affidavit of performance and receipt copy of paid station invoices
attached to the Co-op claims submission form.
8. All claims must be postmarked within 60 days from the date of advertising
or other promotional programs and can be submitted no later than the May
31, 1999 deadline. Claims not received by this date will be denied and any
unused balance will be forfeited.
9. III reserves the right to suspend payment of claims if business partner's
account is not current. If account is not made current prior to filing
deadline, all money accrued will be forfeited. Co-op funds can not be
applied to amount owed.
10. III reserves the right to change this program, including the amount of the
accrual and eligible products and options at any time without prior
notice.
11. Trade/barter ads, agency fees/commissions, discounts and taxes are not
reimbursable.
12. All advertising must be in compliance with local, state and federal laws
and must be in good taste. Each customer is solely responsible for any
such advertising. III expressly disclaims any liability or responsibility
for any advertising or promotion by the customer.
13. All claims and text regarding III information services must be truthful.
Any false or misleading representation will result in a denial of the
co-op claim.
14. Program participants can choose method of reimbursement on the claims
submission form. Options are credit applied to the next invoice after
approval, or check.
Omnipoint Confidential 7
<PAGE> 8
Advertising Will Comply with Intelligent Information Incorporated Co-op Program
Media Usage Guidelines as Outlined in Annex A.
Annex A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Documentation Advertising
Media Type Expenses Covered Required Requirements
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Print o Media Cost o Co-op Claims o Ad must conform
o Newspapers o Production Submission Form to III Co-op
o Magazines o 1 original ad per program guidelines
publication and "Powered by
showing name, iii" logo usage
date and location of guidelines
publication (tear o Prior approvals are
sheet). not required
o Photocopies are not
acceptable
o Copy of paid
invoice
o Multiple
Appearance Ads
must also include
"Newspaper Ad
Multiple
Appearance
Certification Form"
- -------------------------------------------------------------------------------------------------
Direct Mail/Retail o Net Printing Cost o Co-op Claims o Ad must conform
o Statement Stuffers o Production Submission Form to III Co-op
o Newsletters o Mailing List o 2 original samples program guidelines
o Postcards Purchase/Rental o Copy of paid and "Powered by
invoice iii" logo usage
guidelines
o Prior approvals are
not required
- -------------------------------------------------------------------------------------------------
TV & Radio o Media Cost o Co-op Claims o "Powered by iii"
Submission Form must be mentioned
o Copy of paid at least once.
invoice with details o Prior approvals are
of spot length, air not required
dates, number of
spots aired, cost per
spot, and total cost
o Station affidavit
and notarized copy
of video/audiotape
used
- -------------------------------------------------------------------------------------------------
Internet o Banner Advertising o Co-op Claims o Ad must conform
Submission Form to III Co-op
o Copy of paid program guidelines
invoice and "Powered by
o Copy of iii" logo usage
advertisement guidelines
o Prior approvals are
not required
- -------------------------------------------------------------------------------------------------
</TABLE>
Omnipoint Confidential 8
<PAGE> 1
EXHIBIT 10.13
SERVICES AGREEMENT
BETWEEN
INTELLIGENT INFORMATION INCORPORATED
AND
SOUTHWESTERN BELL MOBILE SYSTEMS, INC.
AND SOUTHWESTERN BELL WIRELESS INC.
THIS AGREEMENT, EFFECTIVE JUNE 9, 1998 (THE "AGREEMENT") IS BETWEEN INTELLIGENT
INFORMATION INCORPORATED, A DELAWARE CORPORATION ("III") AND SOUTHWESTERN BELL
MOBILE SYSTEMS, INC., D/B/A CELLULAR ONE AND SOUTHWESTERN BELL WIRELESS INC.
(COLLECTIVELY "SBMS").
WHEREAS, III owns computer software and has related procedures (hereinafter
referred to as "Systems") and by utilizing these Systems provides Services
that deliver "intelligent information" (the "Services") based on data from
various sources (the "Information Providers") to text displaying wireless
devices either at prearranged times or as data conditions change by
prearranged parameters; and
WHEREAS, SBMS is desirous of providing these Services to its customers
(hereinafter such customers receiving Service(s) are referred to as
"Subscribers"); and
WHEREAS, this Agreement covers the provision of Services to SBMS for resale
to its Subscribers, as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby confessed and acknowledged, it is agreed as
follows:
1. PROVISION OF SERVICES.
a. III agrees to provide the Services to SBMS for resale to its
Subscribers, under the terms and conditions contained herein. Individual
Services may be combined into "Packages."
b. A complete list of all the Services available, including times
and/or parameters at which the Services will be delivered, is attached hereto as
part of Appendix B. SBMS is not bound to offer all these services, but may
choose services and create packages based on this list.
c. III will continue to offer the Services initially listed on Appendix
B for at least two years from the effective date hereof. Thereafter, III has the
right to modify Appendix B to alter or remove specific Services only upon at
least 120 days advance written notice to SBMS. III may add Services to Appendix
B at any time upon notice to SBMS and such Services will thereafter be subject
to the requirements of this Agreement and this Paragraph 1.c.
d. SBMS may request that III provide a new type of Service not
available on Appendix B, and may identify specific Information Providers who
provide the data required for such Service. III agrees to work in good faith to
acquire such data (either from an identified provider or other provider(s)) and
make it available to SBMS under this Agreement, if it can do so on commercially
reasonable terms. Notwithstanding the provisions of paragraph 7 below, any such
Services shall be provided by III exclusively to SBMS and to no other III
customer in the geographic areas in which SBMS operates for a period of one
year.
2. TERM; TERMINATION.
a. This Agreement shall become effective upon the date stated above and
shall remain in effect until terminated or canceled as provided herein.
b. For the purposes of this Agreement "cancel or "cancellation" shall
mean the ending of this Agreement for cause due to an uncured breach of the
defaulting party.
Page 1
<PAGE> 2
"Terminate" or "termination" shall mean the ending of this Agreement for
convenience and without cause.
c. SBMS may terminate this Agreement upon one hundred twenty (120) days
prior written notice to III setting forth the effective date of termination. III
may terminate this Agreement upon one hundred eighty (180) days prior written
notice to SBMS setting forth the effective date of termination.
d. Upon the termination or cancellation of this Agreement SBMS shall
pay III for satisfactory Services provided up to the effective date of such
termination or cancellation.
3. ACCESS PORT. SBMS shall provide and maintain the necessary computer access
port(s) into its system for use by III in delivering messages containing
information addressed to SBMS' Subscribers. The protocol used on this port shall
be mutually agreeable to SBMS and III. SBMS shall pay communication costs
between SBMS and III, including but not limited to, connections required for
message delivery and customer provisioning.
4. SUBSCRIBER AGREEMENT. SBMS shall use its best efforts to deliver a subscriber
agreement in substantially the form of that attached hereto as Appendix A (the
"Subscriber Agreement") to each of its Subscribers prior to activation of
Service(s) to that Subscriber along with any description of the Services
delivered to the Subscribers. SBMS may or may not require its Subscribers to
sign the Subscriber Agreement.
SBMS HEREBY AGREES TO INDEMNIFY AND HOLD III AND/OR ANY INFORMATION PROVIDERS
LISTED IN APPENDIX B AND USED BY III IN THE PROVIDING OF SERVICES TO SBMS
HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES, LOSSES, OR EXPENSES SUFFERED OR
PAID AS A RESULT OF ANY CLAIMS, DEMANDS, SUITS, CAUSES OF ACTION, PROCEEDINGS,
AWARDS, JUDGMENTS, AND LIABILITIES (INCLUDING REASONABLE ATTORNEY'S FEES)
INCURRED IN LITIGATION BY OR AGAINST III AND/OR ANY INFORMATION PROVIDERS BY
REASON OF SBMS' FAILURE TO DELIVER THE SUBSCRIBER AGREEMENT TO ANY SUBSCRIBER,
PROVIDED THAT (1) THE PARTY SEEKING INDEMNITY PROVIDES PROMPT NOTICE TO SBMS OF
ANY SUCH CLAIM OR SUIT, AND (2) SBMS SHALL HAVE THE OPTION TO UNDERTAKE AND
CONDUCT THE DEFENSE OF ANY SUIT SO BROUGHT AND THAT NO SETTLEMENT OF ANY SUCH
CLAIM OR SUIT IS TO BE MADE WITHOUT THE PRIOR WRITTEN CONSENT OF SBMS.
III HEREBY AGREES TO INDEMNIFY AND HOLD SBMS HARMLESS FROM AND AGAINST ANY
AND ALL DAMAGES, LOSSES, OR EXPENSES SUFFERED OR PAID AS A RESULT OF ANY CLAIMS,
DEMANDS, SUITS, CAUSES OF ACTION, PROCEEDINGS, AWARDS, JUDGMENTS, AND
LIABILITIES (INCLUDING REASONABLE ATTORNEY'S FEES) INCURRED IN LITIGATION BY OR
AGAINST SBMS AS A RESULT OF THE INFORMATION OR DATA PROVIDED TO SBMS OR ITS
SUBSCRIBERS, EXCEPT IN THOSE CASES IN WHICH SBMS FAILED TO DELIVER THE
SUBSCRIBER AGREEMENT TO THE SUBSCRIBER.
5. CHARGES.
a. The Package and Service rates payable by SBMS per Subscriber are
listed in Appendix B, and may not be increased by III for one year from the
effective date of this Agreement. The rates may thereafter be adjusted for all
participating markets at the same time on an annual basis thereafter upon sixty
(60) days advance written notice to SBMS, subject to the provisions of
Sub-paragraph b. below. Such adjustment shall not exceed five percent (5%) per
year.
b. III represents that the charges and any increases thereof are and
will remain as low as those offered to any of III's other customers for the
Services. If III decreases its prices to any customer, such decrease shall
automatically extend to SBMS. SBMS may audit III in accordance with Section 8
"Records and Audits" to assure III compliance with this section.
c. The charges in any invoice shall be calculated and billed as
follows: the total number of Subscribers on III Systems as of the 15th day of
the month times the rate per
Page 2
<PAGE> 3
Subscriber for each Package or Service shall be billed at month end. Prior to
the 5th day of each month that this Agreement is effective, III shall provide to
SBMS market-based invoices for such charges along with a count of all
Subscribers on III Systems by Package and/or Service type by market as of the
15th day of the prior calendar month and a total message sent count by market
for Services for the prior calendar month. A listing of SBMS' markets is
attached as Appendix E and will be updated by SBMS as needed. SBMS may
periodically audit III's records in accordance with Section 8, to assure
accurate billing to SBMS.
d. Invoices and reports in mutually agreed upon formats of provisioned
Mobile Identification Numbers (MIN's) shall be sent to the individual markets at
the addresses shown on Appendix E. The terms and conditions included in any
invoice shall be deemed to be solely for the convenience of III and will not
alter or expand the terms and conditions of this Agreement or SBMS' obligations
hereunder. SBMS shall have 30 days from receipt to pay III's invoice, unless the
invoice is in dispute. In the event that SBMS in good faith disputes any III
invoice, the parties shall cooperate to resolve such dispute expeditiously. SBMS
shall provide a management contact assigned the monthly responsibility to
coordinate and insure proper and timely payments from the markets to III. These
contacts are listed as Business Escalation in Appendix E.
e. Any preexisting SBMS related Subscribers, e.g., executives, demos,
etc. will be assigned to a Package or Service, subject to the appropriate
charges, upon the effective date of this Agreement
f. III shall pay to SBMS the financial incentives set forth in Appendix
D.
6. MARKETING REPORTS. Prior to the 5th day of each month that this Agreement is
effective, III shall provide to SBMS the following reports, broken down by
individual market, subtotalled for the 5-state in-region area and the Cellular
One markets, and totalled for all markets:
- Number of Subscribers as of the 15th of the month and at month
end;
- Number of Subscribers by information category;
- Number of messages sent;
- Number of changes (total and by type of change (add/delete));
- Number of provisioning web hits by Subscribers vs. Customer
Service.
7. NONEXCLUSIVE MARKET RIGHTS.
a. This is a nonexclusive agreement. SBMS reserves the right to
contract with others for any of the products or services it may require.
b. III shall have the right, at its sole discretion to sell or license
the Services to any other person or company for any purpose, except as set forth
in paragraph 1.d. above.
8. RECORDS AND AUDITS. III and SBMS shall maintain accurate and complete records
with respect to the Services and Subscribers' purchases of Services and allow
each other access to such records in the event of a dispute or a reasonable
request from SBMS for an audit of the Subscribers on III's Systems. III and SBMS
shall retain such records for a period or 4 years. III shall maintain accurate
records of all matters which relate to III's obligations hereunder in accordance
with generally accepted accounting principles and practices, uniformly and
consistently applied in a format that will permit audit. Unless otherwise
provided in the Agreement, III shall retain such records for a period of three
(3) years from the date of final payment under this Agreement. To the extent
that such records may be relevant in determining if III is complying with its
obligations under this Agreement, SBMS and its authorized representatives shall
have access to such records for inspection and audit during normal business
hours after a twenty day notice is provided.
9. WARRANTIES.
Page 3
<PAGE> 4
a. III warrants that III's Systems and Services will be available 7
days a week, 24 hours a day ("Standard Coverage Period") except for mutually
agreed to planned maintenance periods. III will provide SBMS prior written
notice of all planned maintenance periods. The Service shall be provided
promptly and professionally and shall conform to the Delivery Parameters set
forth in Appendix B. III shall maintain an effective backup system for disaster
recovery to allow for the uninterrupted delivery of information, including an
action plan in the event one of the Information Providers has system problems.
b. III warrants that all of its hardware and/or software and Systems,
including embedded third party software, that is used in providing Services
hereunder prior to, during, and after the calendar year 2000, includes and will
continue to include, at no additional cost to SBMS, Year 2000 capability. For
purposes of this Agreement, Year 2000 capability means that the hardware and/or
software will: (i) read, compute, store, process, display and print data
involving dates, including single century and multi-century formulae, and will
not cause computational, display, storage or other errors resulting from the
inability to accurately or correctly handle dates, including the Year 2000 and
any subsequent leap years; and (ii) include the indication of century in all
date-related user interface functions, data fields, and generated codes; and
(iii) be interoperable with other software used by SBMS which may deliver
records to such hardware and/or software and/or Systems, receive records from
such hardware and/or software or interact with such hardware and/or software in
the course of processing dates. As part of this warranty, III agrees to upgrade
or revise its hardware, software, and Systems to comply with Year 2000
capability.
10. INDEPENDENT CONTRACTOR. III represents that it is engaged in a separate and
independent business and is not an employee or agent of SBMS. III is responsible
for compliance with all applicable laws, including laws regarding III's
obligations as an independent contractor under the law.
11. INFRINGEMENT INDEMNITY. III, at its expense, shall indemnify SBMS from and
defend or settle any claim or action brought against SBMS to the extent that it
is based on a claim that any Services, software or other materials furnished
hereunder infringed a patent, copyright, trademark, service mark, trade secret,
or other legally protected proprietary right. III shall pay all costs, fees
(including attorneys' fees) and damages which may be incurred by SBMS for any
such claim or action or the settlement thereof.
12. INSURANCE. III shall maintain at its expense, commercial general liability
insurance (CGL) to provide protection against any claims including claims for
personal injury or property damage arising from this Agreement, for the duration
of this Agreement. CGL insurance shall have limits not less than $1,000,000
combined single limit per occurrence. III shall name SBC Communications, Inc.,
Southwestern Bell Mobile Systems, Inc., and Southwestern Bell Wireless, Inc., as
"Additional Insureds" on III's insurance policy.
13. PRODUCT SERVICE NAMES AND TRADEMARKS. SBMS may, but is not required to, use
the name "Quote Alert," "News Alert," "Weather Alert," or "Sports Alert" in its
marketing efforts. SBMS shall take appropriate measures to insure that the
copyright notices defined for each Service in Appendix B, are made known to all
Subscribers, including displaying the copyright notice with each Subscriber or
Customer Agreement and in all instructions for use of the Packages and Services.
SBMS may use the trademarks, service marks and logos as listed in Appendix C
(the "Trademarks") in connection with the marketing and providing of Products to
Subscribers:
a. SBMS may at all times use and clearly show in connection with the
Products, associated advertising, labels and packaging, the Trademarks and any
appropriate
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legends, markings, and/or notices of property right as may be required by III
from time to time. Depending on the trademarks used, the current legend or
notice requirements are:
i. A TM should appear adjacent to the Trademarks.
ii. A legend should appear indicating that the Trademark is a
trademark of Intelligent Information Incorporated. For example, "Powered by iii
is a registered trademark of Intelligent Information Incorporated".
b. SBMS agrees to submit to III a sample of the proposed use of the
Trademarks on or with the Products, boxes, containers and/or packaging, and III
shall have approved such proposed use in writing prior to any sale of the
Products using such Trademarks in the proposed manner or any other public use of
the Trademarks in the proposed manner by SBMS. Approval will not be unreasonably
withheld, and if III does not provide a written response within ten days of the
receipt of such a request, approval shall be considered granted.
c. SBMS will not harm, misuse or bring into disrepute the Trademarks.
14. SUBSCRIBER INFORMATION.
a. SBMS acknowledges that III is required to provide certain
information relating to the usage of the Products to the Information Providers.
Such information may include:
i.) the number of Subscribers registered in III Systems at
midnight of each day;
ii.) the number and types of messages sent by III Systems;
iii.) the number and types of Subscriber requests registered
in III Systems; and
iv.) any additional information as reasonably required by the
Information Providers, from time-to-time.
III warrants to SBMS that any such data pertaining to specific Subscriber
identification will remain proprietary and strictly confidential and will not be
disclosed outside of III except with SBMS' prior written approval. Any
disclosure of information by III to Information Providers shall be done under an
appropriate nondisclosure agreement designed to protect the confidentiality of
SBMS' information including Subscriber information.
b. Individually identifiable or specific Subscriber Information is
subject to certain privacy laws. III is prohibited from and shall instruct its
Information Providers that they are prohibited from using specific or
individually identifiable Subscriber Information for marketing lists or other
marketing purposes, resale, or for any other purpose other than for the purpose
of providing Services hereunder.
15. SUBSCRIBER SERVICE AND AMENDMENTS.
a. SBMS acknowledges its responsibility to provide a customer
representative to serve Subscribers for the purpose of adding, changing and
deleting parameters and Service requests in the Subscriber's database maintained
in III Systems, and III will be responsible for receiving and effecting any
additions, changes or deletions in Subscriber information (i) within 24 hours of
receipt of written requests from the SBMS, or (ii) in real time for information
sent via the Internet. III will develop and maintain a mechanism for SBMS to
interface with III's systems for above purposes. III will bear the costs of
developing and maintaining a secure web provisioning page for each participating
market's customer service center and customers, according to Appendix B
Description of Profile Maintenance. SBMS will
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bear the costs of developing its own web page and links. III will maintain as a
backup a facsimile machine for receipt of such requests.
b. III is responsible for provisioning the Services requested by SBMS
for its Subscribers and will ensure that each Subscriber receives only the
subscribed-to Services and pre-approved messages.
c. III will cause a one-time "welcome message" to be delivered as the
first message to each wireless device for each new Subscriber and Service, at no
additional charge to SBMS. SBMS will draft the message and may alter it from
time to time. Such message may include, but is not limited to, a greeting and a
reminder to review the Subscriber Agreement.
16. INFORMATION.
I. In the performance of its obligations under this Agreement, either party may
receive or access Information (the "Receiving Party") from the other (the
"Disclosing Party") that may contain material that is proprietary or
confidential, that relates to patentable inventions with respect to which
patents may not have been issued or for which patent applications may not have
been filed, or that is subject to applicable laws regarding secrecy of
communications or trade secrets. Any such Information must be clearly marked by
the Disclosing Party as Confidential or Proprietary in order to receive
confidential treatment under the terms of this Paragraph. Notwithstanding the
foregoing, the parties agree that all information about SBMS Subscribers and
customers, including but not limited to, number of customers or Subscribers,
their names, addresses, billing information, type or quantity of Services
selected and wireless access numbers (MINs) and about III Services being
developed or available but not being provided hereunder, constitutes
confidential Information under this Agreement, regardless of whether it is
marked as such. Accordingly, the Receiving Party agrees:
A. that all such Information so acquired by it or its employees,
contractors or agents (individually and collectively "personnel") hereunder
shall be and shall remain the Disclosing Party's exclusive property;
B. to inform all of its personnel engaged in handling such Information
of the proprietary or confidential character of such Information and of the
existence of applicable laws regarding secrecy of communications;
C. to limit access to such Information to its personnel having a need
to know;
D. to keep, and have its personnel who receive or access such
Information keep, such Information confidential;
E. to return promptly or certify that it has destroyed, any copies of
such Information in written, graphic or other tangible from upon the Disclosing
Party's request; and
F. to use such Information only for purposes of this Agreement and for
other purposes only upon such terms as may be agreed upon between the parties in
writing.
II. Notwithstanding the foregoing, nothing contained in this Section 16 shall
restrict either party in the use or disclosure of any Information from the other
party which:
A. is already in such party's possession without accompanying use or
disclosure restriction prior to its receipt from the other party; or
B. is or subsequently becomes publicly available through no fault of
the Receiving Party; or
C. is rightfully received by the Receiving Party from a third party
without accompanying use or disclosure restriction; or
D. is independently developed by the Receiving Party or a third party;
or
E. is approved in writing for release by the Disclosing Party.
17. LIMITATION OF LIABILITY
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a. EXCEPT FOR THIRD PARTY CLAIMS OF INFRINGEMENT, OR CLAIMS OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER HEREUNDER FOR ANY DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
INCLUDING BUT NOT LIMITED TO ANTICIPATED OR LOST PROFITS FOR ANY DEFECTS, DELAYS
OR FAILURES OF TRANSMISSION OR RECEPTION OF INFORMATION PROCESSED OR TO BE
PROCESSED IN ANY WAY OR MANNER BY III OR SBMS.
b. NOTWITHSTANDING 17 a. ABOVE, IN THE EVENT THAT III'S SYSTEM IS DOWN
OR MATERIALLY DEGRADED, PROVIDED SUCH FAILURE OR DEGRADATION IS NOT BASED ON ANY
ACTIONS OR LACK THEREOF BY SBMS, FOR MORE THAN 24 HOURS IN ANY SINGLE OCCURRENCE
DURING THE STANDARD COVERAGE PERIOD, SBMS SHALL RECEIVE A PRORATED REFUND, IN
CASH, OF THE MONTHLY SERVICE CHARGE FOR EACH SUBSCRIBER AFFECTED BY THE DOWNTIME
OR SYSTEM DEGRADATION STARTING FROM THE TIME THE SERVICE WAS DOWN OR SEVERELY
DEGRADED UNTIL THE TIME SERVICE IS RESTORED. THIS REFUND IS IN ADDITION TO SBMS'
RIGHTS OR REMEDIES UNDER THE SECTION ENTITLED "CANCELLATION" OF THIS AGREEMENT.
18. NONASSIGNMENT. Except as otherwise provided by law, neither party shall
assign its rights or delegate its duties without the prior written consent of
the other party. Notwithstanding the foregoing, upon written notice to III, SBMS
may assign this Agreement to any of SBMS' affiliates or successor companies.
19. CANCELLATION.
a. Either party may cancel this Agreement effective immediately upon
written notice to the other party if:
i. the other party makes an assignment for the benefit of its
creditors; or
ii. any petition shall be filed by or against the other party
under any Section or Chapter of the Federal Bankruptcy Act as amended or as may
be amended or any similar law or statute of the United States or any state
thereof, which is not dismissed within 35 days after filing; or
iii. III Systems fail to perform consistently or become
defective, and such defect(s) or failure(s) of performance are not remedied by
III within 10 working days after notice of such defect(s) or failure(s); or
iv. the other party fails to remedy any other material breach
(excluding those performance issues covered in iii above) within 30 days after
notice from the non-defaulting party.
b. In addition to any of its other rights under this Agreement, SBMS
may cancel this Agreement (i) immediately upon written notice to III if, during
the Standard Coverage Period, there is any single instance of downtime or severe
service degradation within the control of III of at least 8 hours or, if there
are two or more instances of downtime or service degradation in any one year
period exceeding a combined total of at least 30 hours; or (ii) immediately upon
written notice sent to III within sixty (60) days of any III notice of rate
increase that SBMS finds unacceptable.
20. PUBLICITY.
a. III shall not use SBMS' name or any language, pictures or symbols
which could, in SBMS' judgment, imply SBMS' identity in any (a) written or oral
advertising or presentation or (b) brochure, newsletter, book, or other written
material of whatever nature, without SBMS' prior written consent.
b. SBMS agrees to submit to III for written approval, a representative
sample of the advertising or promotional material that SBMS intends to use which
specifically identifies III's Information Provider(s) as the provider of
Services, no fewer than 15 days before
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proposed use. Approval will not be unreasonably withheld, and if III does not
provide a written response within 15 days of the receipt of such a request,
approval shall be considered granted.
21. NOTICES. All notices or other communications hereunder are deemed given when
made in writing and either (a) delivered in person, (b) delivered to an agent,
such as an overnight or similar delivery service, or (c) deposited in the United
States mail, postage prepaid, and addressed as follows:
<TABLE>
<S> <C>
To: Intelligent Information Incorporated To: SBC Wireless
One Dock Street, Suite 500 17330 Preston Rd., Suite 100A
Stamford, CT 06902. Dallas TX 75252
Attn: President Attn: Martin Ray, Director of Procurement
</TABLE>
With a copy to:
Vice President, General Counsel & Secretary
Southwestern Bell Mobile Systems, Inc.
17330 Preston Road, Suite 100A
Dallas, Texas 75252
22. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the state of Texas.
23. AMENDMENTS AND WAIVERS. No provisions of this Agreement shall be deemed
waived, amended or modified by any party hereto, unless such waiver, amendment
or modification is in writing and signed by a duly authorized representative of
each of the parties hereto.
24. HEADINGS NOT CONTROLLING. Section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
25. SURVIVAL. Provisions contained in this Agreement, that by their sense and
context are intended to survive the termination, or cancellation of this
Agreement shall so survive.
26. ENTIRE AGREEMENT. This Agreement, including the Appendices and Exhibits, is
the entire agreement of the parties with respect to the subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.
<TABLE>
<S> <C>
INTELLIGENT INFORMATION INCORPORATED SOUTHWESTERN BELL MOBILE SYSTEMS, INC. AND
INC. SOUTHWESTERN BELL WIRELESS
</TABLE>
BY: /S/ STEPHEN G. MALONEY BY: /S/ STAN SIGMAN
------------------------------- --------------------------------
PRINT NAME: STEPHEN G. MALONEY PRINT NAME: STAN SIGMAN
------------------- -----------
TITLE: PRESIDENT TITLE: PRESIDENT AND CEO
--------- -----------------
DATE SIGNED: 6/8/98 DATE SIGNED: 6/12/98
------ -------
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APPENDIX A
SUBSCRIBER AGREEMENT
IMPORTANT: READ THIS AGREEMENT BEFORE USING THE SERVICE PROVIDED BY_____________
________________________________ (hereafter referred to as "_____"). YOUR USE OF
THE SERVICE, OR SIGNED ACKNOWLEDGMENT, WILL INDICATE YOUR ACCEPTANCE OF ALL OF
THE FOLLOWING TERMS. If this agreement is unacceptable to you, do not use the
Service. _____ is willing to provide you the Service only if you agree to be
bound by the following terms:
1. Information, data or messages provided through the Service, including but not
limited to, prices or values of various items (e.g., stocks, bonds, options,
futures and currencies), the numbers of shares or items traded in a given time
period, and the times at which the prices, values, or number of shares or items
traded fall within preset ranges (hereafter referred to as "Information") has
been independently obtained by _____, from various sources, including stock
exchanges, their affiliates, and others (collectively referred to as
"Information Providers"). These sources are believed to be reliable, but the
accuracy, completeness, timeliness, or correct sequencing of the Information is
not guaranteed by _____, the Information Providers, or any parties transmitting
or processing the Information (hereafter referred to as "Information
Processors"). (Hereafter, collectively _____, the Information Providers and
Information Processors are referred to as "Disseminating Parties".) There may be
delays, omissions, or inaccuracies in the Information. NO DISSEMINATING PARTY
WILL BE LIABLE IN ANY WAY TO YOU OR ANY OTHER PERSON FOR (A) ANY INACCURACY,
ERROR OR DELAY IN, OR OMISSION OF, (I) ANY INFORMATION OR (II) THE TRANSMISSION
OR DELIVERY OF ANY SUCH INFORMATION, OR (B) ANY LOSS OR DAMAGE ARISING FROM OR
OCCASIONED BY (I) ANY SUCH INACCURACY, ERROR, DELAY OR OMISSION, (II)
NON-PERFORMANCE, OR (III) INTERRUPTION IN ANY SUCH INFORMATION FOR ANY REASON,
INCLUDING BUT NOT LIMITED TO ANY NEGLIGENT ACT OR OMISSION BY ANY DISSEMINATING
PARTY. THERE IS NO WARRANTY OF MERCHANTABILITY, NO WARRANTY OF FITNESS FOR A
PARTICULAR USE, AND NO OTHER WARRANTY OF ANY KIND, EXPRESS, OR IMPLIED,
REGARDING THE INFORMATION OR ANY ASPECT OF THE SERVICE (INCLUDING BUT NOT
LIMITED TO ACCESS TO INFORMATION).
2. IN NO EVENT WILL ANY DISSEMINATING PARTY BE LIABLE TO YOU OR ANYONE ELSE FOR
ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES (INCLUDING BUT NOT
LIMITED TO LOST PROFITS, TRADING LOSSES, AND DAMAGES THAT RESULT FROM
INCONVENIENCE, DELAY OR LOSS OF THE USE OF THE SERVICE), EVEN IF ANY
DISSEMINATING PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR
LOSSES. YOU AGREE THAT THE LIABILITY OF ANY DISSEMINATING PARTY, ARISING OUT OF
ANY KIND OF LEGAL CLAIM (WHETHER IN CONTRACT, TORT OR OTHERWISE) IN ANY WAY
CONNECTED WITH THE SERVICE OR THE INFORMATION, WILL NOT EXCEED THE AMOUNT
CHARGED FOR RECEIVING THE INFORMATION. No Disseminating Party shall be liable
for any loss resulting from a cause over which such entity does not have
control, including but not limited to failure of electronic or mechanical
equipment or communication lines, telephone or other interconnect problems,
unauthorized access, theft, operator errors, severe weather, earthquakes,
floods, acts of war, and strikes or other labor problems.
3. _____, the Information Providers and others have a proprietary interest in
the Information. You agree not to reproduce, re-transmit, disseminate, sell,
distribute, publish, broadcast, circulate or commercially exploit the
Information in any manner without the express written consent of _____, and the
relevant Information Provider(s); nor to use the Information for any unlawful
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purpose. You agree to comply with reasonable written requests from _____, and to
protect the Information Providers' and _____'s respective contractual, statutory
and common law rights to the Information and the Service.
4. You acknowledge that neither the Service nor any of the Information is
intended to supply tax or legal advice. Although the Service may provide
Information about how to invest and what to buy, none of this Information is
recommended by any Disseminating Party. The Disseminating Parties do not
recommend any investment advisory service or product, nor offer any advice
regarding the nature, potential value, or suitability of any particular
security, transaction, or investment strategy.
5. You agree to immediately notify _____, if you become aware of any of the
following: (a) any loss or theft of your access number(s), and/or password(s),
or (b) any unauthorized use of any of your access number(s) and/or password(s),
or of the Service or any Information.
6. You agree to indemnify and hold the Disseminating Parties harmless from and
against any and all claims, losses, liabilities, costs and expenses (including
but not limited to attorneys' fees) arising from your violation of this
Agreement or any third party's rights.
7. _____ reserves the right to terminate your access to the Service or any
portion of it at its sole discretion, without notice and without limitation, for
any reason whatsoever, including but not limited to the unauthorized use of your
access number(s) and/or password(s), breach of this Agreement, discontinuance of
_____ or loss of access to any Information from any of the Information
Providers. The Information Processors and _____ shall have no liability to you;
provided, however, that if the termination is without cause, _____ shall refund
the prorata portion of any fee which may have been paid by you for the portion
of the Service not furnished to you as of the date of such termination.
8. You acknowledge that, in providing you with the Service, _____ has relied
upon your agreement to be bound by the terms of this Agreement. You further
acknowledge that this Agreement and all other present and future written
agreements between you and _____ constitute the complete statement of the
agreement between you and _____, and that the agreement does not include any
other or prior contemporaneous promises, representations or descriptions
regarding the Service or the Information even if it were contained in materials
provided by _____. This Agreement may be modified only in writing; if _____
sends you written notice of the modification, your use of the Service after
receiving such notice will indicate your acceptance of the modification. If any
provision of this Agreement is invalid or unenforceable under applicable laws,
it is, to that extent, deemed omitted and the remaining provisions will continue
in full force and effect. This Agreement and performance hereunder will be
governed by and construed in accordance with the laws of the state in which you
purchased service.
9. The terms and conditions of Sections 1, 2, 3 and 6 of this Agreement shall
survive any termination of this Agreement.
___________________________________ Date ________________________
Signature
___________________________________ ______________________________
Printed NameHome Area code and Telephone Number
___________________________________ _______________________________
Address Daytime Area Code and Phone Number
___________________________________
City, State, Zip
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APPENDIX B
SERVICE AND PACKAGE RATES AND CHARGES
Number of Services in Package Monthly Price per Subscriber*
- ----------------------------- ------------------------------
2 $1.25
3 $1.80
4 $2.35
5 $2.90
6 $3.40
Each additional Service is an additional $.50/month. These prices are flat
monthly rates. The frequency of the delivery is defined below. There are no
activation fees or change fees. These prices are subject to the provisions of
paragraph 5 of the Service Agreement.
VOLUME DISCOUNT
*SBMS may take advantage of a Volume Discount based on achieving a threshold
number of subscribers. SBMS may aggregate all of its affiliates in the
achievement of the threshold.
Subscribers % Discount
- -----------------------------------
0 - 4,999 0
5,000 - 9,999 3
10,000 - 14,999 7
15,000 - 19,999 10
20,000 + 14
DELIVERY PARAMETERS
1. Real time services, such as Company News Report, which is breaking news
on a company, and Sports Results, which are final scores, are delivered
as they are available.
2. All other Services have a daily default window of delivery time, to be
selected by the Subscriber.
3. All services, whether real time or otherwise, are subject to the
Subscriber-specific global parameter, which will override all others.
For example, "Deliver between 8 a.m. and 10 p.m. Monday - Friday and
between 10 a.m. and 11 p.m. Saturday - Sunday" overrides real time
delivery. In this case, no real time services will be delivered outside
the subscriber's global parameters, 8 a.m. - 10 p.m. M-F and 10 a.m.
-11 p.m. Sat-Sun.
4. Some services are available daily and some only on business days, as
outlined below.
5. The customer may suspend all services using the web interface without a
financial impact. That is, a customer may suspend their information
services themselves for a period of time, but they will continue to be
charged for the feature. When Customer Service suspends the service,
due to non-pay for example, there is a revenue impact. III will no
longer charge SBMS for that subscriber.
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AVAILABLE SERVICES AND DELIVERY SCHEDULE
III will make available to SBMS the services listed below. The delivery schedule
can be interpreted as follows:
- - Real Time Delivery means information is delivered as it happens and a
detailed summary is added as soon as it is available. Real Time Delivery
services are only subject to the subscriber's global delivery parameters.
- - Scheduled Delivery means the information is delivered at the subscriber's
pre-established time periods.
- - Frequency is the numbers of time/day that the information is delivered.
- - Daily Delivery means the information is delivered 7 days a week, Sunday
through Saturday.
- - Business Day Delivery means the information is delivered on business days
only, usually Monday through Friday, with no delivery on Saturday, Sunday or
holidays.
<PAGE> 13
SERVICES AVAILABLE
<TABLE>
<CAPTION>
REAL
SERVICE DEFINITION TIME SCHEDULED FREQUENCY
------- ---------- ---- --------- ---------
NEWS PRODUCTS
<S> <C> <C> <C> <C>
News Headlines Two headlines daily. Top stories X 2x/day
of the day.
Business News Headlines Two headlines daily. Top stories X 2x/day
in the world of business.
Entertainment News Headlines Two headlines daily. Top stories X 2x/day
in the world of movies, TV, music,
etc.
Consumer Health Reporter News on 1 category on health and X 1x/day as
wellness daily. Categories: Family available
Health, Pediatrics, and Women's
Health. Stories focus on key
medial discoveries, latest medical
trends. Etc. Delivery based on
what comes over the news wires, so
stories may not be issued every day
in every category.
Political News Headlines Latest news stories on Washington X 2x/day
and politics
Company News Reporter Breaking news on 2 companies. X Breaking
Frequency varies by company, based
on how often it makes news.
Professional Medical News News on 1 category prepared for X 1x/day as
the healthcare practitioner. available
Categories: Family Health,
Pediatrics, Women's Health,
Internal Medicine, and Emergency
Medicine.
National Election Results National election results X Breaking
SPORTS PRODUCTS
Sports News Headlines Twice daily updates on the top X 2x/day
stories in sports. Get the latest
word on who's winning, who's on
the injured list, trades, etc.
Sports Results Final scores on 2 teams on ML X Breaking
Baseball, NHL Hockey, NFL &
</TABLE>
<TABLE>
<CAPTION>
BUSINESS
SERVICE DEFINITION DAILY DAY SOURCE
------- ---------- ----- -------- ------
NEWS PRODUCTS
<S> <C> <C> <C> <C>
News Headlines Two headlines daily. Top stories X The Associated Press
of the day.
Business News Headlines Two headlines daily. Top stories X The Associated Press
in the world of business.
Entertainment News Headlines Two headlines daily. Top stories X The Associated Press
in the world of movies, TV, music,
etc.
Consumer Health Reporter News on 1 category on health and X Reuters Health
wellness daily. Categories: Family
Health, Pediatrics, and Women's
Health. Stories focus on key
medial discoveries, latest medical
trends. Etc. Delivery based on
what comes over the news wires, so
stories may not be issued every day
in every category.
Political News Headlines Latest news stories on Washington X The Associated Press
and politics
Company News Reporter Breaking news on 2 companies. As issued Dow Jones & Company
Frequency varies by company, based
on how often it makes news.
Professional Medical News News on 1 category prepared for X Reuters Health
the healthcare practitioner.
Categories: Family Health,
Pediatrics, Women's Health,
Internal Medicine, and Emergency
Medicine.
National Election Results National election results Seasonal The Associated Press
SPORTS PRODUCTS
Sports News Headlines Twice daily updates on the top X SportsTicker
stories in sports. Get the latest
word on who's winning, who's on
the injured list, trades, etc.
Sports Results Final scores on 2 teams on ML As issued SportsTicker
Baseball, NHL Hockey, NFL &
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
REAL
SERVICE DEFINITION TIME SCHEDULED FREQUENCY
------- ---------- ---- --------- ---------
<S> <C> <C> <C> <C>
CFL Football, NBA Basketball
Sports Results Plus Mid-game and final scores for 2 X Breaking
teams. Pick pro or college team
from: ML Baseball, NHL Hockey, NBA
Basketball, NFL Football, Canadian
Football League, and NCAA Div. I
Basketball, NCAA Div. I-A and I-AA
Football
Major League Baseball Standings Current League Standings for the X 1x/day
division of your choice.
Major League Baseball Leaders Who's leading for the League of X 1x/day
your choice. Each day, receive a
different statistical category.
Categories: Home runs, batting,
RBI's stolen bases, ERA, wins and
saves.
Golf Leaderboards PGA action: end of round updates X Breaking
and tournament results
Tennis Results from top 3 seed-match X Breaking
finals and championship finals
Thoroughbred Horse Racing Results on all races at 1 track, X Breaking
specific race at the track.
Sports News Alert Breaking news headlines for the X Breaking
sport of your choice. Categories:
baseball, basketball, football,
hockey, auto racing, golf, soccer,
tennis, horse racing, track &
field, boxing.
WEATHER PRODUCTS
Weather Forecast Daily current forecast for the X 1x/day
local area of your choice. Select
city and state or zip code.
Severe Weather Reporter Immediate alerts to serious X Breaking
weather conditions for the area of
your choice, based on watches and
warnings issued by National Weather
Service. Alerts include
</TABLE>
<TABLE>
<CAPTION>
BUSINESS
SERVICE DEFINITION DAILY DAY SOURCE
------- ---------- ----- -------- ------
SPORTS PRODUCTS
<S> <C> <C> <C> <C>
CFL Football, NBA Basketball
Sports Results Plus Mid-game and final scores for 2 As issued SportsTicker
teams. Pick pro or college team
from: ML Baseball, NHL Hockey, NBA
Basketball, NFL Football, Canadian
Football League, and NCAA Div. I
Basketball, NCAA Div. I-A and I-AA
Football
Major League Baseball Standings Current League Standings for the Seasonal SportsTicker
division of your choice.
Major League Baseball Leaders Who's leading for the League of Seasonal SportsTicker
your choice. Each day, receive a
different statistical category.
Categories: Home runs, batting,
RBI's stolen bases, ERA, wins and
saves.
Golf Leaderboards PGA action: end of round updates Seasonal SportsTicker
and tournament results
Tennis Results from top 3 seed-match Seasonal SportsTicker
finals and championship finals
Thoroughbred Horse Racing Results on all races at 1 track, Seasonal Sports Wire
specific race at the track.
Sports News Alert Breaking news headlines for the As issued SportsTicker
sport of your choice. Categories:
baseball, basketball, football,
hockey, auto racing, golf, soccer,
tennis, horse racing, track &
field, boxing.
WEATHER PRODUCTS
Weather Forecast Daily current forecast for the X National Weather Service
local area of your choice. Select
city and state or zip code.
Severe Weather Reporter Immediate alerts to serious As issued National Weather Service
weather conditions for the area of
your choice, based on watches and
warnings issued by National Weather
Service. Alerts include
</TABLE>
Page 14
<PAGE> 15
<TABLE>
<CAPTION>
REAL
SERVICE DEFINITION TIME SCHEDULED FREQUENCY
------- ---------- ---- --------- ---------
<S> <C> <C> <C> <C>
tornado warnings, winter storms,
severe thunderstorms, earthquake
reports, tsunami warnings, gale
warnings, snow avalanches, flooding
and other conditions. Choose your area
by county.
Atlantic Coast Maritime Report Marine forecasts for Baltimore/ X 1x/day
Washington area
FINANCIAL PRODUCTS
Quote Report 2 Stock quotes at end of day. X 1x/day
Choose any electronically traded 5 p.m. Eastern
public company or mutual fund.
Quote Price Alert 1 Stock with price change alert X Breaking
Stock Quote Reporter Plus At midday and close receive price X 2x/day
and volume on 1 stock. Choose any Noon and 5
electronically traded public p.m. Eastern
company or mutual fund.
LEISURE PRODUCTS
Joke of the Day Mildly humorous joke. Suitable X 1x/day
for all audiences.
Soap Opera Update Highlights from the day on your X 1x/day
favorite daytime drama. Choose
from: All My Children, Another
World, As the World Turns, Bold
and the Beautiful, Days of our
Lives, General Hospital, Guiding
Light, One Life to Live, Port
Charles, Sunset Beach and Young
and the Restless.
Horoscope Daily forecast for one X 1x/day
astrological sign
Lottery Daily results of all the games of X 1x/day
one state's lotteries. Multi-state
games (such as PowerBall, Daily
Millions and Big Game) are
</TABLE>
<TABLE>
<CAPTION>
BUSINESS
SERVICE DEFINITION DAILY DAY SOURCE
------- ---------- ----- -------- ------
WEATHER PRODUCTS
<S> <C> <C> <C> <C>
tornado
warnings, winter storms, severe
thunderstorms, earthquake reports,
tsunami warnings, gale warnings,
snow avalanches, flooding and other
conditions. Choose your area
by county.
Atlantic Coast Maritime Report Marine forecasts for Baltimore/ X National Weather Service
Washington area
FINANCIAL PRODUCTS
Quote Report 2 Stock quotes at end of day. X New York Stock
Choose any electronically traded Exchange, AMEX, NASDAQ
public company or mutual fund.
Quote Price Alert 1 Stock with price change alert As issued New York Stock
Exchange, AMEX, NASDAQ
Stock Quote Reporter Plus At midday and close receive price X New York Stock
and volume on 1 stock. Choose any Exchange, AMEX, NASDAQ
electronically traded public
company or mutual fund.
LEISURE PRODUCTS
Joke of the Day Mildly humorous joke. Suitable X III
for all audiences.
Soap Opera Update Highlights from the day on your X AccuWeather
favorite daytime drama. Choose
from: All My Children, Another
World, As the World Turns, Bold
and the Beautiful, Days of our
Lives, General Hospital, Guiding
Light, One Life to Live, Port
Charles, Sunset Beach and Young
and the Restless.
Horoscope Daily forecast for one X UPS - Eugenia Last
astrological sign
Lottery Daily results of all the games of X LottoNet
one state's lotteries. Multi-state
games (such as PowerBall, Daily
Millions and Big Game) are
</TABLE>
Page 15
<PAGE> 16
<TABLE>
<CAPTION>
REAL
SERVICE DEFINITION TIME SCHEDULED FREQUENCY
------- ---------- ---- --------- ---------
<S> <C> <C> <C> <C>
included in each participating
state results.
"This Day in History" Fact Daily history fact X 1x/day
Ski Report Ski report on ski area of choice. X 1x/day
Reports include new snow, depth of
base, current surface conditions,
lifts and trails in service.
</TABLE>
<TABLE>
<CAPTION>
BUSINESS
SERVICE DEFINITION DAILY DAY SOURCE
------- ---------- ----- -------- ------
<S> <C> <C> <C> <C>
included in each participating
state results.
"This Day in History" Fact Daily history fact X The Associated Press
Ski Report Ski report on ski area of choice. Seasonal SportsTicker
Reports include new snow, depth of
base, current surface conditions,
lifts and trails in service.
</TABLE>
Page 16
<PAGE> 17
DESCRIPTION OF PROFILE MAINTENANCE
1. NetCare!
NetCare!, an internet-based, real-time profile management system, is provided.
III will customize the performance of NetCare! to SBMS Product set as described
herein, and within reason modify the "look and feel" of the web site provided to
meet SBMS existing standards.
<PAGE> 18
APPENDIX C
TRADEMARKS
1. "Powered by iii"
SBMS shall follow "Powered by iii" Guidelines for Use, Exhibit 1.
Page 18
<PAGE> 19
APPENDIX D
FINANCIAL INCENTIVES
Marketing Coop
During the term of this Agreement, III will pay SBMS Marketing Coop funds
in accordance with its Coop Program Guidelines (see Exhibit 2), in an amount up
to three percent (3%) of all services and packages purchased by SBMS hereunder,
in markets that use the trademarks listed in Appendix C. Payments shall be made
quarterly and remitted as follows: to SBMS HQ for all purchases made by
Southwestern Bell Wireless, Inc., in its markets in Texas, Missouri, Oklahoma,
Kansas and Arkansas; and to each of the Southwestern Bell Mobile Systems
Cellular One markets individually for their purchases.
Market Development
III will contribute to the market development of the Services by providing
Services to SBMS free of charge with respect to those Subscribers to whom SBMS
has extended a promotional offer of one month of free service through a
formally advertised promotion and have accepted such free service. These free
Services will be reflected as an adjustment on each market's monthly bill. SBMS
will provide to III monthly the MINs of Subscribers who have accepted free
Service. III will issue a credit to SBMS based on these reports. III will
review market by market, case by case, additional promotional opportunities,
and will increase participation with specific promotions. SBMS will notify III
of any promotional offers. Promotional offers may vary by market; provided
however that such promotions will be limited to "introductory offers," not to
exceed three months of free service.
Quick Start Goal
If SBMS has at least 15,000 Subscribers to the Services by year end 1998, III
will credit a one time Quick Start Marketing Award Payment of $20,000 in
January, 1999. Payment shall be prorated across participating markets: to SBMS
HQ for Southwestern Bell Wireless, Inc., in its markets in Texas, Missouri,
Oklahoma, Kansas and Arkansas; and to each of the Southwestern Bell Mobile
Systems Cellular One markets individually.
Page 19
<PAGE> 20
APPENDIX E
SBMS MARKET LIST
Address, Escalation Contacts, NPA's
and Message Center TAP Dial-in Numbers
Market Definition
For purposes of billing, payments, escalation and marketing reports, SBMS
markets are defined by the NPAs served by each market:
Revised 4/9/98
SWBW - Message Center TAP 800-469-5351
ST. LOUIS
Address: 13075 Manchester Rd., Suite 100A, St. Louis
MO 63131
Business Escalation: Jared Novelly 314-984-2313
Technical Escalation: Ellen Marshall 314-821-7764
NPAs:
314
618
573
KANSAS CITY
Address: 15529 College Blvd., Lenexa KS 66219
Business Escalation: Bill Sullivan 913-752-2376
Technical Escalation: Kelly Quick 913-752-2343
NPAs:
660 785
816 913
316
SOUTH TEXAS
Address:7330 San Pedro Plaza, 9th Floor, San Antonio
TX 78216
Business Escalation: Tom Swail 210-289-1087
Technical Escalation: John Kopcyzk 210-359-3042
NPAs:
210 956
830 915
512
ARKANSAS AND TULSA
Address: 10802 Executive Center Drive, Suite 300,
Little Rock AR 72211
Business Escalation: Dee Hickman 501-219-6619
Technical Escalation: Phil Brown 501-219-6658
NPAs:
501 918
870
DALLAS
Address: 15660 Dallas Parkway, Suite 1300, Dallas
TX 75248
Business Escalation: Carl Nunes 972-866-5391
Technical Escalation: Scott Hillenbrand
972-706-1689
NPAs:
972 903
817 940
214 254
OKLAHOMA CITY
Address: 9020 N. May Ave., #250, Oklahoma City OK
73120
Business Escalation:Vivian Copeland 405-858-2509
Technical Escalation: Bryan Stambeck 405-858-2575
NPAs:
405 580
918
WEST TEXAS
Address: 1901 University Ave., Suite 100, Lubbock
TX 79410
Business Escalation: Michelle Elizardo 806-472-2012
or Jan Collier 806-472-2066
Technical Escalation: Todd Curtis 806-472-2128
NPAs:
806
915
Page 20
<PAGE> 21
Arkansas and Tulsa
Address: 10802 Executive Center Drive, Suite 300,
Little Rock AR 72211
Business Escalation: Dee Hickman 501-219-6619
Technical Escalation: Phil Brown 501-219-6658
NPAs:
501 918
870
21
<PAGE> 22
CELLULAR ONE
CELLULAR ONE - CHICAGO - MESSAGE CENTER
TAP 847-502-0125
Address: 930 N. National Pkwy, Schaumburg IL 60173
Business Escalation: Kerry Benton 847-762-2512
Technical Escalation: Angie Fritz 847-413-7660
NPAs:
312 847
219 309
815 219
773 708
630
CELLULAR ONE - BALTIMORE- MESSAGE CENTER
TAP 800-721-9444
Address: 7855 Walker Drive., #100, Greenbelt MD 20770
Business Escalation: Kelly Heatherman 301-489-3153
Technical Escalation: Carolyn Mitchell 301-489-3263
NPAs:
304 202
703 410
301 540
757 840
CELLULAR ONE - BOSTON - MESSAGE CENTER
TAP 617-967-9200
Address: 100 Lowder Brook Dr., Westwood MA 02090
Business Escalation: Peter Bui 617-462-5036
Technical Escalation: Paul Dimartino 617-462-5171
or Joshua Miller 617-462-5326
NPAs:
617 508
781 603
978
CELLULAR ONE - NEW YORK - MESSAGE CENTER
TAP 315-440-3801
Address: 2875 Union Rd., Suite 35U, Cheektowago NY
14227
Business Escalation: Christine Bolles 716-435-2671
Technical Escalation: Ed Kent 716-435-2280
NPAs:
716
315
518
Page 22
<PAGE> 23
EXHIBIT 1
"POWERED BY iii" GUIDELINES FOR USE
The Value of "Powered by iii"
- - The "Powered by iii" Logo (the "Logo") is an effective way to identify
information services offering as incorporating the benefits and features of
the leading source of personalized content for wireless devices,
Intelligent Information Incorporated (III).
- - Use of the Logo also qualifies resellers to participate in III's advanced
business partner support programs.
The Logo's Meaning for Business Partner Use
- - The Logo conveys the value and excitement of personalized information
services provided by the III platform. Business partners may use this Logo
in advertising, point-of-purchase displays, and marketing materials to
promote information services. The Logo may only be used according to these
Guidelines. These Guidelines help ensure that the Logo continues to provide
consumers with a clear identification of information service quality.
- - To protect this valuable trademark, the business partner may not use the
Logo in any way other than as described in these guidelines or as may be
provided in writing by III from time to time. Any unauthorized use of the
Logo is an infringement of III's trademark rights.
Business Partner Logo Artwork
- - Do not use artwork provided by any source other than III. III will provide
approved Business Partners that agree to follow these guidelines with
electronic versions of the Logo. You may not alter this artwork in any way,
separate the words from the graphic, or replace the words with any others.
The trademark symbol ((TM)) must appear at the lower right corner of the
graphic portion of the Logo. Documents including the Powered by iii logo
must also include the footnote, in no less than 6 point text, "Powered by
iii is a registered trademark of Intelligent Information Incorporated."
Sizing and Placement Requirement
- - The Logo may be used only on materials that make accurate references to the
information services as provided by III. The Logo must be placed in close
proximity to headline copy or logo treatments dealing with information
services. The Logo cannot be larger or more prominent than your company
name, company logo, product name (if applicable), or service name.
- - The Logo may stand-alone, or be incorporated into your information services
logo if appropriate. If the Logo is used as a stand alone element, a
minimum amount of empty space must be left between the Logo and any other
object such as type, photography, borders, edges, etc. The required border
of empty space around the Logo must be 1/4x wide, where x equals the height
of the graphic, as measured from the highest point on the graphic portion
of the Logo to the lowest point on the graphic portion of the Logo.
- - Minimum size for the Logo is 3/8 of an inch high.
- - Business partners may not use the Logo in any manner that suggests that
advertising, point-of-purchase displays, or other marketing materials are
from III.
Page 23
<PAGE> 24
- - The footnote "Powered by iii is a registered trademark of Intelligent
Information Incorporated", in not less than 6 point type, must accompany
each use of the Logo.
- - Intelligent Information Incorporated reserves the right to object to unfair
uses or misuses of its trademarks or other violations of applicable law.
Color Treatment
- - You may not alter the colors of the Logo in any way from the treatments
provided by III, without the written approval of III.
Quality Control
- - III reserves the right to review business partner use of the Logo. Business
partner must correct any deficiencies in the use of the Logo upon
reasonable notice from III.
- - Address any questions concerning the Logo to the appropriate III Account
Manager or III's Director of Marketing.
- - Intelligent Information Incorporated reserves the right to change the Logo
and/or these guidelines at any time at its discretion. You must comply with
the guidelines as amended from time to time.
- - III will bear the expense of any reprinting of materials necessitated by a
change in its Logo or guidelines, provided III requires SBMS not to utilize
existing materials.
Page 24
<PAGE> 25
EXHIBIT 2
INTELLIGENT INFORMATION INCORPORATED
CO-OPERATIVE ADVERTISING PROGRAM GUIDELINES
CO-OP PROGRAM ELIGIBILITY
All North American, Intelligent Information Incorporated (III) business partners
are eligible. To participate in the program, business partners must complete a
Co-op program registration form. This form is available from III account
managers.
CO-OP PROGRAM ACCRUALS
For the period April 1, 1998 through December 31, 1998, standard Co-op will
accrue at a rate equal to 3% of the actual amounts invoiced for the period,
calculated on a quarterly basis. Accrued Co-op funds belong to III until
released for reimbursement of claims for eligible and approved activities.
All information services (content) billings are considered part of the price.
No money is accrued for programming fees, telecommunication connections, or
other expenses or fees.
III reserves the right to change the amount of the accrual and the eligible
products and options at any time with 90 days prior written notice.
III reserves the right to introduce bonus programs throughout the program year.
CO-OP PROGRAM GUIDELINES
1. The "Powered by iii" logo must appear in all advertising to qualify for
Co-op reimbursement.
2. III will provide "Powered by iii" logo and usage guidelines which must be
followed to qualify for reimbursement.
3. No competitors' information services products may be featured in the same
ad.
4. Reimbursement percentage for qualified ads is 50% of the net cost of the
business partner's advertising.
5. If ad is not dedicated to III's information services, III will reimburse the
pro-rated III information services portion of the ad only.
6. To receive credit for print media, III requires a "tear-sheet" of the
advertisement and receipted copy of paid media invoice attached to the Co-op
claims submission form.
7. To receive credit for electronic media, III requires copies of commercial,
station affidavit of performance and receipted copy of paid station invoices
attached to the Co-op claims submission form.
8. All claims must be postmarked within 60 days from the date of advertising or
other promotional programs and can be submitted no later than the May 31,
1999 deadline. Claims not received by this date will be denied and any
unused balance will be forfeited.
9. III reserves the right to suspend payment of claims if business partner's
account is not current. If account is not made current prior to filling
deadline, all money accrued will be forfeited. Co-op funds can not be
applied to amount owed.
10. III reserves the right to change this program, including the amount of the
accrual and eligible products and options at any time without prior notice.
11. Trade/barter ads, agency fees/commissions, discounts and taxes are not
reimbursable.
12. All advertising must be in compliance with local, state and federal laws and
must be in good taste. Each customer is solely responsible for any such
advertising. III expressly disclaims any liability or responsibility for any
advertising or promotion by the customer.
13. All claims and text regarding III information services must be truthful. Any
false or misleading representation will result in a denial of the co-op
claim.
INTELLIGENT INFORMATION INCORPORATED CO-OP PROGRAM MEDIA USAGE GUIDELINES
Page 25
<PAGE> 26
<TABLE>
<CAPTION>
DOCUMENTATION ADVERTISING REQUIREMENTS
MEDIA TYPE EXPENSES COVERED REQUIRED
- -------------------------- ------------------------ ------------------------ -------------------------
<S> <C> <C> <C>
PRINT - Media Cost - Co-op Claims - Ad must conform
- - Newspapers - Production Submission Form to III Co-op
- - Magazines - 1 original ad program guidelines
per publication and "Powered by
showing name, date iii" logo usage
and location of guidelines
publication (tear - Prior approvals
sheet). are not required
- Photocopies are
not acceptable
- Copy of paid
invoice
- Multiple
Appearance Ads must
also include
"Newspaper Ad
Multiple Appearance
Certification Form"
DIRECT MAIL/RETAIL - Net Printing - Co-op Claims - Ad must conform
- - Statement Stuffers Cost Submission Form to III Co-op
- - Newsletters - Production - 2 original program guidelines
- - Postcards - Mailing List samples and "Powered by
Purchase/Rental - Copy of paid iii" logo usage
invoice guidelines
- Prior approvals
are not required
TV & RADIO - Media Cost - Co-op Claims - "Powered by
Submission Form iii" must be
- Copy of paid mentioned at least
invoice with once.
details of spot - Prior approvals
length, air dates, are not required
number of spots
aired, cost per
spot, and total cost
- Station
affidavit and
notarized copy of
video/audiotape used
INTERNET - Banner - Co-op Claims - Ad must conform
</TABLE>
Page 26
<PAGE> 27
<TABLE>
<S> <C> <C> <C>
Advertising Submission Form to III Co-op
- Copy of paid program guidelines
invoice and "Powered by
- Copy of iii" logo usage
advertisement guidelines
- Prior approvals
are not required
</TABLE>
Page 27
<PAGE> 1
Exhibit 10.13a
FIRST AMENDMENT TO SERVICES AGREEMENT
THIS AMENDMENT to that certain Services Agreement made by and between
Intelligent Information Incorporated, a Delaware corporation ("III") and
Southwestern Bell Mobile Systems, Inc., d/b/a Cellular One and Southwestern Bell
Wireless Inc., dated June 9, 1998 (the "Agreement") is effective as of the 11
day of Jan, 1999.
WHEREAS, Southwestern Bell Mobile Systems, Inc. and Southwestern Bell
Wireless Inc. have entered into the Agreement with III for the purchase of
Services that deliver "intelligent information";
WHEREAS, Southwestern Bell Mobile Systems, Inc. and Southwestern Bell
Wireless Inc. are collectively defined as "SBMS" for purposes of the
Agreement; and
WHEREAS, Pacific Bell Mobile Services, Inc. ("PBMS") is an affiliate of,
and under common control with, Southwestern Bell Mobile Systems, Inc.; and
WHEREAS, PBMS desires to purchase Services from III pursuant to the
Agreement.
NOW, THEREFORE, it is agreed as follows:
1. The Agreement is hereby amended to include PBMS as one of the parties
purchasing Services from III pursuant to the Agreement, and PBMS is included as
one of the parties collectively defined in the Agreement as "SBMS."
2. Paragraph 6, Marketing Reports, is amended to read as follows:
Prior to the 5th day of each month that this Agreement is effective, III
shall provide to SBMS the following reports, broken down by individual
market, subtotalled for the 5-state in-region area, the Cellular One
markets, the PBMS markets, and totalled for all markets:
o Number of Subscribers as of the 15th of the month and at month
end;
o Number of Subscribers by information category;
o Number of messages sent;
o Number of changes (total and by type of change (add/delete));
o Number of provisioning web hits by Subscribers vs. Customer
Service.
3. Appendices D and E are replaced in their entirety with the attached First
Page 1 of 2
<PAGE> 2
Amended Appendix D and First Amended Appendix E.
AGREED TO AND EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE:
Intelligent Information Incorporated Pacific Bell Mobile Services, Inc.
By: /s/ Stephen G. Maloney By: /s/ Bob Shaner
----------------------------------- --------------------------------
Print Name: STEPHEN G. MALONEY Print Name: Bob Shaner
--------------------------- ------------------------
Title: PRESIDENT Title: President and CEO
-------------------------------- -----------------------------
Date Signed: 1/14/99 Date Signed: 1/11/99
-------------------------- -----------------------
Page 2 of 2
<PAGE> 3
FIRST AMENDED APPENDIX D
FINANCIAL INCENTIVES
Marketing Coop
During the term of this Agreement, III will pay SBMS Marketing Coop funds in
accordance with its Coop Program Guidelines (see Exhibit 2), in an amount up to
three percent (3%) of all services and packages purchased by SBMS hereunder, in
markets that use the trademarks listed in Appendix C. Payments shall be made
quarterly and remitted as follows: to SBMS HQ for all purchases made by
Southwestern Bell Wireless, Inc., in its markets in Texas, Missouri, Oklahoma,
Kansas and Arkansas; and to each of the Southwestern Bell Mobile Systems
Cellular One markets and PBW individually for their purchases.
Employee Accounts and Reminder Service Accounts with Advertising do not
contribute toward Marketing Coop.
Market Development
III will contribute to the market development of the Services by providing
Services to SBMS free of charge with respect to those Subscribers to whom SBMS
has extended a promotional offer of one month of free service through a formally
advertised promotion and have accepted such free service. These free Services
will be reflected as an adjustment on each market's monthly bill. SBMS will
provide to III monthly the MINs of Subscribers who have accepted free Service.
III will issue a credit to SBMS based on these reports. III will review market
by market, case by case, additional promotional opportunities, and will increase
participation with specific promotions. SBMS will notify III of any promotional
offers. Promotional offers may vary by market; provided however that such
promotions will be limited to "introductory offers," not to exceed three months
of free service.
Reminder Service Accounts with and without Advertising are eligible for the
Market Development.
Employee Accounts are not eligible for the Market Development.
Quick Start Goal
If SBMS has at least 15,000 Subscribers to the Services by year end 1998, III
will credit a one-time Quick Start Marketing Award Payment of $20,000 in
January, 1999. Payment shall be prorated across participating markets: to SBMS
HQ for Southwestern Bell Wireless, Inc., in its markets in Texas, Missouri,
Oklahoma, Kansas and Arkansas; and to each of the Southwestern Bell Mobile
Systems Cellular One markets and PBW, individually.
<PAGE> 4
FIRST AMENDED APPENDIX E
SBMS Market List
Address, Escalation Contacts, NPA's
and Message Center TAP Dial-in Numbers
Market Definition
For purposes of billing, payments, escalation and marketing reports, SBMS
markets are defined by the NPAs served by each market. Double-lined borders
indicate those markets served by the same Message Center by EOY 99.
<TABLE>
<CAPTION>
Revised 4/9/98
--------------------------------------------------------------------------------------------------
SWBW -- Message Center TAP 800-469-5351
--------------------------------------------------------------------------------------------------
St. Louis Dallas
<S> <C>
Address: 13075 Manchester Rd., Suite 100A, Address: 15660 Dallas Parkway, Suite 1300,
St. Louis MO 63131 Dallas TX 75248
Business Escalation: Jared Novelly 314-984- Business Escalation: Carl Nunes 972-866-5391
2313 Technical Escalation: Scott Hillenbrand 972-
Technical Escalation: Ellen Marshall 314-821- 706-1689
7764 NPAs:
NPAs: 972 903
314 817 940
618 214 254
573
<CAPTION>
--------------------------------------------------------------------------------------------------
Kansas City Oklahoma City
<S> <C>
Address: 15529 College Blvd., Lenexa KS Address: 9020 N. May Ave., #250, Oklahoma
66219 City OK 73120
Business Escalation: Bill Sullivan 913-752- Business Escalation: Vivian Copeland 405-858-
2376 2509
Technical Escalation: Kelly Quick 913-752- Technical Escalation: Bryan Stambeck 405-
2343 858-2575
NPAs: NPAs:
KC: 913 Lawrence: 785-331 405 580
816 785-691 918
Wichita: 316-250 785-840
316-253 785-865
316-258 Topeka: 785-220
316-259 785-224
316-651 785-231
316-655 785-633
316-734 785-640
316-737
316-323 [Eldorado]
660
<CAPTION>
--------------------------------------------------------------------------------------------------
South Texas West Texas
<S> <C>
Address: 7330 San Pedro Plaza, 9th Floor, Address: 1901 University Ave., Suite 100,
San Antonio TX 78216 Lubbock TX 79410
Business Escalation: Tom Swail 210-289-1087 Business Escalation: Michelle Elizardo 806-
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
<S> <C>
Technical Escalation: John Kopcyzk 210-359- 472-2012 or Jan Collier 806-472-2066
3042 Technical Escalation: Todd Curtis 806-472-
NPAs: 2128
SA: 210 NPAs:
830 Amarillo: 806-674
CC: 512 806-676
RGV: 956-330 956-802 806-679
956-367 956-874 Lubbock: 806-786
956-369 956-975 806-787
956-373 956-873 806-789
956-607 956-572 806-790
956-245 956-500 Abilene: 915-665
956-605 956-371 915-668
956-248 956-244 915-669
956-642 956-279 Midland: 915-528
Laredo: 956-763 915-553
956-286 915-559
956-285 915-638
<CAPTION>
--------------------------------------------------------------------------------------------------
<S> <C>
Arkansas and Tulsa
Address: 10816 Executive Center Drive, Suite
300, Little Rock AR 72211
Business Escalation: Dee Hickman 501-219-
6619
Technical Escalation: Phil Brown 501-219-
6658
NPAs:
Arkansas: 501 Tulsa: 918-230
870 918-231
918-658 918-232
918-774 918-260
918-775
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
CELLULAR ONE
--------------------------------------------------------------------------------------------------
Cellular One - Chicago - Message Center Cellular One - Boston - Message Center
TAP 847-502-0125 TAP 617-967-9200
<S> <C>
Address: 930 N. National Pkwy, Schaumburg Address: 100 Lowder Brook Dr., Westwood
IL 60173 MA 02090
Business Escalation: Tony Aussin 847-762- Business Escalation: Peter Bui 617-462-5036
2663 Technical Escalation: Paul Dimartino 617-462-
Technical Escalation: Angie Fritz 847-413- 5171 or Joshua Miller 617-462-5326
7660 NPAs:
NPAs:
312
219 847 617 508
815 309 781 603
773 219 978
630 708
<CAPTION>
--------------------------------------------------------------------------------------------------
Cellular One - New York - Message Center SNET Wireless (CT)
TAP 315-440-3801 TAP 617-967-9200
<S> <C>
Address: 2875 Union Rd., Suite 35U, Address: 500 Enterprise Drive, Rocky Hill CT
Cheektowago NY 14227 06067
Business Escalation: Christine Bolles 716-435- Business Escalation: Ellen Smith 860-513-
2671 7784
Technical Escalation: Ed Kent 716-435-2280 Technical Escalation: Ellen Smith 860-513-
NPAs: 7784
716 NPAs: 203
315 860
518
<CAPTION>
--------------------------------------------------------------------------------------------------
Cellular One - Baltimore - Message Center Cellular One - RI and W. Mass
TAP 800-721-9444 TAP 617-967-9200
<S> <C>
Address: 7855 Walker Drive., #100, Greenbelt Address: 500 Enterprise Drive, Rocky Hill
MD 20770 CT
Business Escalation: Kelly Heatherman 301- 06067
489-3153 Business Escalation: Ellen Smith 860-513-
Technical Escalation: Carolyn Mitchell 301- 7784
489-3263 Technical Escalation: Ellen Smith 860-513-
NPAs: 7784
304 202 NPAs: 401
703 410 508-212
301 540 508-223-5600-5799, 5900-8799, 9000-9899
804 240 508-324-5000-5999
443 508-491-6000-8999
508-642-0000-9999
508-646-8000-8999
508-677-5000-5999, 7000-7999, 8100-8999
508-813-0000-9999
508-821-0000-0999, 5000-5499, 6000-6999,
8000-8999
508-828-0000-0999, 8000-8999
508-884-6000-7999
508-730-700-9999
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
<S> <C>
508-961-7000-9999
508-971-0000-9999
508-991-0000-1999, 900-9999
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
PACIFIC BELL WIRELESS
--------------------------------------------------------------------------------------------------
Pacific Bell Wireless
See attached
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
209 212 FRESNO
- ------------------------------------
209 218 FRESNO
- ------------------------------------
209 361 FRESNO
- ------------------------------------
209 362 FRESNO
- ------------------------------------
209 363 FRESNO
- ------------------------------------
209 861 FRESNO
- ------------------------------------
209 871 FRESNO
- ------------------------------------
209 873 FRESNO
- ------------------------------------
209 902 FRESNO
- ------------------------------------
559 930 FRESNO
- ------------------------------------
559 936 FRESNO
- ------------------------------------
209 406 STOCKTON
- ------------------------------------
209 598 STOCKTON
- ------------------------------------
209 631 STOCKTON
- ------------------------------------
209 648 STOCKTON
- ------------------------------------
209 679 MANTECA
- ------------------------------------
209 914 STOCKTON
- ------------------------------------
209 915 STOCKTON
- ------------------------------------
209 918 STOCKTON
- ------------------------------------
702 815 RENO
- ------------------------------------
702 830 RENO
- ------------------------------------
702 762 RENO
- ------------------------------------
530 680 CHICO
- ------------------------------------
916 512 CHICO
- ------------------------------------
530 301 SACRAMENTO
- ------------------------------------
530 318 SACRAMENTO
</TABLE>
1/13/99 Page 1
<PAGE> 9
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
- ------------------------------------
530 383 SACRAMENTO
- ------------------------------------
530 386 SACRAMENTO
- ------------------------------------
530 391 SACRAMENTO
- ------------------------------------
530 400 SACRAMENTO
- ------------------------------------
530 613 SACRAMENTO
- ------------------------------------
916 213 SACRAMENTO
- ------------------------------------
916 300 SC-ROSEVILLE
- ------------------------------------
916 337 SC-ROSEVILLE
- ------------------------------------
916 342 SC-ROSEVILLE
- ------------------------------------
916 402 SACRAMENTO
- ------------------------------------
916 505 SACRAMENTO
- ------------------------------------
916 600 SACRAMENTO
- ------------------------------------
916 601 SACRAMENTO
- ------------------------------------
916 606 SACRAMENTO
- ------------------------------------
916 607 SACRAMENTO
- ------------------------------------
916 612 SACRAMENTO
- ------------------------------------
916 690 ELK GROVE
- ------------------------------------
408 348 SANTA CLARA
- ------------------------------------
408 504 SANTA CLARA
- ------------------------------------
408 505 SANTA CLARA
- ------------------------------------
408 506 SANTA CLARA
- ------------------------------------
408 507 SANTA CLARA
- ------------------------------------
408 799 SANTA CLARA
- ------------------------------------
408 807 SANTA CLARA
- ------------------------------------
408 803 SALINAS
- ------------------------------------
</TABLE>
1/13/99 Page 2
<PAGE> 10
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
408 810 SALINAS
- ------------------------------------
408 812 SALINAS
- ------------------------------------
408 806 SANTA CLARA
- ------------------------------------
408 813 SANTA CLARA
- ------------------------------------
408 821 SANTA CLARA
- ------------------------------------
408 823 SANTA CLARA
- ------------------------------------
415 244 SAN FRANCISCO
- ------------------------------------
415 246 SAN FRANCISCO
- ------------------------------------
415 260 SAN FRANCISCO
- ------------------------------------
415 272 SAN FRANCISCO
- ------------------------------------
415 290 SAN FRANCISCO
- ------------------------------------
415 350 SAN FRANCISCO
- ------------------------------------
415 420 SAN FRANCISCO
- ------------------------------------
415 370 SAN FRANCISCO
- ------------------------------------
415 412 SAN FRANCISCO
- ------------------------------------
415 533 SAN FRANCISCO
- ------------------------------------
415 810 SAN FRANCISCO
- ------------------------------------
415 823 SAN FRANCISCO
- ------------------------------------
510 303 OAKLAND
- ------------------------------------
510 304 OAKLAND
- ------------------------------------
510 316 N/A
- ------------------------------------
510 329 OAKLAND
- ------------------------------------
510 331 OAKLAND
- ------------------------------------
510 332 OAKLAND
- ------------------------------------
510 333 OAKLAND
- ------------------------------------
510 334 OAKLAND
</TABLE>
1/13/99 Page 3
<PAGE> 11
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
- ------------------------------------
<S> <C> <C>
510 384 OAKLAND
- -------------------------------------
510 386 OAKLAND
- -------------------------------------
510 387 OAKLAND
- -------------------------------------
510 305 OAKLAND
- -------------------------------------
510 499 OAKLAND
- -------------------------------------
510 325 OAKLAND
- -------------------------------------
510 326 OAKLAND
- -------------------------------------
510 366 OAKLAND
- -------------------------------------
510 367 OAKLAND
- -------------------------------------
510 388 OAKLAND
- -------------------------------------
650 455 PALO ALTO
- -------------------------------------
650 483 PALO ALTO
- -------------------------------------
650 580 PALO ALTO
- -------------------------------------
650 766 PALO ALTO
- -------------------------------------
650 787 PALO ALTO
- -------------------------------------
650 796 PALO ALTO
- -------------------------------------
707 315 SANTA ROSA
- -------------------------------------
707 318 SANTA ROSA
- -------------------------------------
707 319 SANTA ROSA
- -------------------------------------
707 334 SANTA ROSA
- -------------------------------------
707 548 SANTA ROSA
- -------------------------------------
707 567 SANTA ROSA
- -------------------------------------
831 419 SANTA CRUZ
- -------------------------------------
831 905 SALINAS
- -------------------------------------
831 917 SALINAS
- -------------------------------------
</TABLE>
1/13/99 Page 4
<PAGE> 12
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
925 212 SAN RAMON
- -------------------------------------
925 216 SAN RAMON
- -------------------------------------
925 323 SAN RAMON
- -------------------------------------
925 550 SAN RAMON
- -------------------------------------
925 640 SAN RAMON
- -------------------------------------
925 858 SAN RAMON
- -------------------------------------
925 876 SAN RAMON
- -------------------------------------
619 200 SAN DIEGO
- -------------------------------------
619 246 SAN DIEGO
- -------------------------------------
619 252 SAN DIEGO
- -------------------------------------
619 261 SAN DIEGO
- -------------------------------------
619 917 SAN DIEGO
- -------------------------------------
619 300 SAN DIEGO
- -------------------------------------
619 316 SAN DIEGO
- -------------------------------------
619 339 SAN DIEGO
- -------------------------------------
619 203 SAN DIEGO
- -------------------------------------
619 518 SAN DIEGO
- -------------------------------------
619 708 SAN DIEGO
- -------------------------------------
619 813 SAN DIEGO
- -------------------------------------
619 850 SAN DIEGO
- -------------------------------------
619 920 SAN DIEGO
- -------------------------------------
760 315 SAN DIEGO
- -------------------------------------
760 468 SAN DIEGO
- -------------------------------------
760 638 SAN DIEGO
- -------------------------------------
760 715 SAN DIEGO
- -------------------------------------
760 716 SAN DIEGO
</TABLE>
1/13/99 Page 5
<PAGE> 13
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
- ------------------------------------
<S> <C> <C>
760 717 SAN DIEGO
- -------------------------------------
760 805 SAN DIEGO
- -------------------------------------
760 807 SAN DIEGO
- -------------------------------------
760 815 SAN DIEGO
- -------------------------------------
760 845 SAN DIEGO
- -------------------------------------
760 846 SAN DIEGO
- -------------------------------------
702 217 LAS VEGAS
- -------------------------------------
702 338 LAS VEGAS
- -------------------------------------
702 339 LAS VEGAS
- -------------------------------------
702 340 LAS VEGAS
- -------------------------------------
702 460 LAS VEGAS
- -------------------------------------
702 461 LAS VEGAS
- -------------------------------------
702 480 LAS VEGAS
- -------------------------------------
702 768 LAS VEGAS
- -------------------------------------
805 319 BAKERSFIELD
- -------------------------------------
805 586 BAKERSFIELD
- -------------------------------------
805 623 BAKERSFIELD
- -------------------------------------
805 703 BAKERSFIELD
- -------------------------------------
805 706 BAKERSFIELD
- -------------------------------------
213 324 LOS ANGELES
- -------------------------------------
213 445 LOS ANGELES
- -------------------------------------
213 422 LOS ANGELES
- -------------------------------------
213 446 LOS ANGELES
- -------------------------------------
213 447 LOS ANGELES
- -------------------------------------
213 448 LOS ANGELES
- -------------------------------------
</TABLE>
1/13/99 Page 6
<PAGE> 14
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
213 453 LOS ANGELES
- -------------------------------------
213 458 LOS ANGELES
- -------------------------------------
213 590 LOS ANGELES
- -------------------------------------
213 591 LOS ANGELES
- -------------------------------------
213 595 LOS ANGELES
- -------------------------------------
213 618 LOS ANGELES
- -------------------------------------
213 631 LOS ANGELES
- -------------------------------------
213 793 LOS ANGELES
- -------------------------------------
213 880 LOS ANGELES
- -------------------------------------
323 428 VERNON
- -------------------------------------
323 459 VERNON
- -------------------------------------
323 528 VERNON
- -------------------------------------
323 547 VERNON
- -------------------------------------
323 578 VERNON
- -------------------------------------
323 868 VERNON
- -------------------------------------
310 210 GARDENA
- -------------------------------------
310 259 GARDENA
- -------------------------------------
310 266 GARDENA
- -------------------------------------
310 293 GARDENA
- -------------------------------------
310 308 GARDENA
- -------------------------------------
310 383 GARDENA
- -------------------------------------
310 435 GARDENA
- -------------------------------------
310 528 GARDENA
- -------------------------------------
310 529 GARDENA
- -------------------------------------
310 666 GARDENA
- -------------------------------------
310 748 GARDENA
</TABLE>
1/13/99 Page 7
<PAGE> 15
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
- ------------------------------------
<S> <C> <C>
310 753 GARDENA
- -------------------------------------
310 918 GARDENA
- -------------------------------------
310 989 GARDENA
- -------------------------------------
562 260 LONG BEACH
- -------------------------------------
562 301 LONG BEACH
- -------------------------------------
562 397 LONG BEACH
- -------------------------------------
562 715 LONG BEACH
- -------------------------------------
562 761 LONG BEACH
- -------------------------------------
.562 773 LONG BEACH
- -------------------------------------
562 818 LONG BEACH
- -------------------------------------
562 857 LONG BEACH
- -------------------------------------
562 858 LONG BEACH
- -------------------------------------
562 881 LONG BEACH
- -------------------------------------
562 882 LONG BEACH
- -------------------------------------
562 883 LONG BEACH
- -------------------------------------
562 895 LONG BEACH
- -------------------------------------
562 897 LONG BEACH
- -------------------------------------
562 899 LONG BEACH
- -------------------------------------
626 487 PASADENA
- -------------------------------------
626 524 PASADENA
- -------------------------------------
626 641 PASADENA
- -------------------------------------
626 643 PASADENA
- -------------------------------------
626 674 PASADENA
- -------------------------------------
626 675 PASADENA
- -------------------------------------
626 823 PASADENA
- -------------------------------------
</TABLE>
1/13/99 Page 8
<PAGE> 16
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
626 864 PASADENA
- -------------------------------------
714 350 ANAHEIM
- -------------------------------------
714 390 ANAHEIM
- -------------------------------------
714 423 ANAHEIM
- -------------------------------------
714 478 ANAHEIM
- -------------------------------------
714 606 ANAHEIM
- -------------------------------------
714 608 ANAHEIM
- -------------------------------------
714 609 ANAHEIM
- -------------------------------------
714 624 ANAHEIM
- -------------------------------------
714 785 ANAHEIM
- -------------------------------------
714 875 ANAHEIM
- -------------------------------------
714 878 ANAHEIM
- -------------------------------------
714 883 ANAHEIM
- -------------------------------------
714 906 ANAHEIM
- -------------------------------------
714 914 ANAHEIM
- -------------------------------------
714 915 ANAHEIM
- -------------------------------------
714 925 ANAHEIM
- -------------------------------------
714 928 ANAHEIM
- -------------------------------------
760 333 PALM SPRINGS
- -------------------------------------
760 617 VICTORVILL
- -------------------------------------
805 216 VENTURA
- -------------------------------------
805 404 VENTURA
- -------------------------------------
805 405 VENTURA
- -------------------------------------
805 406 VENTURA
- -------------------------------------
805 407 VENTURA
- -------------------------------------
805 509 VENTURA
</TABLE>
1/13/99 Page 9
<PAGE> 17
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
805 512 VENTURA
- -------------------------------------
805 807 VENTURA
- -------------------------------------
805 813 VENTURA
- -------------------------------------
805 990 VENTURA
- -------------------------------------
805 403 SAN LUIS OBISPO
- -------------------------------------
805 598 SAN LUIS OBISPO
- -------------------------------------
805 704 SAN LUIS OBISPO
- -------------------------------------
805 708 SAN LUIS OBISPO
- -------------------------------------
805 709 SAN LUIS OBISPO
- -------------------------------------
805 712 SAN LUIS OBISPO
- -------------------------------------
818 468 BURBANK
- -------------------------------------
818 486 BURBANK
- -------------------------------------
818 625 BURBANK
- -------------------------------------
818 642 BURBANK
- -------------------------------------
818 726 BURBANK
- -------------------------------------
818 730 BURBANK
- -------------------------------------
818 634 BURBANK
- -------------------------------------
818 635 BURBANK
- -------------------------------------
818 636 BURBANK
- -------------------------------------
818 640 BURBANK
- -------------------------------------
818 645 BURBANK
- -------------------------------------
818 653 BURBANK
- -------------------------------------
818 667 BURBANK
- -------------------------------------
818 687 BURBANK
- -------------------------------------
818 731 BURBANK
- -------------------------------------
</TABLE>
1/13/99 Page 10
<PAGE> 18
PacBell Wireless' NPA-NXX's
for Intelligent Information
<TABLE>
<CAPTION>
- ------------------------------------
NPA NXX Rate Zone
- ------------------------------------
<S> <C> <C>
909 237 ONTARIO
- -------------------------------------
909 262 ONTARIO
- -------------------------------------
909 263 ONTARIO
- -------------------------------------
909 264 ONTARIO
- -------------------------------------
909 265 ONTARIO
- -------------------------------------
909 709 ONTARIO
- -------------------------------------
909 522 ONTARIO
- -------------------------------------
909 640 ONTARIO
- -------------------------------------
909 641 ONTARIO
- -------------------------------------
949 370 LAGUNA
- -------------------------------------
949 378 LAGUNA
- -------------------------------------
949 395 LAGUNA
- -------------------------------------
949 463 LAGUNA
- -------------------------------------
949 584 LAGUNA
- -------------------------------------
949 702 LAGUNA
- -------------------------------------
949 874 LAGUNA
- -------------------------------------
</TABLE>
1/13/99 Page 11
<PAGE> 1
EXHIBIT 10.14
INTELLIGENT INFORMATION INCORPORATED SERVICE AGREEMENT
THIS AGREEMENT is entered into by and between Intelligent Information
Incorporated, a Delaware corporation (hereinafter referred to as "III") and
AirTouch Cellular, a California corporation (hereinafter referred to as
"AirTouch"). The effective date of this Agreement is April 30, 1999.
WHEREAS, III owns computer software and hardware and has related procedures
(hereinafter referred to as "Systems") and by utilizing these Systems provides
"Products" in the form of "Services" and "Packages" that deliver "intelligent
information" based on data from various sources (hereinafter referred to as
"Information Providers") to text displaying wireless devices either at
prearranged times, as data conditions change by prearranged parameters or
on-demand; and
WHEREAS, AirTouch is desirous of providing these Products to its customers
[hereinafter such customers receiving Product(s) are referred to as
"Subscribers"]; and
WHEREAS, the parties agree to enter into certain arrangements, as set forth
herein, for that purpose;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby confessed and acknowledged, it is agreed as follows:
1. Provision of Products. III grants AirTouch the right to market and sell the
Products to AirTouch's prospects and customers. III shall provide the
Products as set forth in Appendix B to Subscribers with modifications from
time to time as mutually determined and agreed to in writing by the parties
hereto. III will provide reasonable feedback to AirTouch on use of the
Products by Subscribers.
2. Product Materials. III will cooperate with AirTouch in the development and
production of promotional or instructional literature or information
relating to the Products.
3. Communications. AirTouch shall provide and maintain at its cost, mutually
agreeable communication protocol(s) and communications connection(s) with
III for the purposes of providing the Products to Subscribers. AirTouch
shall also provide similar communications connection(s) to III's backup
site.
4. Profile Setup and Maintenance Overview.
a. III will be responsible for receiving and effecting all additions,
changes and deletions in Subscriber information based on the information
received from AirTouch either directly, through AirTouch VoiceCare
Service (IVR), III Customer Care, or via AirTouch's website in accordance
with the procedures as more specifically outlined in Appendix B.
b. AirTouch authorizes III to create and maintain an interactive voice
response system which shall record all information required by III to
properly add, change and/or delete users on III's systems.
c. In addition to telephone access, AirTouch authorizes III to create and
maintain a website linked to AirTouch's corporate website throughout the
term of this Agreement. AirTouch shall be solely
1
<PAGE> 2
responsible for all costs associated with maintaining the link between
the website created and maintained by III and AirTouch's corporate
website. The website shall enable individuals interested in becoming
Subscribers to make their Product and profile selections from an on-line
menu of options. Potential Subscribers will, among other features, be
able to: (i) view a complete listing of Products with explanations
regarding options and pricing; (ii) input their profiles; and (iii)
subscribe to receive the Products and Services. In the event that
AirTouch elects to use III's cooperative advertising program, each
party's logo will appear on the website. The use of the logos shall be
subject to the respective party's branding guidelines.
d. AirTouch acknowledges that, as a condition to becoming Subscribers, III
will require all individuals to agree to the terms and conditions of the
AirTouch Information Services Customer Agreement, a representative copy
of which is set forth in Appendix A (hereinafter "Customer Agreement").
The terms of Appendix A may be modified from time to time subject to the
mutual consent of the parties, which consent shall not be unreasonably
withheld. AirTouch shall not knowingly provide Products to any
individuals who have not agreed to be bound by the terms of the Customer
Agreement.
e. III makes no representation, warranty or guarantee as to the accuracy or
completeness of the information (including news, prices, statistics,
analyses and the like) provided through its Products and Services. In no
event shall III be liable to any Subscriber for any decision made in
reliance upon the information provided herein. AirTouch acknowledges and
agrees that use of the Products and Services is at Subscriber's sole
risk. INFORMATION IS PROVIDED ON AN "AS IS" BASIS WITHOUT WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. UNDER NO
CIRCUMSTANCE SHALL III OR ANY OF ITS INFORMATION PROVIDERS BE LIABLE TO
SUBSCRIBER OR ANYONE ELSE FOR ANY DAMAGES WHETHER DIRECT, INDIRECT,
SPECIAL, CONSEQUENTIAL OR PUNITIVE ARISING OUT OF USE OF THE PRODUCTS AND
SERVICES.
5. Indemnification.
a. To the extent of the negligence, gross negligence or willful misconduct
of III or any party under the direction or control of III, or to the
extent any Products and/or Services are defective or unreasonably
dangerous, or to the extent of III's breach of any of the terms and
conditions of this Agreement, III shall indemnify and hold harmless
AirTouch, its owners, parents, affiliates, subsidiaries, agents,
directors and employees from and against all judgments, orders, awards,
claims, damages, losses, liabilities, costs and expenses, including, but
not limited to, court costs and reasonable attorneys' fees
("Liabilities") arising from the performance of the Services hereunder or
the acts or omissions of III, its agents and employees and others under
its direction or control. Such Liabilities shall include, but not be
limited to, those which are attributable to personal injury, sickness,
disease or death; and/or result from injury to or destruction of real or
personal property including loss of use thereof, theft, misuse or
misappropriation. However, III need not indemnify AirTouch to the extent
that any such Liabilities arise out of the negligence, gross negligence
or intentional misconduct of AirTouch, its owners, parents, affiliates,
subsidiaries, agents, directors or employees.
b. To the extent of the negligence, gross negligence or willful misconduct
of AirTouch or any party under the direction or control of AirTouch, or
to the extent of AirTouch's breach of any of the
2
<PAGE> 3
terms and conditions of this Agreement, AirTouch shall indemnify and hold
harmless III, its parent, affiliates, subsidiaries, agents, directors and
employees from and against all Liabilities arising from the acts or
omissions of AirTouch, its agents and employees and others under its
direction or control. Such Liabilities shall include, but not be limited
to, those which are attributable to personal injury, sickness, disease or
death; and/or result from injury to or destruction of real or personal
property including loss of use thereof, theft, misuse or
misappropriation.
c. III shall indemnify and hold harmless AirTouch, its owners, parents,
affiliates, subsidiaries, agents, directors and employees from and
against all Liabilities arising out of or resulting from assertions under
workers' compensation or similar employee benefit acts made by III or any
of III's employees, agents, subcontractors, or subcontractors' employees
or agents.
d. Upon request, the indemnifying party shall, at no cost or expense to any
indemnitee, defend and/or settle any claim for Liabilities, whether or
not litigation is actually commenced, and pay any costs, reasonable
attorneys' fees and judgments and/or settlements that may be incurred by
any indemnitee under this section. The indemnifying party shall also (i)
keep any indemnitee subject to Liabilities reasonably informed of the
progress of such defense and/or settlement and (ii) afford any such
indemnitee, each at its own expense, an opportunity to participate with
the indemnifying party in the defense and settlement of any such
Liabilities.
e. In no event shall either AirTouch or III be liable to the other or to any
third party controlled, directly or indirectly, by the other party for
any incidental, special, indirect, punitive or consequential damages.
6. Patent, Trademark, Copyright or Trade Secret Indemnification.
a. If any of the Products or Services is finally found to constitute an
infringement of a patent, copyright, trademark, service mark, trade
secret or other legally protected proprietary right and AirTouch's use of
such Products or Services is enjoined thereby, III shall, at its sole
expense, either (i) procure for AirTouch the right to continue using the
Products or Services; or (ii) after consultation with AirTouch, replace
or modify the Products or Services to make them functionally equivalent
and noninfringing.
b. III shall indemnify and hold harmless AirTouch, its owners, parents,
affiliates, subsidiaries, agents, directors and employees from and
against all Liabilities that may result by reason of any infringement or
claim of infringement of any patent, trademark, copyright, trade secret
or other proprietary right relating to the Products and/or Services. III
will defend and/or settle at its own expense any action brought against
AirTouch to the extent that it is based on a claim that Products and/or
Services and/or the use thereof, infringe any patent, trademark,
copyright, trade secret or other proprietary right provided that AirTouch
provides III with prompt written notice of the existence of such a claim
and fully cooperates with III in the defense thereof. Failure to provide
notice to III of any action shall not relieve III from any liability in
respect of such action which it may have to an indemnified party on
account of the indemnity agreement contained in this Section, except to
the extent III may have been prejudiced by the failure to give notice.
c. If a preliminary or final judgment shall be obtained against AirTouch's
use of any Products and/or Services or any part thereof by reason of
alleged infringement or if in III's opinion, such Products,
3
<PAGE> 4
and/or Services are likely to become subject to a claim for infringement,
III shall, at its expense and option and without any effect or waiver of
any right AirTouch may possess at either law or equity, either: (a)
procure for AirTouch the right to continue using such Products and/or
Services, or (b) replace or modify the Products and/or Services so that
they become non-infringing, but only if the modification or replacement
does not adversely affect AirTouch's rights or ability to use same as
specified in this Agreement. In addition to the foregoing, in the event
that Products and/or Services are actually modified or replaced, III
shall reimburse AirTouch for all reasonable costs incurred in connection
with notifying Subscribers of any such changes.
d. The provisions contained in this paragraph 6 are the complete and
exclusive statement of AirTouch's rights and III's obligations with
respect to proprietary right infringement. Under no circumstances shall
these provisions apply to any infringement or claim of infringement that
are based, in whole or in part, on any portion of the Products and/or
Services that were either modified by AirTouch without the written
permission of III; combined with other products and services or not used
in accordance with III instructions.
7. Insurance. III agrees to maintain commercial general liability insurance,
including coverage against claims for bodily injury (including death),
personal injury and property damage caused by or occurring in connection
with the operation of III's business, including all activities authorized or
required to be performed under this Agreement, in which AirTouch is
designated an additional insured. Such insurance coverage shall be
maintained under one or more policies of insurance from an insurance
company(s) reasonably satisfactory to AirTouch and shall provide a minimum
liability protection of one million dollars ($1,000,000) per occurrence. III
shall also, at all times during the term, maintain workers' compensation
with statutory limits and employers' liability required insurance with
limits of not less than one million dollars ($1,000,000) per occurrence. No
required insurance policy may be canceled or materially changed except upon
thirty days' prior written notice to AirTouch. The insurance specified in
this paragraph shall provide that such insurance is primary coverage with
respect to all insured and waive all rights of subrogation against AirTouch
and AirTouch's affiliates. III shall cause its insurer to submit
certificates of insurance evidencing such insurance to AirTouch within ten
(10) days following execution of this Agreement.
8. Reporting. Prior to the fifth (5th) day of each month this Agreement is
effective, III shall provide to AirTouch a count of all Subscribers on III
systems by package and/or Service type for the prior calendar month, the
number of new activations for the month and the means by which activated,
the number of deactivations for the month and the means by which
deactivated, a total message sent count for Services for the prior calendar
month, a total message sent count by Subscriber, a breakdown of information
types selected by Subscriber by Package and/or Service type and
miscellaneous information as reasonably necessary to support payment
requirements hereunder.
9. Invoices.
a. During the term of this Agreement, III shall invoice AirTouch on a
monthly basis for Products and Services rendered based on the reporting
described in paragraph 8, above. The fees for Products and Services shall
be computed by multiplying the total number of Subscribers times the rate
per Subscriber for each Package and Service, plus the setup charge for
each new Subscriber, plus message charges and any other charges or
credits required hereunder. The Package and Service rates per Subscriber,
setup charges, message charges, associated conditions and any other
charges
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or credits, are as listed in Appendix B. Any preexisting AirTouch related
Subscribers, e.g., executives, demos, etc., are not to be subject to the
setup fee provisions of Appendix B, however each one of these Subscribers
will be assigned to a Package or Service, subject to the appropriate
charges, upon execution of this Agreement.
b. Any taxes imposed on the provision of Products or Services hereunder
shall be separately stated on any invoice. AirTouch reserves the right to
request and receive from III documentation regarding any taxes, expenses,
or other charges which III claims AirTouch is obligated to pay.
c. Invoices for Products or Services shall be paid within forty-five (45)
days following receipt of an invoice. AirTouch is not required to pay
specific invoiced amounts that are in dispute until such good faith
dispute is resolved. Once the dispute is resolved the disputed amounts
shall be paid within forty-five (45) days following such resolution.
10. Distribution Rights. III shall have the right, at its sole discretion to
sell or license the Products and/or Services to any other person or company
for any purpose. In the event that computer software is provided to
AirTouch, such computer software provided by III to AirTouch shall remain
the sole property of III. Such software shall not be reproduced, except for
backup purposes or use at multiple AirTouch locations, or distributed by
AirTouch. In the event of the termination of this Agreement all software
provided to AirTouch by III shall be returned to III.
11. IP Reporting. AirTouch acknowledges that III is required to provide certain
information relating to the usage of the Products to the Information
Providers (IP). III warrants to AirTouch that any such data pertaining to
Subscriber identification will remain proprietary and confidential with the
exception of satisfying III's reporting requirements to the Information
Providers or their agencies. Notwithstanding anything herein to the
contrary, III is hereby precluded from disclosing AirTouch specific
information to any third party. Information related to the usage of the
Products by AirTouch's Subscribers can not be called out specifically by III
and can be disclosed to third parties only if aggregated with data generated
by other purchasers of III's Products and Services. In the event that
AirTouch's Subscribers are the only III customers to use a particular
Product, then any data generated from the use of such Products can not be
disclosed to any third party. The permitted disclosure of aggregated
information may include:
a. the number of Subscribers registered in III Systems at midnight of each
day;
b. the number and types of messages sent by III Systems;
c. the number and types of Subscriber requests registered in III Systems;
and
d. any additional information as required by the Information Providers,
from time-to-time.
12. Unauthorized Use of Products. The information provided by III shall not be
used by AirTouch or its agents for any other purpose other than the
specified use of the distribution of the Products through wireless devices.
In the event that AirTouch becomes aware that any third party is improperly
using the information or the Products, including, without limitation,
providing or about to provide the information to an unauthorized party,
AirTouch shall immediately notify III of the facts of which it is aware in
connection with such actual or potential unauthorized use and shall provide
III with any
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documents in its possession with respect to the same. The parties shall
cooperate to the fullest extent possible to take all actions necessary to
eliminate such unauthorized use as expeditiously as possible.
13. Liability. III AND THE INFORMATION PROVIDERS SHALL HAVE NO LIABILITY FOR
CLAIMS OR DAMAGES, INCLUDING BUT NOT LIMITED TO ANTICIPATED OR LOST PROFITS
OR ANY ACTUAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, TO
AIRTOUCH OR ANY OF ITS AGENTS OR SUBSCRIBERS FOR ANY DEFECTS, DELAYS OR
FAILURES OF TRANSMISSION OR RECEPTION OF INFORMATION PROCESSED OR TO BE
PROCESSED IN ANY WAY OR MANNER BY III SYSTEMS, INCLUDING, BUT NOT LIMITED
TO, DAMAGES OF ANY NATURE ARISING FROM ANY NEGLIGENCE OF III, AND/OR THE
INFORMATION PROVIDERS, THEIR CUSTOMERS, OFFICERS, AGENTS, DIRECTORS AND
EMPLOYEES. IN NO EVENT SHALL LIABILITY BY III AND THE INFORMATION PROVIDERS
FOR ANY CLAIM ARISING OUT OF THIS AGREEMENT EXCEED THE AMOUNT PAID TO III BY
AIRTOUCH UNDER THIS AGREEMENT WITHIN THE THREE (3) MONTH PERIOD IMMEDIATELY
PRECEDING THE ACCRUAL OF SUCH CLAIM.
14. Assignment. This Agreement may not be assigned by either party without the
prior written consent of the other party hereto, which consent shall not be
unreasonably withheld; provided, however, that either party shall have the
right, without the prior consent of the other party to assign or transfer
this Agreement, to any parent, subsidiary, or affiliate entity or to any
successor which acquires all or substantially all of the assets of the
assigning party.
15. Term. The term of this Agreement is one (1) year beginning on the effective
date of this Agreement. AirTouch shall have the option to renew this
Agreement for one (1) additional year by providing III with written notice
of it intention to renew thirty (30) days before the anniversary of the
effective date of this Agreement, by certified mail or confirmed receipt
delivery service. Upon expiration or termination of this Agreement, the
parties shall immediately cease using the trademarks of the other and shall
mutually agree upon the proper transition of Subscribers.
16. Termination. Any party may terminate this Agreement upon not less than
thirty (30) days prior written notice to the other party if:
a. Any other party makes an assignment for the benefit of its creditors; or
b. Any petition shall be filed by or against such other party under any
Section or Chapter of the Federal Bankruptcy Act as amended or as may be
amended or any similar law or statute of the United States or any state
thereof which is not dismissed within thirty-five (35) days after
filing; or
c. The III Systems fails to materially perform or becomes materially
defective, and such defect(s) or failure(s) of performance cannot be
remedied by III in ten (10) working days from the receipt of notice to
III of the failure or defect.
17. Addresses. The mailing address of III is One Dock Street, Suite 500,
Stamford, CT 06902. The mailing address of AirTouch is specified below. All
notices of default or failure of obligation hereunder shall be mailed to the
other party first class, certified mail, return receipt requested and shall
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be addressed as such unless written notice is made to the other party
informing said of a change in mailing address.
18. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York. In any action between the parties to
enforce any of the terms of this Agreement, the prevailing party shall be
entitled to recover reasonable expenses, including reasonable attorneys'
fees.
19. Contractors. It is expressly agreed that III and AirTouch are acting
hereunder as independent contractors. Under no circumstances shall any of
the employees of one party be deemed the employees of the other for any
purpose.
20. No Affect. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other part or
provision of this Agreement. A waiver by either party of any term or
condition of this Agreement in any instance shall not be deemed or construed
as a waiver of such term or condition for the future, or of any subsequent
breach thereof. All remedies, rights, undertakings, obligations and
agreements contained in this Agreement shall be cumulative, and none of them
shall be in limitation of any other remedy, right, undertaking, obligation
or agreement of either party set forth herein.
21. Millennium. III warrants that its Software and/or Hardware is "Year 2000
compliant". This means that the Products shall operate without error
relating to date data, specifically including any error relating to date
data which represents or references different centuries or more than a
century, will not abnormally end and will be able to accurately process date
data (including, but not limited to, calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries, including
leap year calculations. III further warrants during the term of this
Agreement that any software and/or hardware used by III in support of the
Products as contained in this Agreement are year 2000 compliant and that the
provision of Products under this Agreement will be uninterrupted.
22. Rights to Modify Information. Except as specifically provided in this
Agreement, AirTouch shall have no right to intentionally delete, modify or
revise the information provided by III or the Information Providers.
Notwithstanding the foregoing, AirTouch may reasonably request that III
either directly or through its Information Providers use their best efforts
to delete, modify or revise the information as needed in order to conform
the Products and Services to the wireless display equipment formats employed
by AirTouch's Subscribers.
23. Confidentiality. The following is agreed to for the treatment of
confidential information:
a. III and AirTouch agree to keep confidential all confidential and
proprietary information and materials (a) prepared or developed by or
for it (including the financial terms of this Agreement) and (b)
supplied by one party to the other under this Agreement, provided that
information and materials intended to be held in confidence are (i)
designated as "Confidential" and (ii) are not available in the public
domain.
b. Confidential information may be disclosed as necessary to enforce a
party's rights under this Agreement and to comply with any legal or
governmental action. In the event of legal or
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governmental action, the disclosing party shall promptly notify the
other and shall cooperate in any reasonable manner with the other in
contesting such disclosure.
24. Publicity; Advertising; Promotional Materials. The parties reserve the right
to pre-approve all promotional materials produced by the other party that
mention or otherwise make reference to this relationship or otherwise
utilize the name, trademarks, products and/or services of the other party
inclusive of such party's information providers. For purposes of this
section the term "promotional materials" shall be deemed to include, without
limitation, any and all press releases, advertisements, and announcements
whether in printed or electronic format. Materials subject to the provisions
of this paragraph shall be provided to the other party no fewer then fifteen
(15) days prior to proposed use. Approval will not be unreasonably withheld.
Notwithstanding the foregoing, the parties will use their best efforts to
comply with the respective guidelines and policies regarding use of the
other party's trademarks.
25. Entire Agreement. This Agreement, including the Appendices attached hereto,
constitutes the entire agreement between the parties with respect to this
subject matter and supersedes all previous proposals, both oral and written,
negotiations, representations, commitments, writings and all other
communications between the parties. This Agreement may not be released,
discharged or modified except by an instrument in writing signed by the
parties.
IN WITNESS WHEREOF, the parties have hereto hereby execute this Agreement.
- ---------------------------------------- ------------------------------------
Authorized AirTouch Signature Authorized III Signature
- ---------------------------------------- ------------------------------------
Name Name
- ---------------------------------------- ------------------------------------
Title Title
- ---------------------------------------- ------------------------------------
Date Date
- ----------------------------------------
AirTouch's Mailing Address
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
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APPENDIX A (NETCARE)
AIRTOUCH INFORMATION SERVICES CUSTOMER AGREEMENT
1. Information (all information and material, including but not limited to,
text, images and other multi-media data, provided or made available as part of
AirTouch Information Services) obtainable through the Information Services has
been provided by various independent sources believed to be reliable. However,
the accuracy, completeness and/or timeliness of the Information is not
guaranteed by AirTouch or any other entity (collectively "Provider") selling,
transmitting, processing, consolidating or originating the Information, and such
Provider shall not be liable for any loss or damage arising from any inaccuracy
or error in delivering the Information.
2. INFORMATION IS FURNISHED ON AN "AS IS" BASIS. NO PROVIDER MAKES ANY EXPRESS
OR IMPLIED WARRANTIES REGARDING THE INFORMATION SERVICES OR THE INFORMATION,
INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
3. IN NO EVENT WILL ANY PROVIDER BE LIABLE TO CUSTOMER OR ANYONE ELSE FOR
CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE, DIRECT OR INDIRECT DAMAGES OR FOR
ANY LOST PROFITS, EVEN IF SUCH PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES OR LOSSES.
4. Customer acknowledges that each Provider has proprietary interests in the
Information and Customer agrees not to reproduce, retransmit, sell, publish or
commercially exploit the Information in any manner.
5. AirTouch reserves the right to terminate the Information Services at any
time, for any or no reason and without notice and shall have no liability to
Customer upon such termination other than to refund a prorated portion of the
fee for the Information Services if such termination is without cause.
6. Customer understands that the Information Services may include advertising
messages and e-commerce opportunities and agrees to receive such messages and
opportunities.
7. Customer acknowledges that no Provider has made any representation regarding
the Information Services or any Information that is not expressly stated in this
Agreement.
8. Information Services is accessible wherever an AirTouch digital signal is
available within the AirTouch Inland California and Northern Nevada service
area. Customer must be 18 years of age or older to obtain the Information
Services.
9. Limit of one free month per phone. Customer may cancel its Information
Services at any time before the end of the first month.
10. Customer may cancel its Information Services through the website
(www.airtouch.com/information_services) or by calling the AirTouch
(1-800-AIRTOUCH or *611 from Customer's cellular phone).
11. For complete terms and conditions of wireless service, please also refer to
the AirTouch Terms and Conditions of Service for Inland California and Northern
Nevada.
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APPENDIX A (VOICE)
AIRTOUCH INFORMATION SERVICES CUSTOMER AGREEMENT
CUSTOMERS USE OF THE AIRTOUCH INFORMATION SERVICES ("INFORMATION SERVICES")
CONSTITUTES ACCEPTANCE OF THE FOLLOWING TERMS.
1. Information (all information and material, including but not limited to,
text, images and other multi-media data, provided or made available as part of
AirTouch Information Services) obtainable through the Information Services has
been provided by various independent sources believed to be reliable. However,
the accuracy, completeness and/or timeliness of the Information is not
guaranteed by AirTouch or any other entity (collectively "Provider") selling,
transmitting, processing, consolidating or originating the Information, and such
Provider shall not be liable for any loss or damage arising from any inaccuracy
or error in delivering the Information.
2. INFORMATION IS FURNISHED ON AN "AS IS" BASIS. NO PROVIDER MAKES ANY EXPRESS
OR IMPLIED WARRANTIES REGARDING THE INFORMATION SERVICES OR THE INFORMATION,
INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
3. IN NO EVENT WILL ANY PROVIDER BE LIABLE TO CUSTOMER OR ANYONE ELSE FOR
CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE, DIRECT OR INDIRECT DAMAGES OR FOR
ANY LOST PROFITS, EVEN IF SUCH PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES OR LOSSES.
4. Customer acknowledges that each Provider has proprietary interests in the
Information and Customer agrees not to reproduce, retransmit, sell, publish or
commercially exploit the Information in any manner.
5. AirTouch reserves the right to terminate the Information Services at any
time, for any or no reason and without notice and shall have no liability to
Customer upon such termination other than to refund a prorated portion of the
fee for the Information Services if such termination is without cause.
6. Customer understands that the Information Services may include advertising
messages and e-commerce opportunities and agrees to receive such messages and
opportunities.
7. Customer acknowledges that no Provider has made any representation regarding
the Information Services or any Information that is not expressly stated in this
Agreement.
8. Information Services is accessible wherever an AirTouch digital signal is
available within the AirTouch Inland California and Northern Nevada service
area. Customer must be 18 years of age or older to obtain the Information
Services.
9. Limit of one free month per phone. Customer may cancel its Information
Services at any time before the end of the first month.
10. Customer may cancel its Information Services through the website
(www.airtouch.com/information_services) or by calling the AirTouch
(1-800-AIRTOUCH or *611 from Customer's cellular phone).
11. For complete terms and conditions of wireless service, please also refer to
the AirTouch Terms and Conditions of Service for Inland California and Northern
Nevada.
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APPENDIX B
PRODUCT/SERVICE DESCRIPTION
Basic Package ($2.00/month/subscriber)
- - CUSTOMERS CHOOSE UP TO 3 SELECTIONS FROM:
1. "National News Headlines" at 7am and 2pm Pacific time.
2. "Sports News Headlines" at 8am Pacific time.
3. "Joke of the Day" at noon Pacific time.
4. "Market Wrap-up" (quotes on the DJIA, S&P 500, and NASDAQ) at 2pm Pacific
time.
5. "International News Headlines" at 9am Pacific time.
6. "Local News Headlines" at 10am Pacific time.
7. "Business News Headlines" at 11am and 3pm Pacific time.
8. "Sports Results" - customers select two teams for as-issued final scores:
MLB, NFL, NBA, NHL, MLS, WNBA, NCAA basketball, NCAA football, and NCAA
hockey.
9. "Weather Forecast" by (ZIP code) at 6am Pacific time.
10. "Stock Quotes" (2 symbols, close, with volume).
11. "Horoscope" - one sign daily at 9am Pacific time.
12. "Health News Headlines" at 11am Pacific time.
13. "Entertainment News Headlines" at 11am Pacific time.
14. "Soap Opera Update" at 8am Pacific time.
15. " Lottery" provides daily/weekly major lotto results based on customer's
choice of state.
Enhanced Package ($3.00/month/subscriber)
- - CUSTOMERS CHOOSE UP TO 5 SELECTIONS FROM:
1. *"AP Alerts" as-issued breaking news messages (averages 2/day).
2. "National News Headlines" twice daily at local times chosen by the
customer.
3. "Sports News Headlines" at local time chosen by the customer.
4. "Joke of the Day" at local time chosen by the customer.
5. "Market Wrap-up" (quotes on the DJIA, S&P 500, and NASDAQ) at 2pm
Pacific time.
6. "International News Headlines" at local time chosen by the customer.
7. "Local News Headlines" at local time chosen by the customer.
8. "Business News Headlines" twice daily at local times chosen by the
customer.
9. *"Financial News Alerts" as-issued breaking news messages (averages
1/day).
10. *"Company News Alerts" as-issued breaking news headlines for two
companies.
11. "Sports Results" - customers select two teams for as-issued final
scores: MLB, NFL, NBA, NHL, LPGA, PGA NCAA basketball, NCAA football,
and NCAA hockey.
12. *"Sports Results Plus" - same as "Sports Results" (two teams) but
customers get halftime scores as well as finals, and can also choose
auto racing results as reported.
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13. *"Ski Reports" daily skiing conditions (in-season) for one ski area
local time chosen by the customer.
14. "Weather Forecast" by (ZIP code) at local time chosen by the customer.
15. *"Severe Weather Alerts" as-issued severe weather alerts from the
National Weather Service for one county.
16. "Lottery" provides daily/weekly major lotto results based on customer's
choice of state.
17. *"Stock Quotes Plus" (2 symbols, midday and close, with volume, high and
low )
18. *"Stock Quote Alert" (2 symbols with two auto-set alerts per day)
19. "Horoscope" - one sign daily at local time chosen by the customer.
20. "Health News Headlines" at local time chosen by the customer.
21. "Entertainment News Headlines" at local time chosen by the customer.
13. *"Ski Reports" daily skiing conditions (in-season) for one ski area
local time chosen by the customer.
14. "Weather Forecast" by (ZIP code) at local time chosen by the customer.
15. *"Severe Weather Alerts" as-issued severe weather alerts from the
National Weather Service for one county.
16. "Lottery" provides daily/weekly major lotto results based on customer's
choice of state.
17. *"Stock Quotes Plus" (2 symbols, midday and close, with volume, high and
low )
18. *"Stock Quote Alert" (2 symbols with two auto-set alerts per day)
19. "Horoscope" - one sign daily at local time chosen by the customer.
20. "Health News Headlines" at local time chosen by the customer.
21. "Entertainment News Headlines" at local time chosen by the customer.
22. "Soap Opera Update" at local time chosen by the customer.
23. *"Reminder Service" provides unlimited date specific reminder messages
at customer's specified time, e.g. birthdays, anniversary
* only offered as part of the "Enhanced Package"
- - NetCare: One time development fee of $5,000
**III will waive the one time development fee for NetCare if AirTouch
Cellular bundles an information service selection and offers it as a
complimentary service.
- - III will issue either a $2.00 credit for the first month for each subscriber
receiving the Basic Package and/or a $3.00 credit for the first month for
each subscriber receiving the Enhanced Package. AirTouch will offer the
Basic Package to the end user free of charge for (30) thirty days.
- - III will provide the Reminder Service, at no cost, to AirTouch Cellular and
its subscribers, with activation of the Enhanced Package.
- - Employee Packages -- III will make information services available to any/all
AirTouch employees at the following discounted rates:
Basic Package - $1.00 per month per employee
Enhanced Package - $1.50 per month per employee
III will issue a credit of $1.00 for each subscriber on the Basic Employee
Package, and $1.50 for each subscriber on the Enhanced Employee package for
each of the first 3 months the subscriber is on the service.
- - VoiceCare (IVR) -- One time development fee of $10,000.
- - III agrees to pay AirTouch 0.25 per subscriber for every subscriber that
selects local content provided by the Sacramento Bee
- - VoiceCare (IVR) - One time development fee of $10,000.
- - III agrees to pay AirTouch 0.25 per subscriber for every subscriber that
selects local content provided by the Sacramento Bee.
III has developed a Co-op advertising program for its business partners to
support their information services marketing initiatives. The program will serve
as an incentive for AirTouch to advertise the products and promote the "Powered
by III" concept, with the objective of increasing consumer awareness for both
organizations. The Co-op funds for the calendar year will accrue at a rate
equal to 3% of the actual amounts invoiced for the period, calculated on a
quarterly basis.
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Exhibit 10.15
INTELLIGENT INFORMATION INCORPORATED SERVICE AGREEMENT
THIS AGREEMENT is entered into by and between Intelligent Information
Incorporated, a Delaware corporation (hereinafter referred to as "III") and The
Weather Channel Enterprises, Inc, with its principal office located at 300
Interstate North Parkway, Atlanta, GA 30339, a Georgia corporation (hereinafter
referred to as "TWCE"). The effective date of this Agreement is December 21,
1998.
WHEREAS, III owns computer software and hardware and has related
procedures (hereinafter referred to as "Systems") and by utilizing these Systems
provides "Products" in the form of "services" and "packages" that deliver
"intelligent information" based on data from various sources (hereinafter
referred to as "Information Providers") to text displaying wireless devices
either at prearranged times, as data conditions change, by prearranged
parameters or on-demand; and
WHEREAS, TWCE desires to enable III to provide Products containing content
supplied by TWCE to customers (hereinafter customers receiving such Products are
referred to as "Subscribers"); and
WHEREAS, the parties agree to enter into certain arrangements, as set
forth herein, for that purpose;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby confessed and acknowledged, it is agreed as follows:
1. Content and Distribution Rights.
a) Subject to the terms of this Agreement, III shall have the
non-exclusive right to use and distribute the weather information
specifically described on Appendix B (the "Content") to the
following classes of subscribers as all or part of the Products:
i) to Subscribers ("TWCE Subscribers") who have been provided to
III by TWCE;
ii) to Subscribers ("ATT Subscribers") who are customers of AT&T
Wireless Services ("ATT"); and
iii) to other Subscribers who are customers of other wireless
information service providers ("Other Providers"), provided
that TWCE has approved in writing and in its sole discretion
the provision of the Content to the customers of such Other
Providers.
b) III will not distribute, market or otherwise make available to any
Subscriber, directly or as part of a Product, weather information
similar to the type of information that is contained in the Content.
However, nothing contained in this subparagraph (b) will prevent III
from distributing to Subscribers weather information dissimilar to
the Content that is of a type that TWCE has not made available to
III.
2. Provision of Products. III grants TWCE the right to market and sell the
Products to potential Subscribers. III shall provide the Products to
Subscribers in accordance with this Agreement. If
Intelligent Information Incorporated
Confidential
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<PAGE> 2
III and TWCE determine that a modification to any Product containing the
Content is appropriate, then TWCE shall have the right to approve any such
modifications. III shall have no authority to make any changes to the
Content, but TWCE will use commercially reasonable efforts to make any
required changes to the Content. TWCE will provide reasonable feedback to
III on use of the Products by TWCE Subscribers, and III will provide
reasonable feedback to TWCE on use of the Content by Subscribers.
3. Product Materials. III will cooperate with TWCE in the development and
production of promotional or instructional literature or information
relating to the Products. The development, production and use costs for
such materials are the responsibility of TWCE.
4. Communications. III and TWCE shall use the Internet to deliver the
Products to the Subscribers and the Content to III. Notwithstanding the
foregoing, TWCE shall provide and maintain at its cost, mutually agreeable
communication protocol(s) and communications connection(s) with III for
the purposes of providing the Products to Subscribers and delivering the
Content to III. However, if any Subscriber is a customer of a weather
information service provider that does not provide a toll-free
communications link (through Internet e-mail or a dial-up number) for the
delivery of messages, then III will be responsible for providing the
Product at an additional cost determined by III in order to cover the
additional cost of delivery of messages to that Subscriber.
5. Provisioning. III shall setup each Subscriber on its systems by acquiring
the appropriate credit card or billing information and addressing
information for the delivery of the Products to that Subscriber, and shall
be responsible for all billing of Subscribers (or ATT or Other Provider,
as applicable) related to the Products.
6. Profile Maintenance. TWCE will designate an employee who will work with
III on a web interface for the purpose of adding, changing and deleting
parameters in the Subscriber's database maintained in III Systems. III
will be responsible for receiving and effecting any additions, changes or
deletions in Subscriber information in accordance with procedures outlined
in Appendix B.
7. Subscriber Agreement. III will execute a Subscriber Agreement,
substantially in the form of that contained in Appendix A, with each
Subscriber prior to activation of the Service.
8. Marketing. TWCE shall market the Product by actively promoting and
marketing the commercial availability of its wireless services. TWCE's
marketing initiatives may include, in its discretion, direct response
programs, print advertising, web advertising, newsletters, brochures,
public relations, retail merchandising and other marketing media. III will
use reasonable efforts to promote the use of the Content to customers of
ATT and approved Other Providers.
9. Reporting. No later than the tenth (10th) day of each month, III shall
provide to TWCE a count of all Subscribers for the prior calendar month, a
total message sent count for Services for the prior calendar month and
miscellaneous reports as reasonably necessary to evidence III's payment
obligations hereunder or as reasonably requested by TWCE from time to
time.
10. Payments. No later than the last day of each calendar month, III shall
make the payment to TWCE required by Appendix B. Any payment from TWCE to
III required by Appendix B shall be
Intelligent Information Incorporated
Confidential
- 2 -
<PAGE> 3
made to III by the end of the succeeding calendar month. TWCE shall
include with each payment a detailed description of the manner in which
the payment was calculated.
11. Trademarks.
a) III grants to TWCE a non-exclusive, non-transferable license, during
the term of this Agreement, to use the trade names, trademarks,
service marks and logos of III listed on Appendix C (the "III
Marks") solely in connection with the marketing and provision of
Products containing the Content to Subscribers. III reserves all
right, title and interest in and to the III Marks. TWCE's use of the
III Marks will be subject to the prior written approval of III,
which shall not be unreasonably withheld or delayed. If III does not
provide a written response within five business days of the receipt
of a written request, approval shall be considered granted. TWCE
shall comply with all written guidelines provided by III with
respect to the graphic reproduction and use of the III Marks. This
license cannot be sub-licensed, assigned or otherwise transferred by
TWCE to any third party without the express written consent of III.
The license granted by III to TWCE hereunder shall automatically and
immediately terminate upon the expiration or termination of this
Agreement.
b) TWCE grants to III a non-exclusive, non-transferable license, during
the term of this Agreement, to use the trade names, trademarks,
service marks and logos of TWCE listed on Appendix D (the "TWCE
Marks") solely in connection with the marketing, advertisement,
promotion and distribution of the Content as contemplated by this
Agreement. TWCE reserves all right, title and interest in and to the
TWCE Marks. III's use of the TWCE Marks will be subject to the prior
written approval of TWCE, which shall not be unreasonably withheld
or delayed. If TWCE does not provide a written response within five
business days of the receipt of a written request, approval shall be
considered granted. III shall comply with all written guidelines
provided by TWCE with respect to the graphic reproduction and use of
the TWCE Marks. This license cannot be sub-licensed, assigned or
otherwise transferred by III to any third party without the express
written consent of TWCE. TWCE further hereby grants to III a
non-exclusive, non-transferable license, during the term of this
Agreement, to transmit the TWCE Marks solely during and as contained
within the transmission of Content as part of a Product. The license
granted by TWCE to III hereunder shall automatically and immediately
terminate upon the expiration or termination of this Agreement.
12. Audit. III hereby authorizes TWCE, or its agents, at its sole cost and
during III's regular business hours, access to III's business records
related to the Products for the purpose of verifying the authorized
distribution of the Content. III further agrees to maintain such business
records for not less than three (3) years.
13. Unauthorized Use of Products. In the event that either party becomes aware
that any third party is improperly using the Content or the Products, then
the party that first becomes aware of any third party so doing, shall
immediately notify the other party of the facts of which it is aware in
connection with such actual or potential unauthorized use and shall
provide the other party with any documents in its possession with respect
to the same. The parties shall cooperate to the fullest extent possible to
take all actions necessary to eliminate such unauthorized use as
expeditiously as possible.
Intelligent Information Incorporated
Confidential
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14. Liability.
a) III SHALL HAVE NO LIABILITY FOR CLAIMS OR DAMAGES, INCLUDING BUT NOT
LIMITED TO ANTICIPATED OR LOST PROFITS OR ANY ACTUAL, DIRECT,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, TO TWCE OR ANY OF ITS
AGENTS OR SUBSCRIBERS, RELATING TO ANY DEFECTS, DELAYS OR FAILURES
OF TRANSMISSION OR RECEPTION OF INFORMATION PROCESSED OR TO BE
PROCESSED IN ANY WAY OR MANNER BY III, INCLUDING, BUT NOT LIMITED
TO, DAMAGES OF ANY NATURE ARISING FROM ANY NEGLIGENCE OF III, ITS
CUSTOMERS, OFFICERS, AGENTS, DIRECTORS AND EMPLOYEES.
b) TWCE SHALL HAVE NO LIABILITY FOR CLAIMS OR DAMAGES, INCLUDING BUT
NOT LIMITED TO ANTICIPATED OR LOST PROFITS OR ANY ACTUAL, DIRECT,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, TO III OR ANY OF ITS
AGENTS OR SUBSCRIBERS, RELATING TO ANY DEFECTS, DELAYS OR FAILURES
IN THE PROVISION OF THE CONTENT OR FROM THE ACCURACY OF THE CONTENT,
INCLUDING, BUT NOT LIMITED TO, DAMAGES OF ANY NATURE ARISING FROM
ANY NEGLIGENCE OF TWCE, ITS CUSTOMERS, OFFICERS, AGENTS, DIRECTORS
AND EMPLOYEES.
15. Assignment. This Agreement may not be assigned by either party without the
prior written consent of the other party hereto. Such assignment does not
relieve the assigning party of its obligations hereunder, unless expressly
agreed in writing.
16. Term. The term of this Agreement is two (2) years beginning on the
effective date of this Agreement. However, either party may terminate
this Agreement upon sixty (60) days prior written notice, provided that
the termination date pursuant to this paragraph 18 shall not be prior to
the eighteen (18) month anniversary of the effective date of this
Agreement. Upon delivery of such termination notice, the parties will
negotiate in good faith regarding a possible extension and/or modification
of the terms of this Agreement.
17. Termination. Any party may also terminate this Agreement upon not less
than thirty (30) days prior written notice to the other party if:
a) The party makes an assignment for the benefit of its creditors; or
b) Any petition shall be filed by or against the other party under any
Section or Chapter of the Federal Bankruptcy Act as amended or as
may be amended or any similar law or statute of the United States or
any state thereof which is not dismissed within thirty-five (35)
days after filing; or
c) The III Systems fail to materially perform or become materially
defective, and such defect(s) or failure(s) of performance is not
remedied by III within ten (10) working days from the receipt of
notice to III of the failure or defect.
Upon termination of this Agreement, TWCE and III agree to immediately
discontinue all use of the other party's Trademarks, and to delete the
same from products, boxes, containers and/or packaging, and to destroy all
printed materials bearing any of the other party's Trademarks.
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Upon any termination or expiration of this Agreement, the following
paragraphs of this Agreement shall survive the termination or expiration:
9, 10, 11, 12, 14, 17 through 25.
18. Non Payment.
a) If III fails to make any payment to TWCE as due hereunder, and such
payment is not actually received by TWCE within ten (10) days of its
due date, then TWCE may immediately terminate this Agreement by
notice to III.
b) If TWCE has payment obligations pursuant to this Agreement, and
fails to make any payment to III as due hereunder, then if such
payment is not actually received by III within ten (10) days of its
due date, III may immediately terminate this Agreement by notice to
TWCE.
19. Addresses. The mailing address of III is One Dock Street, Suite 500,
Stamford, CT 06902. The mailing address of TWCE is specified below. All
notices of default or failure of obligation hereunder shall be mailed to
the other party first class, certified mail, return receipt requested and
shall be addressed as such unless written notice is made to the other
party informing said of a change in mailing address.
20. Law. This Agreement shall be governed and construed in accordance with the
laws of the State of New York. In any action between the parties to
enforce any of the terms of this Agreement, the prevailing party shall be
entitled to recover reasonable expenses, including reasonable attorneys'
fees.
21. Contractors. It is expressly agreed that III and TWCE are acting hereunder
as independent contractors. Under no circumstances shall any of the
employees of one party be deemed the employees of the other for any
purpose.
22. No Effect. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, such determination
shall not affect the validity or enforceability of any other part or
provision of this Agreement. A waiver by either party of any term or
condition of this Agreement in any instance shall not be deemed or
construed as a waiver of such term or condition for the future, or of any
subsequent breach thereof. All remedies, rights, undertakings, obligations
and agreements contained in this Agreement shall be cumulative, and none
of them shall be in limitation of any other remedy, right, undertaking,
obligation or agreement of either party set forth herein.
23. Millennium. III warrants that its software and/or hardware is "Year 2000
compliant". This means that the Products shall operate without error
relating to date data, specifically including any error relating to date
data which represents or references different centuries or more than a
century, will not abnormally end and will be able to accurately process
date data (including, but not limited to, calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first
centuries, including leap year calculations. III further warrants during
the term of this Agreement that any software and/or hardware used by III
in support of the Products as contained in this Agreement are year 2000
compliant and that the provision of Products under this Agreement will be
uninterrupted.
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24. Confidentiality. The following is agreed to for the treatment of
confidential information:
a) III and TWCE agree to keep confidential all confidential and
proprietary information and materials (a) prepared or developed by
or for it (including the financial terms of this Agreement) and (b)
supplied by one party to the other under this Agreement, provided
that information and materials intended to be held in confidence are
(i) designated as "Confidential" and (ii) are not available in the
public domain.
b) Confidential information may be disclosed only as necessary to
enforce a party's rights under this Agreement or to comply with any
legal or governmental action. In the event of legal or governmental
action, the disclosing party shall promptly notify the other and
shall cooperate in any reasonable manner with the other in
contesting such disclosure.
25. Entire Agreement. This Agreement, including the Appendices attached
hereto, constitutes the entire agreement between the parties with respect
to this subject matter and supersedes all previous proposals, both oral
and written, negotiations, representations, commitments, writings and all
other communications between the parties. This Agreement may not be
released, discharged or modified except by an instrument in writing signed
by the parties.
IN WITNESS WHEREOF, the parties have hereto hereby execute this Agreement.
/s/ Mike Carey /s/ Stephen Maloney
- --------------------------------- -----------------------------------------
Authorized TWCE Signature Authorized III Signature
Mike Carey Steve Maloney
- --------------------------------- -----------------------------------------
Name Name
Sr. Vice President President
- --------------------------------- -----------------------------------------
Title Title
12/21/98 1/4/99
- --------------------------------- -----------------------------------------
Date Date
Intelligent Information Incorporated
Confidential
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APPENDIX A
SUBSCRIBER AGREEMENT
YOUR USE OF THE SERVICE CONSTITUTES YOUR ACCEPTANCE OF THE FOLLOWING TERMS.
1. Information obtainable through the Service has been provided by various
independent sources believed to be reliable. However, the accuracy, completeness
and/or timeliness of the Information is not guaranteed by any Provider selling,
transmitting, processing, consolidating or originating the Information, and the
Providers shall not be liable for any loss or damage arising from any inaccuracy
or error in delivering the Information.
2. NO PROVIDER MAKES ANY EXPRESS OR IMPLIED WARRANTIES REGARDING THE SERVICE OR
THE INFORMATION, INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
3. THE PROVIDERS ENTIRE LIABILITY FOR DAMAGES IN CONNECTION WITH THE SERVICE OR
THE INFORMATION SHALL NOT EXCEED THE AMOUNTS PAID FOR SUBSCRIBING TO THE
SERVICE. IN NO EVENT WILL ANY PROVIDER BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
SPECIAL, PUNITIVE OR INDIRECT DAMAGES OR FOR ANY LOST PROFITS, EVEN IF SUCH
PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.
4. You acknowledge that the Providers have proprietary interests in the
Information and agree not to reproduce, retransmit, sell, publish or
commercially exploit the Information in any manner.
5. The Providers reserve the right to terminate the Service at any time, for any
or no reason and without notice and shall have no liability to you upon such
termination other than to refund a pro rated portion of the fee for the Service
if such termination is without cause.
6. You represent that you are entering into this Agreement in your individual
capacity and not on behalf of any firm, corporation, partnership, trust or
association.
7. You understand that the Service may include advertising messages and
e-commerce opportunities and agree to receive such messages and opportunities.
8. You acknowledge that no Provider has made any representation to you regarding
the Service or the Information that is not expressly stated in this Agreement.
If any provision of this Agreement is invalid or unenforceable under applicable
law, it shall, to that extent, be deemed omitted, and the remaining provisions
will continue in full force and effect. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
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APPENDIX B
I PRODUCT DESCRIPTION
OVERVIEW
The Weather Channel will provide Content for III to use in Products, i.e.,
wirelessly delivered personalized weather information services that will be
marketed and sold by TWCE, and other entities as approved by TWCE and III, as
defined herein.
DEFINITIONS
o "Affiliate" means a third party authorized by TWCE to resell the
Product.
o "Non Affiliate" means any network that is supported on TWCE web site
that does not have "Affiliate" status.
CONTENT
o TWCE will provide or make available to III the following Content for
inclusion in the Products as described:
o Three Day Forecast -- weather forecasts for the next three
days for 1300 US cities, delivered to III in the morning
(approx. 6 a.m.), early afternoon (approx. 2 p.m.) and night
(approx. 7 p.m.) for delivery to Subscribers according to the
their requested time(s).
o Current Weather Conditions -- conditions for 1300 US cities
delivered to III hourly for delivery to Subscriber in groups
of one, two or three cities according to the their requested
time(s).
o All data files will be made available to III via an FTP GET on TWCE
servers, or such future methods as mutually agreed to, so as to
support the reliable timely acquisition of the Content.
o It is agreed that from time to time, TWCE may expand the Content
offerings to III to include additional weather information and
services. It is agreed and understood that these additional Content
offerings shall be deemed to be Content for the purposes of this
Agreement and shall enjoy all the protections and privileges and be
subject to the applicable restrictions set forth in this Agreement.
OPERATIONAL CONSIDERATIONS/PRODUCT FULFILLMENT
o The primary fulfillment model provides end users a way to activate
through TWCE or its affiliate and III web pages.
o III will be responsible for the processing and distribution of
mobile weather messages to the end user and the billing, collection
and distribution of collected revenue for TWCE customers.
COMPENSATION
o TWCE, and approved Affiliates, will receive payment from III for
Subscribers at the rate of fifty-five percent (55%) of the agreed to
selling price charged by III, provided that III will be entitled to
retain at least $.50 per individual Subscriber per month. In the
event that the parties mutually agree to a pure advertising revenue
model, then the parties will negotiate in good faith to ensure that
III's share of revenue from advertising covers the III $.50 per
Subscriber per month minimum described above and III's reasonable
costs of providing III ADMATTS (Advanced Data Mining Tagging and
Transaction System) services.
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o III will also pay to TWCE $.25 per month for each non-TWCE
Subscriber receiving Content. In the event that TWCE expands the
Content to include over six thousand cities for the Three Day
Forecast and Current Weather Conditions and includes short form for
Severe Weather reports as part of the Content, then III will pay
$.40 per month for each non-TWCE Subscriber receiving Content. It is
expressly understood that this formula applies only to AT&T Wireless
Services, and that terms for any Other Provider will be agreed upon
on a case by case basis.
o If TWCE in its discretion elects to include and sell advertising
along with Content distributed by III through its ADMATTS system,
the net sales (defined as billed sales, less outside commissions and
fees, but without deduction for sales commissions and other internal
costs) attributable to such advertising shall be allocated
seventy-five percent (75%) to TWCE and twenty-five percent (25%) to
III. TWCE shall retain its share of net sales and send to III its
share as provided in paragraph 10 of this Agreement. The sharing of
advertising revenue shall apply to content distributed by the III
ADMATTS system only, and no other advertising revenues shall be
affected.
o TWCE shall retain the sole right, in its discretion, to insert or
attach advertising in or on any and all Content created by TWCE and
distributed by III. TWCE does not authorize III to, and III shall
not, solicit advertising on behalf of TWCE, or for its own purposes,
for inclusion in or adjacent to any Content created by TWCE and
delivered by III. Should TWCE elect to insert or attach advertising
in or on any Content to be distributed to ATT Subscribers or to
Subscribers of Other Providers, then TWCE shall obtain III approval,
such approval will only be withheld if ATT or the Other Provider so
requires, and will share the net sales attributable to such
advertising as described above.
II. DESCRIPTION OF PROFILE MAINTENANCE
NetCare!
NetCare!, an Internet based real time registration and profile management
system, is provided to TWCE at no incremental charge. However, should
incremental programming be required at TWCE's written request on behalf of TWCE
affiliates, then a separate one time charge of $1,000 per Affiliate will be
charged to modify Netcare! III will customize the performance of NetCare! to
TWCE Affiliates Product set as then described, and within reason modify the
"look and feel" of the web site provided to meet TWCE Affiliate's existing
standards. III will pay to TWCE Affiliates twenty five percent (25%) of all
advertising revenue generated by NetCare!, e.g., via banners, each month until
the aggregate amount of such payments equals the initial one time charge above.
Thereafter TWCE Affiliates will receive ten percent (10%) of the advertising
revenue generated by NetCare!
III may provide, at its discretion, an IVR version of its NetCare! for use in
the registration of Subscribers and for Subscriber profile management.
Intelligent Information Incorporated
Confidential
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APPENDIX C
III MARKS
1. "Powered by iii"
TWCE shall follow "Powered by iii" Guidelines for Use, Exhibit 1 and agrees to
the following conditions of use:
a. TWCE shall at all times use and clearly show in connection with the
Products, associated advertising, labels and packaging, the
Trademarks and any appropriate legends, markings, and/or notices of
property right as may be required by III from time to time.
Depending on the trademarks used, the current legend or notice
requirements are:
i. A TM should appear adjacent to the Trademarks.
ii. A legend should appear indicating that the Trademark is a
trademark of Intelligent Information Incorporated. For
example, "Powered by iii is a trademark of Intelligent
Information Incorporated".
b. TWCE agrees to submit to III a sample of the proposed use of the
Trademarks on or with the Products, boxes, containers and/or
packaging, and III shall have approved such proposed use in writing
prior to any sale of the Products using such Trademarks in the
proposed manner or any other public use of the Trademarks in the
proposed manner by TWCE. Approval will not be unreasonably withheld,
and if III does not provide a written response within ten days of
the receipt of such a request, approval shall be considered granted.
d. TWCE will not harm, misuse or bring into disrepute the Trademarks.
e. TWCE acknowledges the ownership of the Trademarks in III, and agrees
that it will do nothing inconsistent with such ownership and that
all use of the Trademarks by TWCE shall inure to the benefit of and
on behalf of III.
f. TWCE agrees that nothing in the Agreement shall give TWCE any right,
title or interest in the Trademarks, other than the right to use the
Trademarks in accordance with this Agreement, and TWCE agrees that
it will not claim title to the Trademarks or attack the title of III
in the Trademarks.
Intelligent Information Incorporated
Confidential
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Exhibit 1
"Powered by iii" Guidelines for Use
The Value of "Powered by iii"
o The "Powered by iii" Logo (the "Logo") is an effective way to identify
information services offering as incorporating the benefits and features
of the leading source of personalized content for wireless devices,
Intelligent Information Incorporated (III).
o Use of the Logo also qualifies TWCEs to participate in III's advanced
business partner support programs.
The Logo's Meaning for Business Partner Use
o The Logo conveys the value and excitement of personalized information
services provided by the III platform. Business partners are required to
use this Logo in advertising, point-of-purchase displays, and marketing
materials to promote information services. Use of the Logo is made
mandatory under the trademark license granted in the standard III Service
Agreement, and the Logo may only be used according to these Guidelines.
These Guidelines help ensure that the Logo continues to provide consumers
with a clear identification of information service quality.
o To protect this valuable trademark, the business partner may not use the
Logo in any way other than as described in these guidelines or as may be
provided in writing by III from time to time. Any unauthorized use of the
Logo is an infringement of III's trademark rights.
Business Partner Logo Artwork
o Do not use artwork provided by any source other than III. III will provide
approved Business Partners that agree to follow these guidelines with
electronic versions of the Logo. You may not alter this artwork in any
way, separate the words from the graphic, or replace the words with any
others. The trademark symbol (TM) must appear at the lower right corner of
the graphic portion of the Logo. Documents including the Powered by iii
logo must also include the footnote, in no less than 6 point text,
"Powered by iii is a trademark of Intelligent Information Incorporated."
Sizing and Placement Requirement
o The Logo may be used only on materials that make accurate references to
the information services as provided by III. The Logo must be placed in
close proximity to headline copy or logo treatments dealing with
information services. The Logo cannot be larger or more prominent than
your company name, company logo, product name (if applicable), or service
name.
o The Logo may stand-alone, or be incorporated into your information
services logo if appropriate. If the Logo is used as a stand alone
element, a minimum amount of empty space must be left between the Logo and
any other object such as type, photography, borders, edges, etc. The
required border of empty space around the Logo must be 1/4x wide, where x
equals the height of the graphic, as measured from the highest point on
the graphic portion of the Logo to the lowest point on the graphic portion
of the Logo.
o Minimum size for the Logo is 3/8 of an inch high.
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o Business partners may not use the Logo in any manner that suggests that
advertising, point-of-purchase displays, or other marketing materials are
from III.
o The footnote "Powered by iii is a trademark of Intelligent Information
Incorporated", in not less than 6 point type, must accompany each use of
the Logo.
o Intelligent Information Incorporated reserves the right to object to
unfair uses or misuses of its trademarks or other violations of applicable
law.
Color Treatment
o You may not alter the colors of the Logo in any way from the treatments
provided by III, without the written approval of III.
Quality Control
o III reserves the right to review business partner use of the Logo.
Business partner must correct any deficiencies in the use of the Logo upon
reasonable notice from III.
o Address any questions concerning the Logo to the appropriate III Account
Manager or III's Director of Marketing.
o Intelligent Information Incorporated reserves the right to change the Logo
and/or these guidelines at any time at its discretion. You must comply
with the guidelines as amended from time to time.
Intelligent Information Incorporated
Confidential
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APPENDIX D
TWCE MARKS
1. The Weather Channel(R)
2. Admosphere(R)
3. America's Natural Resource(R)
4. Everything Weather(R)
5. Local on the 8's(R)
6. Met on the Net(R)
7. SafeSide(R)
8. Starlit(R)
9. The Frequency of Weather(R)
10. The Weather Channel Connection(R)
11. The Weather Classroom(R)
12. Travelwise(R)
13. TWC(R)
14. Weather Star(R)
15. Weather Star XL(R)
16. Weather You Can Always Turn To(R)
17. Weathering The Seasons(R)
Intelligent Information Incorporated
Confidential
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Exhibit 10.18
MARKETING AGREEMENT
This Marketing Agreement ("Agreement") is entered into by and between
1-800-FLOWERS (the "Company"), a New York corporation with its principle offices
at 1600 Stewart Avenue, Westbury, N.Y. 11590, and Intelligent Information
Incorporated (the "Marketer"), a Delaware corporation with its principle offices
at One Dock Street, Suite 500, Stamford, CT 06902.
1. Definitions
a. Tag. The term "Tag" means a text reference to the name and/or
trademarks of the Company when included as part of the Service to Users and in
marketing materials distributed by the Marketer and its Business Partners.
b. Impressions. The term "Impressions" refers to the number of times a
User is exposed to the Tag.
c. Sales. The term "Sales" means the sales generated by the Company as
a result of a User making a purchase of Product.
d. Product. The term "Product" means the products or goods offered for
sale by the Company.
e. Business Partners. The term "Business Partners" means third parties
through which Marketer distributes the Services to Users, subject to the terms
of this Agreement.
f. Users. The term "Users" means those consumers who receive the
Service or who are prompted to use the Product.
g. Trademark. The term "Trademark" means the 1-800-FLOWERS name and
logo as such logo appears on marketing materials and in advertising by the
Company.
h. Service. The term "Service" means the information products and
services created by the Marketer and delivered to the User in such a manner that
provides or encourages access to order the Product, e.g., a Tag, an automatic
call feature, etc.
i. Incentives. Promotions offered or provided by the Company designed
to stimulate Sales.
2. Distribution
a. Grant of Rights. Subject to the terms and conditions of this
Agreement, Company grants Marketer a nonexclusive license, as provided for in
this Agreement, to (i) promote the Product to its Business Partners, who shall
have the right to market the Product and distribute it as part of the Service to
Users and (ii) to use the Trademark to market the Product provided the Company
gives its prior written consent to any such uses.
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3. Marketing
a. Promotion. Marketer agrees to promote and market the Product to
prospective Business Partners and Users. The Company will use commercially
reasonable efforts to promote and market the wireless availability of the
Product to its Business Partners.
b. Tags. Marketer shall be responsible for including Tags in accordance
with its production schedule.
c. Use of Trademark. Marketer shall name Company in its formal
promotional and marketing materials relating to the Service. Company agrees that
Marketer has the right, during the term of this Agreement, to use the Trademark
in Marketer and its Business Partner marketing and advertising materials,
subject to the terms of this Agreement, provided Marketer and its Business
Partners include notice that the Trademarks are registered trademarks of
1-800-FLOWERS, Inc. used with permission and provided the Company gives prior
written approval to any such uses. Such use of the brand identification shall be
solely in a manner as previously approved by Company as set forth in
subparagraph d. below.
d. Prior Approval. Marketer agrees to submit to Company for prior
written approval all press releases, advertising or other promotional materials
that use Company names not less than twenty (20) days before the proposed use.
Company shall not unreasonably withhold its approval. Company may grant or
withhold its approval in its sole discretion, but agrees to notify the Marketer
within ten (10) days of any withholds.
e. Incentives. The Company agrees to extend its customary Incentives to
the Marketer and its Business Partners in order to stimulate Users to call for
Product and thereby increase Sales.
4. Provisioning
a. Provision of the Service. Subject to the terms and conditions of
this Agreement, Company shall make available to Marketer substantially all
Products. Company will provide to the Marketer: (i) toll free accesses to its
national customer call center(s), and (ii) call management that allows Company
customer service to acknowledge the User by Business Partner. Such functions
will be provided in conformance with the Technical Specifications set forth in
Exhibit C.
b. Audit. Both Marketer and Company may, during business hours and upon
reasonable notice, inspect and audit the relevant books and records of the other
party for the sole purpose of verifying all information related to payments
under this Agreement. Such inspection and audit shall be at the expense of the
inspecting party.
5. Reporting and Payment
a. Reporting. Company will provide to the Marketer by the 30th of each
month a report indicating the total number of Sales and gross revenues generated
from activity related to the Marketer and its Business Partners for the prior
calendar month.
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b. Payment Schedule. Company shall pay Marketer the Fees set forth in
the Payment Schedule in Exhibit B.
6. Term and Termination
a. Term. This Agreement commences on the date last signed (the
"Effective Date"), and shall remain in effect for an Initial Term of three (3)
years. Thereafter this Agreement will automatically renew for one year terms,
unless terminated in writing ninety days prior to any term renewal date by
either party.
b. Insolvency. Either party may terminate this Agreement by written
notice to the other if the other party becomes insolvent, makes a general
assignment for the benefit of creditors, permits the appointment of a receiver
for its business or assets, or takes steps to wind up or terminate its business.
c. Notwithstanding anything to the contrary contained herein, the
Company shall have the right to terminate this Agreement at any time upon 90
days prior written notice to the Marketer.
7. Trademarks
Marketer acknowledges that Company trademarks are claimed to be the
sole and exclusive property of Company. Pursuant to Paragraph 3.d., Company
shall have the right to approve in writing in advance the use of its trademarks
by Marketer for all purposes, including, without limitation, for which approval
given to identify and promote use of the Service. Upon compliance with this
provision and Paragraph 3.d., use of such marks by Marketer for such purposes
shall be deemed approved during the term of this Agreement unless Company
specifically notifies Marketer to the contrary.
8. Limitation of Liability
In no event shall one party be liable to the other for any direct,
indirect, special, exemplary or consequential damages, sustained by a party,
including lost profits, whether or not foreseeable or alleged to be based on
breach of warranty, contract, negligence or strict liability, arising under this
Agreement or any performance under this Agreement.
9. Force Majeure
Neither party shall be liable for any delay or failure to perform under
this Agreement if caused by conditions beyond its control, including but not
limited to fire, flood, accident, storm, acts of war, riot, government
interference, strikes or walkouts; provided, however, no such event shall excuse
any delay or failure to perform by Company of its obligations to make payment to
Marketer under Paragraph 5 of this Agreement. The affected performing party
shall promptly notify the other party of the nature and anticipated length of
continuance of such force Majeure. Should any such failure or suspension of
performance by Company continue for more than one (1) month, then either party
shall have the right to terminate this Agreement without further liability or
obligation on the part of either party.
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10. Notices
All notices and demands hereunder shall be in writing and delivered by
hand delivery, certified or registered mail, return receipt requested, or
confirmed facsimile transmission at the addresses set forth below (or at such
different address as may be designated by either party by written notice to the
other party). Delivery shall be deemed to occur (i) if by hand deliver, upon
such delivery, (ii) if by mail, four (4) days after deposit with the U.S. Postal
Service, and (iii) if by facsimile transmission, upon receipt.
If to Company:
1-800-FLOWERS
1600 Stewart Avenue
Westbury, NY 11590
Attn: Glenn Reed
If to Marketer:
Intelligent Information Incorporated
One Dock Street, Suite 500
Stamford, CT 06902
Attn: Robert Coletti
11. General Terms and Conditions
a. Not Agent. Neither party shall be considered an agent of the other
party, nor shall either party have the authority to bind the other party.
b. No Assignment. Neither party may assign this Agreement without the
written consent of the other party; provided, however, that either party may
assign this Agreement as part of a transaction in which substantially all of the
assets related to its rights and obligations under this Agreement are assigned
to a third party.
c. Governing Law. This Agreement and performance hereunder shall be
construed and governed by the laws of the State of New York. Any dispute agreed
hereunder shall be resolved before the courts of the State of New York of the
USDC in and for the Eastern District of New York.
d. Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if such provision(s) had never been contained herein, provided that such
provision(s) shall be curtailed, limited or eliminated only to the extent
necessary to remove the invalidity, illegality or unenforceability.
e. Waiver. No waiver of any breach of any of the provisions of this
Agreement shall be deemed a waiver of any preceding or succeeding breach of the
same or any other provisions
- 4 -
<PAGE> 5
hereof. No such waiver shall be effective unless in writing and then only to the
extent expressly set forth in writing.
f. Complete Agreement. The parties agree that this Agreement is the
complete and exclusive statement of the agreement between the parties, which
supersedes and merges all prior proposals, understandings and other agreements,
oral or written, between the parties relating to this Agreement.
g. Amendment. This Agreement may not be modified, altered or amended
except by written instrument duly executed by both parties.
h. Not Inference Against Author. No provision of this Agreement shall
be interpreted against any party because such party or its legal representative
drafted such provision.
i. Headings. The headings used in this Agreement are for convenience
only and are not to be construed to have a legal significance.
j. Read and Understood. Each party acknowledges that it has read and
understands this Agreement and agrees to be bound by its terms.
<TABLE>
<S> <C>
Marketer, by: Company, by:
/s/ Stephen G. Maloney /s/ Glenn Reed
- ------------------------------ ----------------------------------------
Signature Signature
Stephen G. Maloney Glenn Reed
- ------------------------------ ----------------------------------------
Printed Name Printed Name
President VP
- ------------------------------ ----------------------------------------
Title Title
Date: 5-6-97 Date: 5-2-97
</TABLE>
EXHIBIT A
Description of Product
a) Product shall include a complete set of current products for sale by 1-
800-FLOWERS. b) Marketer intends to include the Product of the Company in its
Service offerings to its Business Partners. A User will be afforded a convenient
and seamless means of connecting from the Business Partner to the Company. In
addition, the Marketer will be providing Service to Users and, under terms of
this Agreement, providing Tags highlighting the Company and/or its Product.
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<PAGE> 6
EXHIBIT B
Payment Schedule
a) Sales Fees. The Company shall pay Marketer a percentage, based upon the
following schedule, of the revenues that the Company has received or is entitled
to receive from any/all Sales generated (Revenue) as a part of the Service. This
percentage will be five percent (5%) for all orders up to 100,000 per year, six
percent (6%) for the next 100,000 orders, seven percent (7%) for the next
100,000 orders, eight percent (8%) for the next 100,000 orders, nine percent
(9%) for the next 100,000 through 999,999 annual orders and ten percent (10%)
for anything over 1,000,000 orders. b) Payment. Marketer will receive payment by
check monthly, by the 30th day of the month following the month in which the
sales were made. Revenue is defined as price of merchandise net of service,
shipping and handling charges, applicable taxes, discounts, credits and
appropriate chargebacks.
EXHIBIT C
Technical Specifications
a) Company will install and maintain toll free number(s) for Marketer to provide
to Users and will maintain the customer service center necessary to offer the
Service via such toll free number. b) Both parties further agree to discuss the
development of an automated interface that would provide the User with the
opportunity to place an order directly with the Company without accessing the
Company's call center.
EXHIBIT D
Addendum
1) Marketer shall operate the Service in compliance with all applicable
laws and regulations. Marketer is solely responsible for obtaining all
required governmental authorizations necessary for the full performance
of its Service as provided for under this Agreement.
2) Marketer hereby represents and warrants that:
a) It is a corporation duly organized and validly existing and in
good standing under the laws of Delaware.
b) It has the full power and authority to enter this Agreement and to
perform its obligations hereunder.
c) The Service and no service to be rendered by Marketer under this
Agreement knowingly infringes or violates any patent, copyright,
trade secret, trademark or other proprietary right of any third
party.
3) The Company shall have the right to treat any customers who purchase
from the Company as its permanent customers for any and all purposes
and that any such customers may be added to its customer lists; which
lists are periodically sold or leased. The Company agrees that it will
make reasonable efforts not to sell or lease such lists to competitors
of the Marketer.
4) That should there be any conflict between the terms of this Addendum
and the form Agreement, then the terms of this Addendum shall prevail.
- 6 -
<PAGE> 7
5) Marketer will monitor and periodically test the general availability
and operation of the Service and its compliance with the terms of this
Agreement.
6) Company and Marketer agree to keep confidential all information and
materials supplied by the other party and limit access to such
information and materials to those who need to know in order to
implement and carry out the terms of this Agreement.
7) Marketer, its agents, servants and/or employees, agree to defend,
indemnify and hold the Company, is subsidiaries, affiliates and their
respective officers, directors and employees free and harmless from any
and all claims, expenses, costs and liabilities, whatsoever, including
reasonable attorneys fees, arising from the representations made by the
Marketer herein and arising from any acts and/or omissions of Marketer
in carrying out the terms of this Agreement.
- 7 -
<PAGE> 1
EXHIBIT 10.22
MASTER CONTENT PROVIDER AGREEMENT
This Content Provider Agreement ("Agreement") is entered into this 9th day of
February, 2000 by and between Broadcast Entertainment.com, Inc., a corporation
with its principal offices at 443 Congress Street, Portland, ME 04101
("Provider") and i3 Mobile, Inc. ("i3"), a Delaware corporation, with its
principal offices at 181 Harbor Drive, Third Floor, Stamford, CT 06902.
WHEREAS, i3 has developed proprietary systems, procedures and technologies to
deliver to its customers a wide assortment of content, data and transactional
services directly to wireless devices and enables such customers to personalize
such delivery to meet their specific needs and preferences; and
WHEREAS, Provider is in the business of aggregating entertainment related
content and services; and
WHEREAS, Provider is desirous of aggregating and providing i3 with certain
entertainment related content, data and transactional services for delivery to
i3's wireless customers either directly or through i3's distributors in
accordance with the terms and provisions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. BUSINESS OVERVIEW. Provider shall provide i3 with exclusive access to a wide
variety of customizable entertainment related content, data and transactional
services aggregated by Provider from a variety of third party sources which may
include Provider's own content (hereafter referred to collectively as "Content
Providers").
(a) CONTINUOUS JOINT MARKETING. Throughout the term of this Agreement,
Provider and i3 will use their reasonable best efforts to work together to
develop and produce wireless products based on content received from Content
Providers and related promotional materials that are designed to enhance the
demand for wireless entertainment content and services by end-users (services
based on Provider's content shall be referred to as "Wireless Content
Services").
(b) EXCLUSIVE RELATIONSHIP. Subject to the exclusion for "Existing
Contracts," as set forth below, during the term of this Agreement i3 hereby
appoints Provider as i3's exclusive content provider and aggregator for the
entertainment related content as is more specifically defined on Appendix A,
which is attached hereto and made a part hereof. i3 and Provider acknowledge
that i3 has entered into agreements with other parties including other content
providers prior to the date hereof which content providers are listed on
Appendix A attached hereto and made a part hereof (the "Existing Contracts").
The Provider understands and agrees that i3 will honor all current and future
obligations under the Existing Contracts (including renewals) without violating
the exclusivity provisions of this Agreement. It is understood, however, that i3
agrees that it will use its commercially reasonable, good faith efforts to
arrange a meeting with each of the Existing Contracts to enable Provider and i3
to formally present this relationship and request that the Existing Contracts,
in their sole discretion, consider directing their content through Provider.
(c) PROTOCOL. Provider shall provide or require the Content Providers
to provide the Wireless Content Services to i3 in conformance with the Technical
Specifications set forth in Appendix C attached hereto and made a part hereof.
(d) ADDITIONAL SERVICES. At any time during the term of this Agreement,
Provider may request that i3 provide deliverables and materials or perform
additional work and services ("Additional Services"). In the event i3 elects to
perform such Additional Services, the parties shall outline the specifications,
cost
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and delivery dates of the project on a statement of work ("Statement of Work").
Each Statement of Work must be mutually agreed upon by the parties and shall
only be effective and incorporated into this Agreement when executed by both
parties. Each Statement of Work shall be dated for identification and must
include a detailed description of the agreed upon work, services and/or
deliverables to be furnished together with any available standard commercially
available specifications, documentation and descriptions for same
("Specifications"), the location for the delivery and installation (if
applicable) ("Delivery Location"), a Milestone Schedule listing performance,
delivery and other key dates for the work effort involved (each, a "Scheduled
Delivery Date"), the fixed price or time and materials charges, including
support charges, if any, and whether such are monthly, quarterly or annual, if
applicable, and any additional terms the parties mutually agree to include. The
first Statement of Work issued hereunder is set forth on Appendix E attached
hereto and made a part hereof.
(e) ADVERTISING In all instances in which Provider is the sole
aggregator of the content, data, or transactional services delivered or
otherwise made available to end users pursuant to Appendix A Part A of this
Agreement, i3 hereby assigns Provider and its affiliate, AlliedAdvertising.com,
all of i3's rights to place advertising at prevailing market rates, on an
exclusive basis, in connection with the Wireless Content Services. The
determination of whether Provider is the sole aggregator for purposes of the
preceding sentence shall exclude any icons, marks or text that may be included
in the Wireless Content Services to identify either i3 or its distributor as the
provider of the service. All net revenues generated from the activities of
Provider in connection with this provision, either directly or through any of
its affiliates, shall be subject to the terms of Appendix B. Provider shall use
for itself, and cause its affiliates to use, commercially reasonable efforts to
obtain the highest placement rates for the advertising placed pursuant to the
terms of this Agreement.
In those instances where Provider is not the sole aggregator of
content, data or transactional services delivered or otherwise made available to
the end users but in which i3 otherwise controls the placement of such
advertising, i3 shall not permit any third party to advertise products that
compete with the content, data and transactional services aggregated by Provider
pursuant to Appendix A Part A. The determination of whether a third party's
products compete with Providers shall be made by i3 using its commercially
reasonable business judgement. In those instances where i3 does not control the
placement of such advertising, it shall use commercially reasonable efforts to
protect each of the parties' respective interests.
2. DISTRIBUTION AND FEES. (a) Subject to the terms and conditions of this
Agreement, Provider grants i3 an exclusive worldwide license and right to
distribute the Wireless Content Services to distributors and end-users. The term
"end-users" refers to all individuals who receive wireless information and
messaging services from i3 through the i3 Network either directly or indirectly
through its distributors such as Wireless Network Operators and other
enterprises under contract with i3. Distributors shall have the right to market
the Wireless Content Services and distribute the Wireless Content Services to
end-users. The exclusive worldwide license and right granted to i3 hereunder
extends to any and all current or future wireless communications devices
including, but not limited to, SMS and WAP based PCS telephones, WAP browsers,
PDA's, pagers, in vehicle and in airline devices and all other enabling wireless
devices for worldwide distribution. Payments relating to revenues derived from
the marketing of the Wireless Content Services are set forth on Appendix B.
(b) If Provider identifies an end-user or distributor that Provider
wants to receive the Wireless Information Services, i3 shall use its
commercially reasonable efforts to secure an agreement with such end-user or
distributor. If i3 is unsuccessful, for whatever reason, Provider shall have the
right to enter into direct negotiations with such end-user or distributor and to
enter into any contract or agreement resulting therefrom subject to the payment
provisions set forth on Appendix B.
i3Mobile, Inc. - CONFIDENTIAL INFORMATION (FODA0100) Page 2
<PAGE> 3
3. CONTENT. i3 acknowledges that this Agreement does not transfer to i3,
distributors or end-users any proprietary right, title or interest, including
copyright, in and to the content made available by Content Providers as part of
the Wireless Content Services. i3 shall not directly edit, abridge, rewrite or
in any way alter the content of the Wireless Content Service or create any work
derived from the content of the Wireless Content Services that changes its
meaning or tone. Provider agrees that i3 may make changes to the content to meet
wireless display equipment formats.
4. SELECTION OF CONTENT PROVIDERS. (a) i3 and the Provider hereby agree that all
content delivered by Content Providers shall be mutually agreed upon by i3 and
Provider, each in the exercise of good faith and reasonable commercial and
technical business judgement. i3 and Provider agree and acknowledge that, from
time to time, Provider may engage the services of Content Providers to assist
Provider in fulfilling its obligations hereunder. i3 and Provider agree and
acknowledge that before the Provider engages the services of any Content
Provider, the Provider shall give written notice to i3 of the name of the
Content Provider and a brief summary of the content that such Content Provider
will provide (such notice being hereinafter referred to as a "Content Provider
Notice"). Within five (5) days of i3's receipt of a Content Provider Notice, i3
may provide written notice to the Provider that i3 rejects the Content Provider
in which case i3 may provide Provider with an alternative content provider (any
such notice being hereinafter referred to as a "Content Provider Replacement
Notice"). If i3 provides a Content Provider Replacement Notice, the Provider
shall not enter into an agreement with the Content Provider specified in the
Content Provider Notice and shall, instead, engage in good faith negotiations to
agree upon the terms upon which the Provider will retain the content provider
specified in the Content Provider Replacement Notice. To the extent possible,
Provider shall utilize the form of agreement set forth on Appendix D as the
basis of contract. i3 and Provider agree and acknowledge that Provider may
receive compensation from Content Providers. i3 agrees and acknowledges that any
fees, compensation or other consideration paid by any Content Provider to
Provider shall be the sole and exclusive property of Provider and, unless
otherwise agreed upon, i3 shall have no right to receive any portion thereof.
(b) If i3 identifies a potential content provider covered by the
exclusivity provisions hereof, Provider shall use its commercially reasonable
efforts to secure an agreement with such content provider. If Provider is
unsuccessful, for whatever reason, i3 shall have the right to enter into direct
negotiations with such content provider and to enter into any contract or
agreement resulting therefrom subject to the payment provisions set forth on
Appendix B.
5. TRADENAMES, TRADEMARKS AND LOGOS. i3 hereby grants Provider the right to use
and publish in connection with the Wireless Content Services and promotional
materials describing the Wireless Content Services, the trademarks, trade names
and logos now or hereafter owned or used by i3 which are associated with i3 or
the Wireless Content Services ("i3's Marks") provided such use and publication
complies with the applicable guidelines available to Provider on i3's web site.
(a) RIGHT OF APPROVAL. Provider agrees to submit to i3 a sample of the
proposed use of i3's Marks on or with the Wireless Content Services, boxes,
containers and/or packaging, and i3 shall have approved such proposed use in
writing prior to any sale of the Wireless Content Services using such of i3's
Marks in the proposed manner or any other public use of i3's Marks in the
proposed manner by Provider. Approval will not be unreasonably withheld, and if
i3 does not provide a written response within ten (10) days of the receipt of
such a request, approval shall be considered granted.
(b) PROVIDER'S TRADEMARKS. Provider shall use commercially reasonable
best efforts to procure for i3 the right to use the respective trademarks, logos
and trade names of all Content Providers in connection subject to their
respective published branding guidelines. The parties acknowledge that this is a
material element of this business relationship. i3 acknowledges that all service
marks, trademarks, brands, logos and trade names used by Content Providers
(collectively the "Provider Marks") are the exclusive property of the Content
Providers and are authorized for use by the Content Providers. i3 shall not use
any
i3Mobile, Inc. - CONFIDENTIAL INFORMATION (FODA0100) Page 3
<PAGE> 4
of the Provider Marks for any purpose or in any medium without the express prior
written consent of Provider. i3 acknowledges that this Agreement does not
transfer any rights to use any Provider Marks and that this Agreement does not
and will not confer any goodwill or other interest in any Provider Marks upon
i3, all rights to which shall remain with Provider.
6. TERM. The term of this Agreement shall be five (5) years beginning on March
1, 2000 (the "Effective Date") subject to the approval of this Agreement by i3's
board of directors prior to such date. In the event i3's board does not approve
this Agreement prior to the Effective Date, this Agreement shall terminate
without any further obligation or liability of any kind. At least three (3)
months prior to the expiration of the initial term or any subsequent term
hereof, Provider shall give i3 notice of its intention to renew the Agreement.
The parties shall thereupon work in good faith to reach mutually acceptable
terms on which to continue this relationship.
7. REPORTING AND PAYMENT. (a) i3 will deliver to Provider an activity report by
the 30th day following the end of each calendar quarter containing a summary
review of the Wireless Content Services delivered to users and revenues received
for the preceding calendar quarter. i3 may issue the report in electronic format
provided that Provider can access such format. Additional reporting information
may be made available to Provider upon request. All payments hereunder with
respect to any calendar quarter shall be made in immediately available U.S.
funds at Provider's address within thirty (30) days of the end of such quarter.
Any amount not paid when due shall bear a late payment charge, until paid, at
the rate of 1.5% per month or, if lesser, the maximum amount permitted by law.
(b) Provider will make all payments due i3 hereunder in immediately
available U.S. funds at i3's address within thirty (30) days of receipt of
invoice. Any amount not paid when due shall bear a late payment charge, until
paid, at the rate of 1.5% per month or, if lesser, the maximum amount permitted
by law.
8. i3 WARRANTIES AND REPRESENTATIONS.
(a) TITLE. i3 warrants that it has all necessary right, power and authority
to grant the rights and licenses granted Provider hereunder with respect to the
Wireless Content Services and neither the license or use as permitted hereunder
will in any way constitute an infringement or other violation of any trademark,
copyright, patent, trade secret or other intellectual property right of any
third party. i3 further warrants that the Wireless Content Services licensed
hereunder shall be free and clear of all claims, security interests, liens and
encumbrances of any kind.
(b) EXISTING CONTRACTS. Attached hereto as EXHIBIT A is a true and accurate
excerpt from the S-1 filed by i3 on January 7, 2000, relating to certain of i3's
existing distribution relationships with wireless network operators. i3
represents and warrants that the statements set forth therein remain true and
accurate in all material respects as of the date hereof.
(c) DISCLAIMER. EXCEPT AS SPECIFICALLY STATED IN THIS SECTION, NEITHER i3
NOR ITS DISTRIBUTORS MAKE ANY WARRANTIES OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY (INCLUDING, WITHOUT LIMITATION, TIMELINESS, TRUTHFULNESS, SEQUENCE,
COMPLETENESS, ACCURACY, FREEDOM FROM INTERUPTION), ANY IMPLIED WARRANTIES
ARISING FROM TRADE USAGE, COURSE OF DEALING, OR COURSE OF PERFORMANCE, OR THE
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
SHALL HAVE NO LIABILITY FOR THE ACCURACY OF, OR FOR DELAYS OR OMISSIONS IN, THE
PROVIDED WIRLESS CONTENT SERVICES.
9. PROVIDER WARRANTIES AND REPRESENTATIONS. Provider warrants and represents
that it has (a) the necessary power and authority to enter into and perform its
obligations under this Agreement and has properly authorized the same by all
requisite action; (b) all necessary rights to grant the license under this
Agreement; and (c) the content collected from the Content Providers and
associated trademarks do not
i3Mobile, Inc. - CONFIDENTIAL INFORMATION (FODA0100) Page 4
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infringe upon any intellectual property rights of any third party.
Notwithstanding any other provision in this Agreement, Provider shall defend or
settle at its own expense any claim or suit against i3 arising out of or in
connection with an assertion that the Wireless Content Services infringes any
intellectual property rights, and Provider shall indemnify and hold i3 harmless
from damages if any, finally awarded in such suit or the amount of the
settlement thereof.
10. LIMITATION OF LIABILITY. In no event shall i3 be liable to anyone for any
delays, inaccuracies, errors or omissions with respect to the Wireless Content
Services or the transmission or delivery of all or any parts thereof, except to
the extent that such delays, inaccuracies, errors or omissions are the result of
the gross negligence or intentional misconduct of i3. IN NO EVENT WILL i3 OR ITS
DISTRIBUTORS BE LIABLE TO ANY PARTY (A) FOR ANY DIRECT, INDIRECT, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO DAMAGES FOR LOSS
OF BUSINESS PROFITS, BUSINESS INTERRUPTION AND THE LIKE), OR ANY OTHER DAMAGES
ARISING IN ANY WAY OUT OF THE AVAILABILITY, USE, RELIANCE ON, OR INABILITY TO
USE WIRELESS CONTENT SERVICES EVEN IF i3 HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES AND REGARDLESS OF THE FORM OF ACTION WHETHER IN CONTRACT, TORT OR
OTHERWISE; OR (B) FOR ANY CLAIM ATTRIBUTABLE TO ERRORS, OMISSIONS, OR OTHER
INACCURACIES IN ANY CONTENT.
11. INDEMNIFICATION. Provider shall indemnify, defend and hold i3, its officers,
agents and employees harmless from and against any and all suits, proceedings at
law or in equity, and any and all loss or damage (including reasonable attorney
fees) arising out of or in connection with any claim made by any person, firm,
or corporation in respect of delays, errors or omissions in providing Wireless
Content Services, except that the foregoing indemnity shall not apply to the
gross negligence or intentional misconduct of i3, its officers, agents or
employees. i3 shall indemnify, defend and hold Provider, its officers, agents
and employees harmless from and against any and all suits, proceedings at law or
in equity, and any and all loss or damage (including reasonable attorney fees)
arising out of or in connection with any claim made by any person, firm, or
corporation that is an end-user or distributor in respect of any content
provided by any Content Providers.
12. BREACH AND TERMINATION. (a) FOR CAUSE: If either party is in breach or
default of any material term, condition, or covenant of this Agreement, then the
non-breaching party shall give the other party written notice of such breach or
default. If such breach or default shall continue for sixty (60) days after the
non-breaching party gives the other party written notice, then in addition to
all other rights and remedies of law or equity or otherwise, the non-breaching
party may cancel this Agreement without any charge, obligation, or liability
whatsoever, except as to the payment for Wireless Content Services already
received and accepted by i3 and except for the obligations set forth in Sections
10 and 13 which obligations shall survive the termination of this Agreement.
(b) INJUNCTIVE RELIEF; SPECIFIC PERFORMANCE: i3 expressly acknowledges
and agrees that the benefits to be obtained by Provider pursuant to this
Agreement, and Provider's business relationship with i3 are unique and have
value to Provider which would be difficult or impossible to quantify. i3 further
acknowledges that, in the event of a breach of this Agreement by i3, (i) damages
resulting from such breach would be difficult or impossible to quantify, and
(ii) the harm suffered by Provider as a result of such breach would be
irreparable and could not be compensated solely by an award of money damages.
Therefore, i3 expressly agrees that, in the event of a breach or threatened
breach of this Agreement by i3, in addition to all other remedies available to
Provider (expressly including, but not limited to, money damages to the extent
calculable), Provider shall be entitled to injunctive relief to prevent or
enjoin such breach (including temporary and preliminary injunctive relief)
expressly including specific performance hereof. I3 further agrees that Provider
shall not be required to post any bond or surety as a condition to such relief,
and, if such surety shall be required by any court granting such relief, i3
irrevocably agrees that a bond in the amount of $10,000 shall be sufficient
surety.
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13. CONFIDENTIALITY. (a) Any i3 information, whether business or technical
information, written, oral, or otherwise (collectively "i3's Information"),
furnished to Provider under this Agreement or in contemplation hereof shall
remain i3's property. At i3's request, Provider shall return promptly to i3 all
copies in written, graphic or other tangible form of such i3's Information.
Provider agrees to keep all i3's Information confidential unless Provider had
previous knowledge and had no obligation to keep it confidential, i3 has
subsequently made it public, or a third party has lawfully made it public.
Provider shall only use i3's Information for the purpose of providing
Information Services under this Agreement.
(b) Any Provider information, whether business or technical
information, written, oral, or otherwise (collectively "Provider's
Information"), furnished to i3 under this Agreement or in contemplation hereof
shall remain Provider's property. At Provider's request, i3 shall return
promptly to Provider all copies in written, graphic or other tangible form of
such Provider's Information. i3 agrees to keep all Provider's Information
confidential unless i3 had previous knowledge and had no obligation to keep it
confidential, Provider has subsequently made it public, or a third party has
lawfully made it public. i3 shall only use Provider's Information for the
purpose of providing Wireless Content Services under this Agreement.
(c) Provider and i3 agree that they shall use commercially reasonable,
good faith efforts to keep the terms of this Agreement confidential. Provider
and i3 acknowledge that i3 has an obligation to disclose this Agreement and
certain of its terms to the Securities and Exchange Commission pursuant to
applicable law. i3 shall request confidential treatment of any such disclosure.
14. AUDIT RIGHTS. Upon ten (10) business days prior written notice at any time
during the Term or for a period of one (1) year thereafter but no more than once
during any twelve (12) month period, either party and its representatives shall
have the right during normal business hours and at such party's expense to
examine and make copies and extracts from the books and records of the other
party relating to the Wireless Content Services or to Provider's distribution of
content per section 2. (b). for the purpose of verifying the accuracy of
statements and payments and the performance of each party's obligations
hereunder.
15. FORCE MAJEURE. Notwithstanding anything herein to the contrary, i3, Content
Providers or Provider shall not be required to perform or observe their
respective obligations in this Agreement (except for obligations to make
payments) if prevented or hindered from doing so by any circumstances beyond
their reasonable control.
16. ASSIGNMENT. Neither Provider nor i3 may assign this Agreement, either
voluntarily or by operation of law, without the prior written consent of the
other party hereto; provided, however, that (a) in the event of a consolidation
or merger of i3 involving all or substantially all of i3's assets, i3 may assign
this Agreement to its successor in interest provided that such successor
undertakes to fulfill all of i3's obligations hereunder; and (b) in the event of
a consolidation or merger of Provider involving all or substantially all of
Provider's assets, Provider may assign this Agreement to its successor in
interest provided that such successor undertakes to fulfill all of Provider's
obligations hereunder.
17. CHOICE OF LAW. This Agreement will be controlled by the laws of the State of
New York without regard to its conflict of laws rules. Any action brought in
connection with this Agreement shall be filed in the County of New York in the
State of New York.
18. ENTIRE AGREEMENT. This Agreement represents the entire understanding between
the parties and supersedes all previous agreements and understandings, written
or oral, which may have been entered into prior to the date of execution hereof.
In the event of a conflict between the terms of this Agreement and any Appendix
attached hereto, the terms of the Appendix shall prevail. In the event of a
conflict between the terms of this Agreement and Provider's purchase order(s),
if any, the terms of this Agreement
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shall prevail. This Agreement shall not be altered except by written agreement
executed by the parties hereto. No waiver by either party of any breach or
default hereunder shall be deemed to be a waiver of any preceding or subsequent
breach or default. This Agreement shall not be effective until executed by an
authorized officer of i3 at its Stamford, CT headquarters.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of
the date set forth above.
i3 MOBILE, INC. BROADCASTENTERTAINMENT.COM
BY: BY:
----------------------------- -----------------------------
NAME: NAME:
--------------------------- ---------------------------
TITLE: TITLE:
-------------------------- --------------------------
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APPENDIX A
EXCLUSIVITY
A. Subject to the terms of this Agreement, Provider is granted an exclusive
right to provide i3 with wireless content strictly within the following
entertainment related areas:
1. Movie Reviews, Trailers, Listings and related Transactional Services
2. Concert Information and Related Transactional Services
3. . Animation Offerings/Cartoon Network
4. AM/FM Radio Broadcasts and Listings
5. Video Downloads with or without Interactive Availability Menu
6. Music Downloads with or without Interactive Availability Menu
B. The following are the "Existing Contracts" for purposes of this agreement:
Sony Corporation and associated properties
NBC Interactive Properties
Culturefinder
Tourdates
Uwire
C. Provider will deliver the following Content Providers as part of this
Agreement:
Broadcast America.com
BaliHai.com
Broadcast Hollywood.com or Hollywood Stock Exchange.com
In addition to the foregoing, i3 agrees that LTV and FTV are approved
Content Providers but nothing herein shall require Provider to provide Content
from LTV and/or FTV.
D. Nonexclusive Rights:
1. Restaurant Reservations, Listings and Information
2. Any other Entertainment Related Content not set forth in subsection A.
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APPENDIX B
WIRELESS CONTENT SERVICES DESCRIPTION AND FEES
A. Rights Fees
In consideration of the exclusive rights being granted by i3 to Provider
hereunder, Provider shall assign to i3 certain trade credits that Provider
receives from BroadcastAmerica.com, relating to advertising on broadcast radio,
which trade credits shall have an industry stated value of $15,000,000, which
trade credits may be used at any time during the term of this Agreement and when
such credits are available to Provider from BroadcastAmerica.com.
Provider agrees, upon request of i3, to use commercially reasonable best efforts
to procure documentation from BroadcastAmerica.com supporting the valuation of
any on-line, radio and television advertising assigned to i3 hereunder.
B. Allocation of Net Proceeds
Net proceeds will be allocated between the parties on a 60-40 basis with sixty
(60%) percent payable to i3. Net proceeds shall be defined as proceeds derived
from the worldwide marketing of Wireless Content Services by i3 or Provider, as
the case may be, less any and all costs associated with generating such proceeds
including, but not limited to, content, distribution, billing and collection
expenses and any other expenses associated with generating such proceeds fees
due distributors.
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APPENDIX C
WIRELESS CONTENT DELIVERY SPECIFICATIONS
To Be Provided
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APPENDIX D
FORM OF CONTENT PROVIDER AGREEMENT
DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is entered into by and between
____________ ("Provider"), a ________ corporation with its principal offices at
___________________, and (" "), a corporation, with its principal offices at
1. Definitions
a. Content Providers. The term "Content Providers" means third parties
from whom the Provider acquires the right to distribute Content
provided or made available as part of the Service.
b. Service. The term "Service" means the electronic content and
transactional services identified in Exhibit A to this Agreement.
c. Content. The term "Content" means all information and material, whether
or not protected by copyright, including but not limited to text,
images, and other multimedia data, provided or made available
to as part of the Service.
d. Resellers. The term "Resellers" means third parties through which
distributes the Service to Users, subject to the terms of this
Agreement.
e. Users. The term "Users" means all third parties to whom may
license, sell, transfer, make available or otherwise distribute the
Service.
2. Distribution
a. Grant of Rights. Subject to the terms and conditions of this Agreement,
Provider grants a nonexclusive license and right to distribute the
Service to Resellers and Users in the Territory. Resellers shall have
the right to market the Service and distribute the Service to Users.
Nothing herein precludes from entering into similar agreements
with other content providers offering the same or substantially the
same Content as Provider.
b. Territory. Wireless telephones, pagers, PDAs, receivers, transmitters
and all other Internet enabling wireless devices for worldwide
distribution.
c. Exclusive. Provider grants a three-year period of exclusivity,
to start concurrent with the signing of this agreement. During this
period of exclusivity Provider shall not permit the Service to be used
by any other party including Provider in the Territory defined in 2(b),
above.
3. Marketing
a. Expenses. shall be responsible for all expenses incurred by
in connection with the promotion and marketing of the
Service.
b. Prior Approval. Provider and agree to submit to the other party
for written approval all press releases, advertising and other
promotional materials that use Service names or a party's company name
not less than fifteen (15) days before the proposed use. Each party
shall not unreasonably withhold its approval. Unless notice of
approval or disapproval is received within (10) days of receipt of
promotional materials, approval shall be deemed
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granted. Either party, however, may identify the other in its
published listing of available services or Distributors without such
written approval.
4. Delivery of the Service
a. Provision of the Service. Subject to the terms and conditions of this
Agreement, Provider shall provide the Service to via e-mail
or other mutually agreed upon electronic means.
b. Timeliness. Provider shall use commercially reasonable efforts to
maintain the timeliness of the Content. acknowledges that,
in part, Provider relies on the performance of Content Providers
outside the control of Provider in order to provide the Service.
c. Modifications. shall not edit, abridge, rewrite or in any way
alter the Content of the Service or create any work derived from the
Content of the Service, that changes its meaning or tone. Provider
agrees that may make changes to the content to meet wireless
display equipment formats.
d. Review by Provider. Throughout the term of this Agreement, shall
provide Provider reasonable access to 's system for distribution
of the Service to Users for the sole purpose of reviewing 's
implementation of the Service.
e. Audit. Provider or its representative may, during business hours and
upon reasonable notice, inspect and audit the relevant books and
records of for the sole purpose of verifying all information
related to payments under this Agreement. Such inspection and audit
shall be at the expense of the Provider.
5. Reporting and Payment
a. Reporting. shall provide to Provider by the 15th of each month
a report indicating the number of users of the Service for the prior
calendar month.
b. Payment Schedule. shall pay Provider the Monthly Fees set
forth in the Payment Schedule in Exhibit B.
c. Notwithstanding anything contained herein to the contrary, provider
grants the right to offer Content to all Distribution Partners
at no charge for a period not to exceed ninety (90) days from the date
Content is first made available to end-users of such Distribution
Partner.
6. Term and Termination
a. Term. This Agreement commences on the date of the last signature hereto
or the first commercial distribution of the Service, whichever occurs
first (the "Effective Date"), and shall remain in effect for an Initial
Term of two (2) years. This Agreement shall renew automatically for
successive one year Renewal Terms unless either party notifies the
other party in writing, at least ninety (90) days be fore the end of
the Initial Term or any Renewal Term, of its election not to renew.
b. Termination. Either party may terminate this Agreement at any time if
the other party breaches any material provision of this Agreement. Such
termination shall take effect (i) if the breach is incapable of cure,
then immediately upon the breaching party's receipt of a
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written notice of termination which identifies the breach, or (ii) if
the breach, capable of being cured, has not been cured within sixty
(60) days after receipt of written notice from the non-breaching party
identifying the breach, then immediately upon receipt of a written
notice of termination received within thirty (30) days of the end or
such sixty (60) day period.
c. Insolvency. Either party may terminate this Agreement by written notice
to the other if the other party becomes insolvent, makes a general
assignment for the benefit of creditors, permits the appointment of a
receiver for its business or assets, or takes steps to wind up or
terminate its business.
d. Obligations upon Termination. Effective upon termination of the
Agreement, shall not license, sell, transfer, make available or
otherwise distribute the Service or Content nor access, use or
retransmit the Service or Content. Within thirty (30) days of
termination, shall (i) report to and pay Provider all amounts owed
under this Agreement, and (ii) for all Content, either (A) erase and
purge the Content from any on-line and off-line storage media and
certify, in writing to Provider that such eraser and purge has been
completed, or (B) certify, in writing, to Provider that certain Content
has been retained in creating back-ups during the normal course of
business and that such Content shall not be used in any manner
whatsoever without the prior consent of the Provider.
7. Content
acknowledges that this Agreement does not transfer to ,
Resellers or Users any proprietary right, title or interest, including
copyright, in and to the Content made available as part of the Service.
8. Warranties
(a) Provider warrants that it has all necessary right, power and authority
to provide Content and Service to for the term hereunder. In
addition, Provider warrants that neither the license nor use as
permitted hereunder will in any way constitute an infringement or other
violation of any trademark, copyright, patent, trade secret or other
intellectual property right of any third party. Provider shall
indemnify and hold harmless from and against all liabilities
that may result by reason of any infringement or claim of infringement
of any patent, trademark, copyright, trade secret or other proprietary
right relating to the Content and/or Service delivered hereunder.
Provider will defend and/or settle at its own expense any action
brought against to the extent that it is based on a claim that
Content and/or Service infringe any patent, trademark, copyright, trade
secret or other proprietary right.
(b) EXCEPT AS SPECIFICALLY SET FORTH IN (a) ABOVE, EACH PARTY DISCLAIMS ALL
OTHER WARRANTIES, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, RELATING TO
THIS AGREEMENT, PERFORMANCE UNDER THIS AGREEMENT, THE SERVICE AND
CONTENT, AND EACH PARTY'S COMPUTING AND DISTRIBUTION SYSTEM.
9. Limitation of Liability
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Except for Provider's indemnification for proprietary right infringement,
in no event shall either party be liable to the other for any direct,
indirect, special, exemplary or consequential damages, including lost
profits, whether or not foreseeable or alleged to be based on breach of
warranty, contract, negligence or strict liability, arising under this
Agreement or any performance under this Agreement.
10. Notices
All notices and demands hereunder shall be in writing and delivered by hand
delivery, certified or registered mail, return receipt requested, express
delivery service or confirmed facsimile transmission at the addresses set
forth above (or at such different address as may be designated by either
party by written notice to the other party). Delivery shall be deemed to
occur (i) if by hand delivery, upon such delivery, (ii) if by mail, express
delivery service upon such delivery, and (iii) if by facsimile
transmission, upon receipt of confirmation.
11. General Terms and Conditions
a. Not Agent. Neither party shall be considered an agent of the other
party nor shall either party have the authority to bind the other
party.
b. No Assignment. Neither party may assign this Agreement without the
written consent of the other party; provided, however, that either
party may assign this Agreement as part of a transaction in which
substantially all of the assets related to its rights and obligations
under this Agreement are assigned to a third party.
c. Governing Law. This Agreement and performance hereunder shall be
construed and governed by the laws of the State of New York.
d. Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such
provision(s) had never been contained herein, provided that such
provision(s) shall be curtailed, limited or eliminated only to the
extent necessary to remove the invalidity, illegality or
unenforceability.
e. Waiver. No waiver of any breach of any of the provisions of this
Agreement shall be deemed a waiver of any preceding or succeeding
breach of the same or any other provisions hereof. No such waiver shall
be effective unless in writing and then only to the extent expressly
set forth in writing.
f. Complete Agreement. The parties agree that this Agreement is the
complete and exclusive statement of the agreement between the parties,
which supersedes and merges all prior proposals, understandings and
other agreements, oral or written, between the parties relating to this
Agreement.
g. Amendment. This Agreement may not be modified, altered or amended
except by written instrument duly executed by both parties.
h. Attorney's Fees. Should any action be brought by either party to
enforce the provision of this Agreement, the prevailing party, whether
by settlement, adjudication or arbitration, shall have the right to
collect reasonable attorneys' fees, expenses and costs form the
nonprevailing party.
i. Not Inference Against Author. No provision of this Agreement shall be
interpreted against any party because such party or its legal
representative drafted such provision.
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<PAGE> 15
j. Headings. The headings used in this Agreement are for convenience only
and are not to be construed to have a legal significance.
AGREED:
- -------------------- Provider, by:
by:
- -------------------- -------------------
Signature Signature
- -------------------- --------------------
Printed Name Printed Name
- -------------------- --------------------
Title Title
- --------------------------------------------------------------------------------
Date: _______________ Date: _______________
- --------------------------------------------------------------------------------
EXHIBIT A
The Service
The Provider agrees to deliver or make available to
EXHIBIT B
Payment Schedule
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<PAGE> 16
APPENDIX E
ADDITIONAL SERVICES
STATEMENT OF WORK #1
Provider hereby retains i3 to provide services to update Provider's website to
provide for the delivery of content and related services directly to wireless
devices and to offer Provider the capability to offer these web to wireless
services to up to five (5) affiliated companies.
Charges for i3's initial consultation, web site design, development and
deployment services and deliverables shall be based on a fixed price fixed time
pricing model. The agreed upon value for the services and deliverables shall be
Two Million ($2,000,000) Dollars payable in three installments as follows: Five
Hundred Thousand ($500,000) Dollars payable immediately upon execution of this
Agreement; Five Hundred Thousand ($500,000) Dollars payable upon successful
completion of Milestone Checkpoint #1 and One Million ($1,000,000) Dollars
payable upon successful completion of Milestone Checkpoint #2.
I. The parties agree to the following schedule:
A. The Initial Consultation and Scoping Phase commenced on January 11, 2000,
prior to the execution date of this agreement. The parties agree that any
activities performed by i3 prior to the execution date of this Statement of
Work shall be incorporated into and be governed by the terms hereof. The
initial consultation phase is primarily a fact-finding exercise whereby i3
will work with Provider to scope the wireless needs of Provider's business.
It is anticipated that this phase will be completed by no later than
February 29, 2000.
B. The Detailed Design Phase shall commence immediately upon the conclusion of
the Initial Consultation and Scoping Phase. During this phase the parties
will work together to produce mutually agreed upon specifications for the
final wireless solution based on the findings of the Initial Consultation
and Scoping Phase. It is anticipated that this phase will be completed by
no later than March 31, 2000.
C. MILESTONE CHECK POINT #1: Provider understands that payment of the second
installment due hereunder shall be deemed complete acceptance of i3's
products and services under A and B above.
D. The Wireless Solution Development Phase shall commence immediately upon the
successful completion of the Detailed Design Phase. Based on the
specifications developed during the Detailed Design Phase, i3 shall begin
building Provider's wireless solution. It is anticipated that a version of
the solution ready for testing shall be completed by May 15, 2000.
E. The Testing and Feedback Phase shall commence immediately upon the delivery
of the initial version of the solution. Provider shall test the solution
and i3 shall offer Provider full support services during this testing and
feedback phase. The Testing and Feedback Phase shall end no later than June
10, 2000.
F. The Deployment and Implementation Phase shall commence immediately upon the
conclusion of the Testing and Feedback Phase. i3 undertakes to incorporate
mutually agreed upon enhancements to the wireless solution and to perform
final QA and prepare the solution
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for deployment and implementation by Provider. The Deployment and
Implementation Phase shall end no later than June 30, 2000.
G. MILESTONE CHECK POINT #2: Provider understands that payment of the third
installment due hereunder shall be deemed complete acceptance of i3's
products and services under D, E and F above.
H. Maintenance and Support Services. Under this Statement of Work #1, i3 will
provide maintenance and support services for the deliverables through
December 31, 2000.
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EXHIBIT A
EXISTING DISTRIBUTION ARRANGEMENTS
WIRELESS NETWORK OPERATORS
We have entered into relationships with a number of leading telecommunications
carriers and wireless network operators in order to facilitate widespread
distribution of our services and to grow our user base. We have established
relationships with wireless network operators that represent more than 50% of
the North American market for wireless phone users at June 30, 1999. Marketing
fee arrangements provide incentives to our wireless network operator
distributors to promote our products and services. Although the terms of each
wireless network operator distribution agreement differ, the standard agreement
we use is nonexclusive, has a term of one to three years, automatically renews
for continuous one year terms and may be terminated by either party on notice,
with or without cause. Some of the wireless network operators with which we have
distribution relationships include:
PrimeCo PCS
AT&T Digital PCS
SBC Communications Inc.
AT&T PocketNet
Southwestern Bell Mobile
AirTouch Cellular Systems, Inc.
Bell Mobility Cellular, Inc. (Canada)
Pacific Bell
BellSouth Wireless Data
Cellular One (Boston, Cellular One of Oregon Baltimore, Washington, D.C.)
CFW Wireless
SkyTel
Clearnet PCS
Triton PCS
MTT Mobility (Canada)
TSR Wireless
Omnipoint Communications Services
United States Cellular
PageMart
U.S. West Wireless
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<PAGE> 1
EXHIBIT 10.23
CONTENT DISTRIBUTION AGREEMENT
THIS AGREEMENT is between DOW JONES & COMPANY, INC., U.S. Highway No. 1
at Ridge Road, South Brunswick, New Jersey 08852 ("Dow Jones"), and INTELLIGENT
INFORMATION INCORPORATED, One Dock Street, Stamford, Connecticut 06902
("Intelligent Information").
INTRODUCTION
A. Dow Jones publishes and distributes the Dow Jones Online News, a
business and financial newswire ("DJON").
B. Intelligent Information owns and distributes electronic products or
services that deliver to subscribers via wireless transmission technologies
quotation information from various equity and commodity exchanges, as well as
sports information, stock quotes, and weather information ("Direct Services").
Intelligent Information also authorizes third parties ("Authorized Resellers")
to redistribute the Direct Services (either with the same or a different brand
name from the name used by Intelligent Information for the Direct Services), and
to redistribute some or all of the content from the Direct Services as part of
the Authorized Resellers' own wireless transmission technology product or
service ("Reseller Services"). The Direct Services and the Reseller Services
shall collectively be referred to herein as the "Intelligent Information
Services".
C. Intelligent Information wishes to obtain from Dow Jones, and Dow Jones
wishes to grant to Intelligent Information, a license to incorporate headlines
from DJON into the Intelligent Information Services.
1. GRANT OF LICENSE
(a) LICENSE AND DELIVERY. Subject to Intelligent Information's compliance
with all of the terms and conditions hereof, Dow Jones hereby grants to
Intelligent Information a license to incorporate only those headlines from DJON
defined and specified on Exhibit A ("DJ Headlines"), into Direct Services, and
to make such DJ Headlines available: (1) directly to individual subscribers to
the Direct Services located in the United States and Canada ("Direct
Subscribers"); and (2) through Authorized Resellers of the Direct Services or
through Reseller Services to individuals located in the United States and Canada
("Reseller Subscribers"). The Direct Subscribers and Reseller Subscribers shall
collectively be referred to as the "Intelligent Information Subscribers". Dow
Jones shall make available from its South Brunswick, New Jersey facility the Dow
Jones composite feed containing DJON and the DJ Headlines (the "Composite
Feed"). Intelligent Information, at its expense, shall install, operate and
maintain (i) all communications lines and equipment necessary to accept such
feed at Intelligent Information's office set forth above or at 1101 Arwyn Court,
Euliss, Texas 76040, and (ii) the computer system that will receive the
Composite Feed and display the DJ Headlines. Intelligent Information shall not
receive the Composite Feed at any location other than the locations set forth
above, without Dow Jones' prior written consent. Immediately upon receipt of the
Composite Feed, Intelligent Information shall cause its computer systems to
dispose of the text of the stories contained in DJON, as well as the headlines
and text of all other stories contained on the Composite Feed, keeping, in
accordance with the terms hereof, only the DJ Headlines coded with the code set
forth on Exhibit A.
(b) ADDITIONAL LICENSE RESTRICTIONS. Intelligent Information shall not
permit, and shall cause all Authorized Resellers not to permit, Intelligent
Information Subscribers to store any DJ Headline
<PAGE> 2
for more than 24 hours after it is received. Intelligent Information shall be
permitted to store DJ Headlines for its internal billing purposes only;
provided, however, that in no event shall Intelligent Information distribute any
DJ Headline more than 24 hours after such DJ Headline is received. Other than as
expressly permitted or required pursuant to this Agreement (including, but not
limited to, Section 2), Intelligent Information shall not, and shall cause all
Authorized Resellers not to, edit, alter, change, add to or delete any DJ
Headline without the prior written consent of Dow Jones.
Intelligent Information shall not, and shall cause its Authorized
Resellers not to, distribute DJ Headlines or other Dow Jones content other than
as part of an Intelligent Information Service set forth on Exhibit C, or
otherwise approved in advance in writing by Dow Jones (and, therefore, deemed
incorporated into Exhibit C).
Intelligent Information shall not, and shall cause its Authorized
Resellers not to, distribute any Intelligent Information Service containing DJ
Headlines through or using any distribution method other than wireless
transmission technology, including, without limitation, email, cable or dial-up
communications via a modem. Intelligent Information shall not, and shall cause
its Authorized Resellers not to, deliver any Intelligent Information Service
containing DJ Headlines via an interactive online or electronic information
service, such as but not limited to, America Online, CompuServe, Microsoft
Network, Prodigy, AppleLink, eWorld, AT&T Interchange, Delphi, networkMCI, or
Telebase System, Inc.
All rights not expressly granted to Intelligent Information herein shall
be retained by Dow Jones.
(c) ADDITIONAL AUTHORIZED RESELLERS. Intelligent Information acknowledges
and agrees that all Authorized Resellers that Dow Jones has authorized to
distribute DJ Headlines to Intelligent Information Subscribers as of the date of
this Agreement are listed on Exhibit B attached hereto. Intelligent Information
shall notify Dow Jones in writing of its desire to add resellers to Exhibit B
and such proposed resellers shall be so added, and for all purposes hereof
deemed Authorized Resellers, unless within thirty (30) days of receipt of such
notice Dow Jones notifies Intelligent Information that such proposed reseller
is, in Dow Jones' reasonable discretion, unacceptable to Dow Jones. Intelligent
Information shall not make any DJ Headlines available to any third party who
does not qualify as an Authorized Reseller hereunder, other than Direct
Subscribers.
(d) RELATIONSHIP WITH RELATED COMPANIES. Beginning sixty (60) days after
the Effective Date (as defined below), Intelligent Information shall not
distribute any DJ Headlines to Mobile Telecommunications Corp. or any parent,
subsidiary or affiliate of Mobile Telecommunications Corp., without the express
prior written consent of Dow Jones. Notwithstanding anything to the contrary in
this Agreement or the License and Sales Representation Agreement between Dow
Jones and Intelligent Information dated as of July 1, 1993, if within thirty
(30) days after the Effective Date (as defined below) Dow Jones and Mobile
Telecommunications Corp. or SkyTel have not executed a mutually acceptable
agreement pursuant to which Dow Jones provides certain content from DJON to
SkyTel for redistribution by SkyTel, Intelligent Information shall request to
negotiate with Dow Jones to permit Intelligent Information to distribute DJ
Headlines to Mobile Telecommunications Corp. or SkyTel, subject to payment of an
increased renegotiated Royalty and other terms and conditions as may be
acceptable to Dow Jones and Intelligent Information.
2. COPYRIGHT. Intelligent Information acknowledges and agrees that the
copyright to the DJ Headlines, DJON and the coding and contents thereof is and
shall remain the sole and exclusive property of Dow Jones. Intelligent
Information shall take appropriate measures to insure that notice of such
copyright is made known to all persons with access to the Intelligent
Information Services, including
2
<PAGE> 3
displaying in a conspicuous location in all documentation distributed to
Intelligent Information Subscribers by Intelligent Information or its Authorized
Resellers ("Subscriber Materials") the following: "Copyright 19__ Dow Jones &
Company, Inc. All Rights Reserved. Distributed by Intelligent Information (or
Reseller name) under license from Dow Jones & Company, Inc. The headlines
contained in this Intelligent Information Service are the sole and exclusive
property of Dow Jones & Company, Inc. and are protected by copyright. Such
headlines may not be copied, republished or redistributed without the prior
written consent of Dow Jones & Company, Inc." Intelligent Information shall also
cause, and shall cause all Authorized Resellers to cause, the words "DJ NEWS" to
appear on each screen and printout containing a DJ Headline received, displayed
or printed by any Intelligent Information Subscriber; provided, however, that if
there is insufficient character space or other capacity to include all of the
words "DJ NEWS" in a particular display from the Intelligent Information Service
because of the length of the DJ Headline, Intelligent Information or an
Authorized Reseller may truncate this message to read "DJ"; if insufficient
character space is available to display the letters "DJ", this sentence shall
not apply.
3. ROYALTIES
(a) CALCULATION OF ROYALTY. In consideration of the rights granted
herein, Intelligent Information shall pay to Dow Jones monthly royalties
("Royalties") equal to the greater of (i) $5,000 per month; and (ii) $0.50 per
month per Intelligent Information Subscriber who receives DJ Headlines on up to
four companies or news categories, plus $0.10 per month for each additional
company or news category received by such Intelligent Information Subscriber.
(b) PAYMENT. Within 20 days after the end of each month during the term
hereof, Intelligent Information shall deliver to Dow Jones a report showing the
name of each Direct Service and Reseller Service, each Authorized Reseller, and
each Direct Subscriber, and the calculation of the Royalties due in respect
thereof, together with a check payable to Dow Jones for such Royalties.
(c) MAINTENANCE AND INSPECTION OF RECORDS. Intelligent Information shall
maintain, and shall cause its Authorized Resellers to maintain, complete and
accurate records of all Intelligent Information Subscribers receiving DJ
Headlines hereunder and of the Royalties payable with respect thereto
("Intelligent Information Records"). Dow Jones shall have the right, upon at
least 20 days' prior written notice to inspect and copy the Intelligent
Information Records during normal business hours not more frequently than twice
per year; provided, however, that if such inspection reveals an underpayment to
Dow Jones of four percent (4%) or more, then the cost of such inspection shall
be borne by Intelligent Information. All information gained by Dow Jones or its
authorized representatives from such inspection will be kept in strict
confidence and will be used solely for the purpose of verifying the accuracy of
the Royalties payable hereunder.
(d) INCREASES. By written notice to Intelligent Information at least 60
days prior to the end of the Initial Term, Dow Jones may increase the rates for
the first Renewal Term by a percentage not greater than the percentage increase
in the Consumer Price Index for All Urban Consumers -- All Items, U.S. City
Average, Unadjusted for Seasonal Variation (1982-1984 = 100) (the "CPI") during
the Initial Term. Subsequent rate increases by Dow Jones shall not exceed the
greater of (i) the percentage increase in the CPI per year; or (ii) six percent
(6%) per year.
4. INDEMNIFICATION
(a) BY DOW JONES. In the event of any claim, suit or action by any third
party (other than an Authorized Reseller) against Intelligent Information
arising out of the DJ Headlines (except for claims described in Section 4(b)),
Intelligent Information shall promptly notify Dow Jones, and Dow Jones shall
defend such claim, suit or action in Intelligent Information's name but at Dow
Jones' expense and under Dow Jones' control. Dow Jones shall indemnify and hold
harmless Intelligent Information against any judgment, liability, loss, cost or
damage (including litigation costs and reasonable attorneys' fees) arising
3
<PAGE> 4
from or related to such claim, suit or action, whether or not such claim, suit
or action is successful.
(b) BY INTELLIGENT INFORMATION. In the event of any claim, suit or action
by any third party against Dow Jones arising out of any error caused by: (i)
Intelligent Information in receiving, storing or transmitting the DJ Headlines
on or through any Direct Service, or (ii) an Authorized Reseller transmitting
the DJ Headlines on or through any Reseller Service, Dow Jones shall promptly
notify Intelligent Information, and Intelligent Information shall defend such
claim, suit or action in Dow Jones' name but at Intelligent Information's
expense and under Intelligent Information's control. Intelligent Information
shall indemnify and hold harmless Dow Jones against any judgment, liability,
loss, cost or damage (including litigation costs and reasonable attorneys' fees)
arising from or related to such claim, suit or action, whether or not such
claim, suit or action is successful.
5. SERVICE MARKS; PRESS RELEASES AND PROMOTIONAL MATERIALS. Intelligent
Information acknowledges and agrees that (i) Dow Jones is the sole and exclusive
owner of the service marks Dow Jones Online News and DOW JONES, and (ii)
Intelligent Information and its Authorized Resellers neither have nor shall
obtain any right, except as expressly provided herein, to use any such service
mark or any other service mark, trademark or trade name of Dow Jones.
Intelligent Information shall not, and shall cause its Authorized Resellers not
to, publish or distribute any advertising, promotional materials or other
printed matter including, but not limited to, Subscriber Materials, or make any
public announcements using any service mark, trademark or trade name of Dow
Jones or otherwise referring to the availability of the DJ Headlines on the
Intelligent Information Services without the prior written consent of Dow Jones,
which consent shall not be unreasonably withheld. If within ten (10) business
days after delivery of samples of any such materials, Dow Jones has not notified
the sending party of its disapproval, such material shall be deemed approved.
Any breach of this Section 5 shall be deemed a material breach of this
Agreement.
6. TERM; TERMINATION
(a) TERM. The parties hereby terminate the License and Sales
Representation Agreement between Dow Jones and Intelligent Information dated as
of July 1, 1993, provided, however, that Sections 2 and 3 shall survive the
termination of such agreement regarding actions occurring prior to the
termination date. The initial term of this Agreement (the "Initial Term") shall
commence on the date hereof and, unless terminated earlier or extended pursuant
hereto, shall expire twelve (12) months after the date hereof. Unless either
party sends to the other written notice of its election not to renew at least
sixty (60) days prior to the end of the Initial Term, or any Renewal Term, as
the case may be, the term hereof shall be extended for an additional one-year
term (a "Renewal Term").
(b) TERMINATION FOR DEFAULT. If either party shall default in the
performance of or compliance with any provision contained in this Agreement and
such default shall not have been cured within 30 days after written notice
thereof shall have been given to the appropriate party, the party giving such
notice may then give further written notice to such other party terminating this
Agreement, in which event this Agreement and rights granted hereunder shall
terminate on the date specified in such further notice.
(c) CHANGE IN CONTROL. If there occurs during the term hereof any change
in the effective voting control of Intelligent Information, or any merger into
or acquisition by any third party of Intelligence Information, or the sale or
transfer of one or more Intelligent Information Services, or the sale or
transfer of all or substantially all of the other assets of Intelligent
Information to any third party, including, without limitation, to or by Mobile
Telecommunications Corp., SkyTel, or any other corporate parent, subsidiary or
affiliate (collectively, a "Control Event"), Intelligent Information shall
notify Dow
4
<PAGE> 5
Jones in writing of such Control Event within 10 days after its effectiveness.
Dow Jones may, within 30 days after receipt of such written notice, terminate
this Agreement upon at least 60 days' prior written notice. Intelligent
Information may notify Dow Jones in writing of any proposed Control Event prior
to its proposed effectiveness, and Dow Jones shall within 30 days after receipt
of such notice, notify Intelligent Information in writing whether Dow Jones
would exercise its right to terminate this Agreement if such proposed Control
Event were consummated.
7. MISCELLANEOUS
Sections 1(b), 2, 4, 5 and 7 shall survive the expiration or termination
of this Agreement for any reason. Intelligent Information hereby represents and
warrants to Dow Jones that it will cause all Authorized Resellers to comply with
and be bound by the terms and conditions of Sections 1(b), 2 and 5 of this
Agreement. This Agreement may not be amended except by written instrument
executed by Intelligent Information and Dow Jones. This Agreement shall be
binding upon and shall inure to the benefit of the undersigned parties and their
respective successors and permitted assigns. No assignment of this Agreement, by
operation of law or otherwise, shall be made by either party without the prior
written consent of the other. Except with respect to third party claims
described in Section 4 above, neither party shall be liable to the other for any
lost revenue, lost profits or other consequential damages, even if advised of
the possibility of such damages. If any term or provision of this Agreement is
found to be invalid, illegal or unenforceable, in whole or in part, for any
reason, such term or provision shall be deemed to be severed from this
Agreement, and all remaining terms and provisions shall not be affected or
impaired thereby and shall be enforced in accordance with their terms. This
Agreement contains the entire understanding of the parties and supersedes all
previous verbal and written agreements on the subject thereof, including,
without limitation, the July 1, 1993 License and Sales Representation Agreement.
This Agreement does not and shall not be deemed to constitute a partnership or
joint venture between the parties. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey applicable to
contracts wholly made and wholly performed in New Jersey.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of Feb. 20, 1996
(the "Effective Date").
INTELLIGENT INFORMATION INC. DOW JONES & COMPANY, INC.
By: /s/ R M Unnold By: /s/ Jessica Perry
-------------------------- --------------------------
Name: R. M. Unnold Name: Jessica Perry
Title: CEO Title: Assistant Director
6
<PAGE> 7
EXHIBIT A
DJ HEADLINES
Headlines containing the P/DHL transmission code which also carry company stock
symbol and/or news category subcodes.
7
<PAGE> 8
EXHIBIT B
AUTHORIZED RESELLERS
As of 2/96
Air Call Northwest
Airtouch
American Personal Communications
American Paging
Axcess Global
Bell Atlantic
Bell Mobility Canada
Comwest
Flower City Paging
MCI Paging
Metrocall
Message Center USA
National Dispatch Center
Nextel Communications
PageMart
Paging Dimensions
Paging Partners
Telecom
USA Mobile
US Healthcare
5 By 5 Communications
8
<PAGE> 9
EXHIBIT C
INTELLIGENT INFORMATION SERVICES
The Intelligent Information Service provides data in the form of short messages
to a user's wireless device based on the user's personal criteria as that
criteria is met.
9
<PAGE> 1
EXHIBIT 10.24
DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is entered into by and between Fox
News Network, LLC, a division of News Corporation. ("Provider"), a Delaware
Limited Liability Company with its principle offices at 1211 Avenue of the
Americas, New York, NY 10036, and Intelligent Information Incorporated (the
Distributor"), a Delaware corporation with its principle offices at One Dock
Street, Suite 500, Stamford, CT 06902.
1. Definitions
a. Information Providers. The term "Information Providers" means third
parties from whom the Provider acquires the right to distribute Content provided
or made available as part of the Service for use solely in connection with the
Product as described below.
b. Service. The term "Service" refers to the act of parsing and
delivering the Content, as defined below and other information provided by
approved third party content providers, to Users.
c. Content. The term "Content" means all material, whether or not
protected by copyright, including but not limited to text, images, and other
multimedia data, delivered by Provider as part of the Service and as further
defined in Exhibit A.
d. Business Partners. The term "Business Partners" means third parties
through which Distributor distributes the Services to Users, subject to the
terms of this Agreement.
e. Users. The term "Users" sometimes referred to as subscribers, means
those consumers who purchase the Service or use the Product.
f. Product. The term "Product" means the Service as packaged with and
delivered to a device distributed by the Distributor and its' Business Partners.
g. Trademark. The term Trademark means the FOX NEWS name and logo as such
logo appears on its Web site on marketing materials and in advertising by the
Provider,
h. Wireless. The term wireless means public networks including paging,
narrowband PCS, broadband PCS, specialized mobile radio, cellular.
2. Distribution
a. Grant of Rights. Subject to the terms and conditions of this
Agreement, Provider grants Distributor a nonexclusive license, except as
provided for in this Agreement, and right to, (i) distribute the Content in
connection with the Service for use with the Product; and (ii) license the use
of the Trademark to market the Service as part of the Product. Business Partners
shall have the right to market the Service and distribute the Service to Users
and to use the Service for their internal use subject to the terms of this
Agreement.
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 2
b. User Agreements. Distributor shall require that each Business Partner
enter into an agreement prior to utilizing Content or Trademarks. Such
agreements are to be approved by the Provider twenty (20) days in advance of
utilizing Content or Trademarks.
c. Reservation. Provider reserves the right to add or withdraw all or
portions of Content with ten (10) days notice to Distributor or immediately if
Provider has good cause.
d. Exclusive. Provider grants Distributor a three year period of
exclusivity solely with respect to the Content and the Trademark license to use
in the Wireless market, to start concurrent with signing of this agreement.
Distributor grants Provider a three year period of exclusivity as it pertains to
cable news channels CNN and MSN BC.
3. Marketing
a. Expenses. Distributor shall be responsible for all expenses incurred
by distributor in promoting and marketing the Service, unless such expenses have
been agreed to be paid by the Provider or a third party advertiser in writing in
advance.
b. Use of Trademark. Distributor acknowledges that Provider Trademarks
are the sole and exclusive property of the Provider, Distributor shall use its
best efforts to name Provider as one of its information services in its formal
promotional and marketing materials relating to the Service. Provider agrees
that Distributor has the right to use the Trademark in Distributor and its'
Business Partner marketing and advertising materials, subject to the terms of
this Agreement, provided Distributor and its Business Partners include notice
that the Trademark are registered trademarks of FOX NEWS.
c. Prior Approval. Distributor agrees to submit to Provider for prior
written approval all press releases, advertising or other promotional materials
that use Service names or a party's company name not less than fifteen (15) days
before the proposed use. Provider shall not unreasonably withhold its approval.
Unless notice of approval or disapproval is received within (10) days of receipt
of promotional materials, approval shall be deemed granted. Distributor shall be
solely responsible for insuring that Business Partner and Users use the
Trademark solely in such form as has been previously approved by Provider.
d. Referral. Provider and Distributor agree to provide Users with
references back to the FOX NEWS web site for additional information on a subject
delivered to a User based upon Content from the Provider.
4. Delivery of the Service
a. Provision of the Service. Subject to the terms and conditions of this
Agreement, Provider shall provide the Service to Distributor and Distributor
shall receive the Service from Provider in conformance with the Technical
Specifications set forth in Exhibit C.
b. Timeliness. Provider shall use commercially reasonable efforts to
maintain the timeliness of the Content. Distributor acknowledges that, in part,
Provider relies on the performance of Information Providers outside the control
of Provider in order to provide the Service.
c. Modifications. Distributor shall not rewrite or alter the Content of
the Service or create any
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 3
work derived from the Content of the Service, without the prior written approval
of Provider. Provider agrees that Distributor may make changes to the format of
the content in order to meet wireless display equipment formats.
d. Review by Provider. Throughout the term of this Agreement, Distributor
shall provide Provider reasonable access to Distributor's system for
distribution of the Service to Users for the sole purpose of reviewing
Distributors implementation of the Service.
5. Reporting and Payment
a. Reporting. Distributor shall provide to Provider by the 15th of each
month a report indicating the number of Users of the Service for the prior
calendar month and any such additional information as may reasonably be
requested by Provider, including the defined Service packages purchased, the
number of impressions generated.
b. Payment Schedule. Provider shall pay Distributor the Monthly Fees set
forth in the Payment Schedule in Exhibit B.
6. Term and Termination
a. Term. This Agreement commences on the date last signed (the "Effective
Date"), and shall remain in effect for an Initial Term of three (3) years.
b. Termination. Provider may terminate this Agreement for any and no
reason at any time upon ninety (90) days prior written notice to Distributor.
Either party may terminate this Agreement at any time if the other party
materially breaches any provision of this Agreement. Such termination shall take
effect (i) if the breach is incapable of cure, then immediately upon the
breaching party's receipt of a written notice of termination which identifies
the breach, or (ii) if the breach, capable of being cured, has not been cured or
a satisfactory plan to cure has not been developed within ten (10) days after
receipt of written notice from the non-breaching party identifying the breach,
then immediately upon receipt of a written notice of termination received within
five (5) days of the end of such ten (10) day period.
c. Insolvency. Either party may terminate this Agreement by written
notice to the other if the other party becomes insolvent, makes a general
assignment for the benefit of creditors, permits the appointment of a receiver
for its business or. assets, or takes steps to wind up or terminate its
business.
7. Content
a. Ownership. Distributor acknowledges that Provider is the sole
copyright proprietor of the Content and that this Agreement does not transfer to
Distributor, Business Partners or Users any proprietary right, title or
interest, including copyright, in the Content made available as part of the
Service.
8. Limited Warranties of Provider and Distributor
a. Distributor acknowledges that Provider's trademarks are the sole and
exclusive property of Provider Pursuant to Paragraph 3b, Provider shall have the
right to approve in writing in advance the use of its Trademarks by Distributor
to identify and promote use of the Service.
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 4
b. Agreement. Provider warrants that its entry into this Agreement does
not violate any agreement between Provider and any third party.
c. Laws and Regulations. Provider warrants that its performance under
this Agreement and the use of the Content conforms to all applicable laws and
government rules and regulations, subject to the terms of this Agreement.
c. The Content. Distributor agrees that the Content is provided by
Provider "AS IS", without any warranty or representation of any kind.
9. Limitation of Liability
In no event shall one party be liable to the other party for any direct,
indirect, special, exemplary or consequential damages, including lost profits,
whether or not foreseeable or alleged to be based on breach of warranty,
contract, negligence or strict liability, arising under this Agreement or any
performance under this Agreement.
10. Indemnification
Distributor shall indemnify and hold harmless Provider and its
Information Providers from and against any claims, losses, expenses,
liabilities, and damages, including reasonable legal fees and expenses, arising
out of Distributor's, Business Partners' or Users' breach of any provision of
this Agreement. Provider agrees to notify Distributor of any such claim promptly
in writing. The parties agree to cooperate fully during such proceedings.
Distributor shall defend and settle at its sole expense all proceedings arising
out of the foregoing.
11. Force Majeure
Neither party shall be liable for any delay or failure to perform under
this Agreement if caused by conditions beyond its control, including but not
limited to fire, flood, accident, storm, acts of war, riot, government
interference, strikes or walkouts; provided, however, no such event shall excuse
any delay or failure to perform by Provider of its obligations to make payment
to Distributor under Paragraph 5 of this Agreement. The affected performing
party shall promptly notify the other party of the nature and anticipated length
of continuance of such force majeure. Should any such failure or suspension of
performance by Provider continue for more than one (1) month, then either party
shall have the right to terminate this Agreement without further liability or
obligation on the part of either party.
12. Notices
All notices and demands hereunder shall be in writing and delivered by
hand delivery, certified or registered mail, return receipt requested, or
confirmed facsimile transmission at the addresses set forth below (or at such
different address as may be designated by either party by written notice to the
other party). Delivery shall be deemed to occur (i) if by hand deliver, upon
such delivery, (ii) if by mail, four (4) days after deposit with the U.S. Postal
Service, and (iii) if by facsimile transmission, upon receipt of confirmation.
If to Provider:
FOX NEWS
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 5
1211 Avenue of the Americas
New York, N. Y. 10036-8795
Attn: Vice President, Finance
If to Distributor:
Intelligent Information Incorporated
One Dock Street, Suite 500
Stamford, CT 06902
Attn: Controller
13. General Terms and Conditions
a. Not Agent. Neither party shall be considered an agent of the other
party nor shall either party have the authority to bind the other party.
b. No Assignment. Neither party may assign this Agreement without the
written consent of the other party, such consent shall not be unreasonably
withheld: provided, however, that either party may assign this Agreement as part
of a transaction in which substantially all of the assets related to its rights
and obligations under this Agreement are assigned to a third party.
c. Governing Law. This Agreement and performance hereunder shall be
construed and governed by the laws of the State of New York.
d. Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if such provision(s) had never been contained herein, provided that such
provision (s) shall be curtailed, limited or eliminated only to the extent
necessary to remove the invalidity, illegality or unenforceability.
e. Waiver. No waiver of any breach of any of the provisions of this
Agreement shall be deemed a waiver of any preceding or succeeding breach of the
same or any other provisions hereof. No such waiver shall be effective unless in
writing and then only to the extent expressly set forth in writing.
f. Complete Agreement. The parties agree that this Agreement is the
complete and exclusive statement of the agreement between the parties, which
supersedes and merges all prior proposals, understandings and other agreements,
oral or written, between the parties relating to this Agreement.
g. Amendment. This Agreement may not be modified, altered or amended
except by written instrument duly executed by both parties.
h. Not Inference Against Author. No provision of this Agreement shall be
interpreted against any party because such party or its legal representative
drafted such provision.
i. Headings. The headings used in this Agreement are for convenience only
and are not to be construed to have a legal significance.
j. Read and Understood. Each party acknowledges that it has read and
understands this
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 6
Agreement and agrees to be bound by its terms.
AGREED PROVIDER:
III Fox News
- ---------------------- ----------------------
Distributor, by: Provider, by:
/s/ Stephen G. Maloney /s/ Jack Abernathy
- ---------------------- ----------------------
Signature Signature
Stephen G. Maloney Jack Abernathy
- ---------------------- ----------------------
Printed Name Printed Name
President VP Finance and Admin.
- ---------------------- ----------------------
Title Title
Date: 6/16/97 Date: 6/13/97
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 7
EXHIBIT A
Description of Content, Brand and Distributor use of Service
a. Content shall be determined by Provider in consultation with Distributor.
b. The use of the Service will be to bundle the Content (if and when provided)
with information provided by Distributor from third parties so as to provide to
the User a branded Product containing limited information from Provider and
other information e.g. national and business news.
c. The Distributor will include the Provider on all Packages sold with its brand
and will include periodic reference to either the Providers world wide web
address (URL).
d. The Provider agrees that the Distributor will use the Trademark and
associated brands to market and differentiate its Service in the Wireless
market.
EXHIBIT B
Payment Schedule
a. Fees. Distributor shall pay Provider according to the following fee schedule:
- - Use of the Trademark and Brand only, will be at no cost to the Distributor
or Provider.
b. Demo Units. Distributor may set up free demonstration accounts for sales and
marketing purposes, but will use its best efforts to minimize the number and
duration of such accounts.
c. Cross Promotion. Distributor will use reasonable efforts tp "push" Users to
the Provider's web site for additional information.
EXHIBIT C
Provision of the Service
Technical Specifications
Service is to be delivered to Distributor in an electronic manner that is
mutually agreeable.
EXHIBIT D
Confidential Information
a. This Agreement and all Exhibits thereto.
Intelligent Information Incorporated Confidential & Proprietary (FOXNWDA697)
<PAGE> 1
EXHIBIT 10.25
[LOGO] SportsTicker(R)
HARBORSIDE FINANCIAL CENTER, 600 PLAZA TWO, JERSEY CITY, NEW JERSEY
07311 - (201) 309-1200
SUBSCRIPTION AGREEMENT
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
COMPANY NAME AREA CODE/PHONE NO.
INTELLIGENT INFORMATION, INC. (203) 969-0011
- ---------------------------------------------------------------------------------------------------------------------------
INSTALLATION
ADDRESS ONE DOCK STREET, SUITE 500 STAMFORD, CT 06902
-----------------------------------------------------------------------------------------------------------------
(Street) (City/State) (Zip)
NEAREST CROSS STREET
-------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
INSTALL LOCATION CONTACT AT ADDRESS ABOVE TYPE OF BUSINESS
DEPT./FLOOR ROOM #. (INCLUDE PHONE NUMBER)
MS. JOAN DALE VENDOR/WIRELESS
- -------------------------------------------------------------------------------------------------------------------------
BILLING INFORMATION IF OTHER THAN ABOVE:
---------------------------------------------------------------------------------
(Contact Name and Phone Number)
- -------------------------------------------------------------------------------------------------------------------------
(Company Name) (Street) (City/State)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICES MONTHLY NON-RECURRING TOTAL MONTHLY
SUBJECT TO AGREEMENT SERVICE FEE CHARGES FEES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*Monthly Information:
1/1/98 -- 12/31/98: $3500.00 --- $3500.00
1/1/99 -- 4/30/99: $4000.00 --- $4000.00
5/1/99 -- 8/31/99: $4750.00 --- $4750.00
9/1/99 -- 12/31/99: $5500.00 $5500.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SUBSCRIPTION TERM AND RATES
- --------------------------------------------------------------------------------
The subscription service period is for a minimum of 24 months (beginning on the
first day of service operation or _________) and service shall continue on a
revolving 12-month renewal term basis thereafter until terminated effective at
the end of the term or any renewal with thirty (30) days prior written notice by
either party. The monthly service fee is $ (*) . The installation charge is $
N/A. The security deposit is $ XXX and will be returned to the subscriber upon
cancellation and return of all Sports Ticker equipment.
- --------------------------------------------------------------------------------
INTENDED USE
- --------------------------------------------------------------------------------
Specify intended use of
SportsTicker information SEE ADDENDUM
- --------------------------------------------------------------------------------
<PAGE> 2
ACCEPTANCE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
THE SUBSCRIBER HEREBY ACKNOWLEDGES RECEIPT OF CURRENT SportsTicker RATES AND ACKNOWLEDGES THAT SUBSCRIBER HAS CAREFULLY READ AND
UNDERSTANDS THE PROVISIONS OF THE AGREEMENT WHICH INCLUDE THE TERMS AND CONDITIONS AS INDICATED ABOVE AND THE REVERSE SIDE HEREOF.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSCRIPTION ACCEPTED BY
SERVICE REQUESTED BY SportsTicker Enterprises L.P.
Intelligent Information Incorporated
- ------------------------------------------------------------------------ -----------------------------------------------------
(Company Name) Authorized SportsTicker Officer
6/29/98
- ------------------------------------------------------------------------ -----------------------------------------------------
(Signature & Title of duly authorized officer, partner, or proprietor) (Date)
- ------------------------------------------------------------------------------------------------------------------------------------
THIS AGREEMENT IS SUBJECT TO ACCEPTANCE BY Sports Ticker Enterprises, L.P.
WHITE AND YELLOW COPIES - CUSTOMER SERVICE PINK COPY - ACCOUNTING DEPT. GOLD COPY - SUBSCRIBER
</TABLE>
<PAGE> 3
[LOGO] SportsTicker(R)
SUBSCRIPTION AGREEMENT
The subscriber listed on the forepart hereof ("the Subscriber") hereby orders
the sports information service provided by SportsTicker Enterprises, L.P. ("ST")
, hereinafter referred to as the "Service", to be furnished to the subscriber at
the address shown on the front of this Agreement.
Notice of any change in the name, nature, or place of business shall at once be
given to ST, and Subscriber represents and warrants to and agrees with ST as
follows:
1. The SportsTicker information contained in the service is proprietary to or
copyrighted by ST and/or its sources of data and is to be received by
Subscriber only for its private and individual use in its said business at
its office or place designated on the front of this Agreement, and
Subscriber will not communicate, sell, recirculate, redistribute or
otherwise furnish, or permit to be furnished, said information to any
person, branch office, firm or corporation nor to any other place than the
designated place of business without the express prior written consent of
ST. The prohibitions on recirculation or redistribution shall not apply if
Subscriber is in the TV, Cable or Radio broadcasting business, or to
newspaper reprints of the Service if Subscriber is in the newspaper
publishing business. Recirculation or redistribution of the Service for
textual or electronic information services such as videotext or teletext is
expressly prohibited. Subscriber further agrees that it will comply with
any and all regulations concerning the location of any and all equipment
furnished. Subscriber by ST ("Equipment") in its place of business and will
adopt and enforce all reasonable regulations which ST requires in order to
prevent such information from being taken improperly from said place of
business.
2. Subscriber's office or place of business designated on the front of this
Agreement shall not be directly or indirectly connected by any private or
other means of outgoing communication with any office or place of business
engaged in the business of supplying sports information without the express
prior written consent of ST.
3. Subscriber will not attach, or permit or cause to be attached, any
equipment to the printer or other equipment supplied by ST, or the Service
line/modem nor will Subscriber use any equipment not provided as part of
the Service without the prior written approval of ST. Subscriber shall not
copy, manipulate or redistribute computer programs associated with the
Service without the prior written consent of ST and upon non-renewal by
Subscriber or termination for whatever reason of this Agreement. Subscriber
shall promptly return any such program or related media to ST. In addition,
any copies of ST computer programs or related media shall be destroyed by
Subscriber. Any equipment subsequently attached to Equipment previously
provided by ST shall be subject to the terms and conditions of this
Agreement.
4. At all times upon 24 hours notice to Subscriber, any person or persons
designated by ST will have full and free access to the place herein
designated to observe the use of the Service and to inspect, maintain, and
replace any Equipment.
5. Subscriber agrees to pay to ST in advance on the first day of each month
its monthly fee for the Service (as set forth on the forepart of this
Agreement), plus any applicable federal, state and local taxes as follows:
a) In the case of the standard Service, the monthly fee will include all
costs for data delivery (including communications charges), Equipment,
printer rental and ordinary maintenance. The installation charge
covers all ordinary costs for installing the Service and a printer
including delivery. All paper supplies will be available for purchase
from independent suppliers. Extraordinary installation charges will be
billed to Subscriber at cost.
b) In the case of the Service without a printer, for use with Subscriber
provided equipment, the monthly fee covers all costs for data delivery
(including communications charges) and ordinary service maintenance.
The installation charge covers all ordinary costs for installing the
Service.
Invoices are payable by the Subscriber on receipt and are subject to a late
charge of one and one-half percent per month for any amounts due ST
hereunder which are not paid within 30 days of invoicing.
6. ST may at its sole discretion and at any time following the minimum
subscription period or any renewal term, change the monthly fee as
specified herein by giving six (6) weeks written notice to Subscriber. In
addition, in the event the tariffs on which communications charges or other
network carrier charges are based or charged, ST shall have the right to
modify such charges to subscriber on a pro-rate basis at the time such
tariffs are applied.
7. The furnishing of the Service to Subscriber by ST is conditioned upon
strict compliance with the provisions in this Agreement and with all local,
state and federal regulations which might pertain to the use of the
Service. ST may discontinue the Service, without notice, whenever the terms
of any of ST's agreements with professional or collegiate associates or
leagues require such discontinuance, or in the judgement of ST it finds a
breach by Subscriber of any of the provisions of this Agreement. Upon such
termination, Subscriber shall promptly return to ST all Equipment,
programs, software and related materials belonging to ST.
8. ST and its sources of data including all individual teams, leagues and
administrative bodies involved with the professional and collegiate
sporting events covered on the Service shall not be liable for any errors,
omissions, delays or inaccuracies in the information provided, nor for any
interruption of the Service arising out of the installation, relocation,
use, or maintenance of any Equipment, systems, or connection facilities or
due to events beyond the reasonable control of ST or its sources of data.
ST and its sources of data shall not be liable to Subscriber for
consequential, special or indirect damages arising out of the receipt
and/or use of the Service.
9. If the Service is expressly provided by ST for operation on Subscriber's
own equipment, it shall be furnished without warranty as to compatibility,
fitness or performance with such equipment, and Subscriber shall bear all
costs and responsibility for such equipment.
10. Subscriber agrees to pay all personal property taxes and any other taxes,
assessment fees or penalties in respect of the Service which may be the
Subscriber's legal responsibility to pay. Subscriber shall reimburse ST for
any property taxes ST may be required to pay as a result of the
transactions contemplated by this Agreement.
11. In the event Subscriber provides information for dissemination by ST,
Subscriber agrees to take all reasonable actions necessary to keep such
information current, accurate, true and complete, to notify ST promptly of
any errors or omissions; and Subscriber warrants that it has full power to
obtain, transmit and distribute such information. ST shall have the right,
without any obligation to Subscriber, to utilize in any products marketed
by ST, its parent companies and/or its affiliates the information so
provided to ST by Subscriber.
12. The Service applied for in this Agreement shall continue in force for a
minimum subscription period as indicated on the front of this Agreement.
The Service and the terms of this Agreement shall continue in force on a
revolving 12 month renewal basis following the minimum period until the
effective date of cancellation. Except as provided in Paragraph 7 above,
cancellation of the Service following the initial or any renewal
subscription period will become effective at the end of the term of this
Agreement or any renewal with not less than 30 days prior written notice
from either party to the other of its intention to so cancel this
Agreement.
13. Subscriber agrees to pay ST fees as billed, for any and all of the
following:
a) For any unfulfilled modem or telephone loop liability associated with
premature Service termination by Subscriber.
b) For any order delay or cancellation penalty which may apply from the
day of order placement, up to and including the day of installation.
c) For a disconnect charge not to exceed $200 for Service termination of
any time and in any manner caused by Subscriber.
14. Subscriber will have not right in or to any Equipment or to information
received except that right of use in the ordinary course of Subscriber's
business consistent with the provisions herein. Subscriber will not move
any of the Equipment without prior written permission by ST. Subscriber
will pay for extraordinary cost of installation, repair or replacement,
over and above ordinary installation costs and for extraordinary
maintenance. Extraordinary installation includes, but is not limited to,
special cable requirements such as teflon, cabling in excess of 100 feet,
installation work performed at any time other than 9 a.m. to 5 a.m., Monday
through Friday, electrical work done external to the Equipment, and
expedited order handling and shipping. Extraordinary maintenance includes
electrical work external to the Equipment, maintenance of accessories or
attachments, and includes repair of damage to the equipment, earth station,
personal computer, antenna, printer or modem resulting from accident,
neglect, misuse, failure of electrical power or causes other than ordinary
use. Subscriber will return the Equipment in good condition, ordinary wear
and tear expected, when the Service is terminated. If the Equipment is
returned in a damaged condition, Subscriber shall reimburse ST for the
repair or replacement of the Equipment. Subscriber shall be responsible for
any or all theft of the Equipment used to deliver the Service to Subscriber
and shall pay ST the full replacement cost of the Equipment damage arising
out of the maintenance, use or existence of any Equipment, unless solely
due to negligent installation by ST.
15. The signatory on the front of this Agreement is authorized to act on behalf
of the Subscriber and this is the entire Agreement between the parties.
Nothing stated heretofore or hereafter will be considered part of this
Agreement without a mutually agreeable amendment hereto. This Agreement
shall be governed by the laws of the State of New York without regard to
the choice of law principles thereof.
16. In the event any action is taken by ST to enforce this Agreement or to
protect the rights of ST with respect to the Service of Equipment,
Subscriber agrees to pay all costs including court costs, disbursements and
reasonable attorney's fees.
17. This Agreement may not be assigned by Subscriber without the prior written
consent of ST.
Subscriber has indicated its preference of Service and minimum subscription
period, in accordance with the fees indicated, as shown on the front of this
Agreement.
<PAGE> 1
EXHIBIT 10.25a
ADDENDUM TO THE SPORTSTICKER SUBSCRIPTION AGREEMENT
THIS ADDENDUM TO THE SPORTSTICKER SUBSCRIPTION AGREEMENT, dated as of
January 1, 1998 (the "Agreement"), by and between Sportsticker Enterprises L.P.
("ST") and Intelligent Information, Inc. ("").
The Agreement shall be amended as follows:
1. ST grants to III the non-exclusive right to redistribute ST information
through wireless devices offered directly by III to individuals solely
for their personal, private, non-commercial use.
2. III shall pay to ST the greater of the monthly fee noted in the Agreement
or twenty-five (25%) percent of gross revenues generated from the sale of
ST information to the end user.
For the purposes of this Agreement, the term Subscriber shall mean
any end user who receives, through any III products, any portion
of the ST information for any period during the month. The gross
revenues shall be based on the number of subscriptions at the end
of each month.
3. The term of this Agreement shall be for an initial term of two (2) years
commencing on the first day of service operation, and shall continue
thereafter for twelve (12) months unless terminated by either party upon
thirty (30) days prior written notice.
4. Each month during the term of the Agreement, III shall pay ST those
charges noted in the Agreement by the first of the month, and shall pay
the royalty within thirty (30) days of the end of the month. Should III
become delinquent with these payments, ST may discontinue service on ten
(10) days written notice.
5. III shall provide to ST complete and accurate monthly usage subscriber
reports for each month, and upon reasonable advance notice, III will
permit ST to audit III's records relating only to those subscribers
accessing the ST information. ST agrees that all of III's records will be
treated as confidential and will not be used for any purpose other than
the audit as described herein.
6. The terms and conditions of this Agreement and this Addendum shall be
kept confidential by III and not disclosed to any third party.
7. III shall provide to ST, at no cost, two (2) III pagers for the purpose
of ST monitoring the use of the ST information on the DS service.
8. III shall not use the ST names, trademarks, or other corporate
identification for promotional or any advertising purposes without the
express written consent of ST, except for copyright purposes.
----------------------------------- ----------------------------------
For: Intelligent Information, Inc. For: SportsTicker Enterprises L.P.
Date: 2/11/97 Date: 6/29/98
<PAGE> 1
EXHIBIT 10.26
DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is entered into by and between LA
Times ("Provider"), a division of The Times Mirror Company, a Delaware
Corporation with its principle offices at Times Mirror Square, Los Angeles, CA
90053 and Intelligent Information Incorporated (the Distributor"), a Delaware
corporation with its principle offices at One Dock Street, Suite 500, Stamford,
CT 06902.
1. Definitions
a. Information Providers. The term "Information Providers" means third
parties from whom the Distributor acquires the right to distribute Content
provided or made available as part of the Service for use solely in connection
with the Product as described below.
b. Service. The term "Service" refers to the act of parsing, formatting
and delivering the Content, as defined below and other information provided by
approved third party content providers, to Users.
c. Content. The term "Content" means all material, whether or not
protected by copyright, including but not limited to text, images, and other
multimedia data, delivered by Provider as part of the Service and as further
defined in Exhibit A.
d. Business Partners. The term "Business Partners" means third parties
through which Distributor distributes the Services to Users, subject to the
terms of this Agreement.
e. Users. The term "Users" sometimes referred to as subscribers, means
those consumers who purchase the Service or use the Product.
f. Product. The term "Product" means the Service as packaged with and
delivered to a device distributed by the Distributor and its' Business Partners.
g. Trademark. The term "Trademark" means the LA Times name and logo as
such logo appears on its Web site, marketing materials and in advertising by the
Provider.
h. Wireless. The term "Wireless" means public networks including paging,
narrowband PCS, broadband PCS, specialized mobile radio, cellular.
2. DISTRIBUTION
a. Grant of Rights. Subject to the terms and conditions of this
Agreement, Provider grants Distributor a nonexclusive license, except as
provided for in this Agreement, and right to, (i) distribute the Content in
connection with the Service for use with the Product; and (ii) license the use
of the Trademark solely for marketing the Service as part of the Product,
subject to Providers' review and approval of each such marketing use as set
forth in Section 3.c. below Business Partners shall have the right to market the
Service and distribute the Service to Users and to use the Service for their
internal use subject to the terms of this Agreement.
b. User Agreements. Distributor shall require that each Business Partner
enter into an agreement prior to utilizing content or Trademarks.
(LATIMES797)
<PAGE> 2
c. Reservation. Provider reserves the right to add or withdraw portions
of Content with ten (10) days notice to Distributor or immediately if Provider
has good cause.
3. MARKETING
a. Expenses. Distributor shall be responsible for all expenses incurred
by Distributor in promoting and marketing the Service, unless such expenses have
been agreed to be paid by the Provider or a third party advertiser in advance.
b. Use of Trademark. Distributor acknowledges that Provider trademarks
are claimed to be the sole and exclusive property of Provider. Distributor shall
use Provider's name as one of its information services in its formal promotional
and marketing materials relating to the Service. Provider agrees that
Distributor and its Business Partners have the right to use the Trademark as set
forth in Section 2a above and subject to the terms of this Agreement, provided
Distributor and its Business Partners include notice that the Trademark are
registered trademarks of Provider.
c. Prior Approval. Distributor agrees to submit to Provider for prior
written approval all press releases, advertising or other promotional materials
that use Service names or a party's company name not less than fifteen (15) days
before the proposed use. Provider shall not unreasonably withhold its approval.
Unless notice of approval or disapproval is received within (10) days of receipt
of promotional materials, approval shall be deemed granted. Distributor shall be
solely responsible for insuring that Business Partner use the Trademark solely
in such form as has been previously approved by Provider.
d. Referral. Distributor agrees to provide Users with periodic references
back to specific publications or websites for additional information on a
subject delivered to a User based upon Content from the Provider.
e. Cross Promotion. Distributor will use reasonable efforts to "push"
Users to the Provider's publications for more information or the "rest of the
story".
4. DELIVERY OF THE CONTENT AND DISTRIBUTION OF SERVICE
a. Provision of the Content. Subject to the terms and conditions of this
Agreement, Provider shall provide the Content to Distributor and Distributor
shall receive the Content from Provider in conformance with the Technical
Specifications set forth in Exhibit C.
b. Timeliness. Provider shall use commercially reasonable efforts to
maintain the timeliness of the Content. Distributor acknowledges that, in part.
Provider relies on the performance of Information Providers outside the control
of Provider in order to provide the Content.
c. Modifications. Distributor shall not rewrite or alter the Content of
the Service or create any work derived from the Content of the Service, without
the prior written approval of Provider. Provider agrees that Distributor may
make changes to the format of the Content in order to comply with wireless
display equipment formats.
d. Review by Provider. Throughout the term of this Agreement. Distributor
shall provide Provider reasonable access, during normal business hours, to
Distributor's system of distribution of the Service to Users for the sole
purpose of reviewing Distributor's implementation of the Service.
(LATIMES797)
<PAGE> 3
5. REPORTING AND FEES
a. Reporting. Distributor shall provide to Provider by the 15th of each
month a report indicating the number of Users of the Service for the prior
calendar month and any such additional information as may and reasonably be
requested by Provider, including the defined Service packages purchased and the
number of impressions generated.
b. Monthly Fees. Provider shall pay Distributor the Monthly Fees set
forth in the Fee Schedule in Exhibit B.
6. TERM AND TERMINATION
a. Term. This Agreement shall commence on the date last signed by the
Parties (the "Effective Date"), and shall remain in effect for an Initial term
of one (1) year.
b. Termination. Provider may terminate this Agreement at any time
upon ninety (90) days prior written notice to Distributor. Either party may
terminate this Agreement at any time if the other party materially breaches any
provision of this Agreement. Such termination shall take effect (i) if the
breach is incapable of cure, then immediately upon the breaching party's receipt
of a written notice of termination which identifies the breach, or (ii) if the
breach is capable of being cured buthas not been cured within thirty (30) days
after receipt of written notice form the non-breaching party identifying the
breach, then immediately upon receipt of a written notice of termination
received within ten (10) days of the end or such thirty (30) day period.
c. Insolvency. The solvent party may terminate this Agreement by written
notice to the other if the other party becomes insolvent, makes a general
assignment for the benefit of creditors, permits the appointment of a receiver
for its business or assets, or takes steps to wind up or terminate its business.
7. CONTENT
a. Ownership. Distributor acknowledges that Provider claims to be
the sole copyright owner of the Content and that this Agreement does not
transfer to Distributor, Business Partners or Users any or is clearly authorized
to relicense the Content right, title or interest, including copyright, in the
Content made available as part of the terms of this Agreement..
8. LIMITED WARRANTIES OF PROVIDER AND DISTRIBUTOR
a. Distributor acknowledges that Provider trademarks are claimed to be
the sole and exclusive property of Provider. Pursuant to Paragraph 3.d.,
Provider shall have the right to approve in writing in advance the use of its
trademarks by Distributor to identify and promote use of the Service. Upon
compliance with this provision and Paragraph 3d. use of such marks by
Distributor for such purposes shall be deemed approved during the term of this
Agreement unless Provider specifically notifies Distributor to the contrary.
b. Agreement. Both the Provider and Distributor warrants that its entry
into this Agreement does not violate any agreement between it and any third
party.
c. Laws and Regulations. Provider warrants that its performance under
this Agreement and the use of the Content conforms to all applicable laws and
government rules and regulations, subject to the
(LATIMES797)
<PAGE> 4
terms of this Agreement.
d. The Content. Distributor agrees that the Content is provided by
Provider "AS IS". Provider does not warrant the accuracy, completeness or
timeliness of the Content. Provider warrants that it has the right to provide
the Content to Distributor.
9. LIMITATION OF LIABILITY
IN NO EVENT SHALL ONE PARTY BE LIABLE THE OTHER FOR ANY, INDIRECT,
INCIDENTAL SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS
OR LOST SAVINGS, WHETHER OR NOT FORESEEABLE.
10. INDEMNIFICATION
Distributor shall indemnify, defend and hold harmless Provider and its
i.e. third party Information providers from and against any claims, losses,
expenses, liabilities, and damages, including reasonable legal fees and
expenses, arising out of Distributor's, Business Partners' or Users' breach of
any provision of this Agreement. Provider agrees to notify Distributor of any
such claim promptly in writing. The parties agree to cooperate fully during such
proceedings. Distributor shall defend and settle at its sole expense all
proceedings arising out of the foregoing.
11. FORCE MAJEURE
Neither party shall be liable for any delay or failure to perform under
this Agreement if caused by conditions beyond its control, including but not
limited to fire, flood, accident, storm. acts of war, riot, government
interference, strikes or walkouts; provided, however, no such event shall excuse
any delay or failure to perform by Provider of its obligations to make payment
to Distributor under Paragraph 5 of this Agreement. The affected performing
party shall promptly notify the other party of the nature and anticipated length
of continuance of such force majeure. Should any such failure or suspension of
performance by Provider continue for more than one (1) month, then either party
shall have the right to terminate this Agreement without further liability or
obligation on the part of either party.
12. NOTICES
All notices and demands hereunder shall be in writing and delivered by
hand delivery, certified or registered mail, return receipt requested, or
confirmed facsimile transmission at the addresses set forth below (or at such
different address as may be designated by either party by written notice to the
other party). Delivery shall be deemed to occur (i) if by hand deliver, upon
such delivery, (ii) if by mail, four (4) days after deposit with the U.S. Postal
Service, and (iii) if by facsimile transmission, upon receipt of confirmation.
If to Provider: If to Distributor:
LA Times Intelligent Information Incorporated
Times Mirror Plaza One Dock Street, Suite 500
Los Angeles, CA 90053 Stamford, CT 06902
Attn: Harry Chandler Attn: Robert Coletti, Controller
(LATIMES797)
<PAGE> 5
13. GENERAL TERMS AND CONDITIONS
a. Not Agent. Neither party shall be considered an agent of the other
party not shall either party have the authority to bind the other party.
b. No Assignment. Neither party may assign this Agreement without the
prior written consent of the other party; provided, however, that either party
may assign this Agreement as part of a transaction in which substantially all of
the assets of such party are assigned to a third party.
c. Governing Law. This Agreement and performance hereunder shall be
construed and governed by the laws of the State of New York.
d. Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if such provision(s) had never been contained herein, provided that such
provision(s) shall be curtailed, limited or eliminated only to the extent
necessary to remove the invalidity, illegality or unenforceability.
e. Waiver. No waiver of any breach of any of the provisions of this
Agreement shall be deemed a waiver of any preceding or succeeding breach of the
same or any other provisions hereof. No such waiver shall be effective unless in
writing and then only to the extent expressly set forth in writing.
f. Complete Agreement. The parties agree that this Agreement is the
complete and exclusive statement of the agreement between the parties, which
supersedes and merges all prior proposals, understandings and other agreements,
oral or written, between the parties relating to this Agreement.
g. Amendment. This Agreement may not be modified, altered or amended
except by written instrument duly executed by both parties.
h. Headings. The headings used in this Agreement are for convenience only
and are not to be construed to have a legal significance.
(LATIMES797)
<PAGE> 6
i. Read and Understood. Each party acknowledges that it has read and
understands this Agreement and agrees to be bound by its terms.
AGREED:
- ---------------------- ----------------------
Distributor, by: Provider, by:
/s/ R. M. Unnold /s/ Harry Chandler
- ---------------------- ----------------------
Signature Signature
R. M. Unnold Harry Chandler
- ---------------------- ----------------------
Printed Name Printed Name
CEO Dir. New Bus. Devel.
- ---------------------- ----------------------
Title Title
Date: 8/12/97 Date: 7/29/97
---------------- ----------------
(LATIMES797)
<PAGE> 7
EXHIBIT A
Description of Content, Brand and Distributor use of Service
a. Content shall be determined by mutual agreement of Provider and Distributor.
It will be comprised of electronic information from various news categories such
as business, general local, entertainment etc. from Provider's Internet Site.
b. The purpose of the Service will be to bundle the Content (if and when
provided) with information provided by Distributor from third parties so as to
provide, to the User a Product containing condensed or summarized information
from Provider and other third party Information Providers (e.g., weather,
traffic and sports).
c. Distributor will include the Provider on all Product sold with its brand and
will include the Provider's world wide web address (URL) or specific publication
as depicted by the Provider.
d. Provider acknowledges that the Distributor will be entitled to use the
Trademark and associated brands to market and differentiate the Service in the
wireless market.
EXHIBIT B
Fee Schedule
a. Fees. Distributor shall pay Provider according to the following fee schedule:
- - Use of the Trademark and Brand only, will be at no cost to the
Distributor.
- - Use of the Trademark, Brand and Provider Content consisting of headlines
(approximately 120 characters), will be at a forty percent (40%) royalty
on monthly gross revenues received by the Distributor from any Service
using Content from the Provider; or proportional use if, the Content is
bundled with content from other Information Providers.
- - Use of the Trademark, Brand and Provider Content consisting of summaries
or briefs (approximately 240 characters), will be at a forty percent
(40%) royalty on monthly gross revenues received by the Distributor from
the sales of any Service that Includes Content from the Provider; or
proportional use if, the Content is bundled with content from other
Information Providers
- - Use of full text article, will be at a forty percent (40%) royalty on
gross revenues received by the Distributor from any Service using such
articles.
- - Proportional Use example: User purchase service that contains sports
information from an Information Provider via the Distributor as well as
Content from the Provider. The Distributor receives $3.00(U.S) for that
User from a Business Partner. The proportion of content used is equal
between the Information Provider (sports) and the Provider (news); the
Distributor would pay Provider fees of twenty percent, in the case of
summaries being used, of $1.50 or $.30 per User. [(Total Fee Paid by
Business Partner) divided by (# of Providers) = A. Ax (Provider's Royalty
%) = Provider's Actual Fee.
b. Demo Units. Distributor may set up free demonstration accounts for sales and
marketing purposes, but will use its best efforts to minimize the number and
duration of such accounts.
c. Payment. Provider will receive applicable payment, by check monthly, by the
15th day of the following month.
(LATIMES797)
<PAGE> 1
EXHIBIT 10.27
DATABASE LICENSE AGREEMENT - WIRELESS INTERNET
SECTION I - LICENSED USE
A. PARTIES ("PARTIES")
infoUSA: InfoUSA Inc., a Delaware corporation
5711 S. 86th Circle, Omaha, NE 68127
LICENSEE: Intelligent Information, Inc., a Delaware corporation
181 Harbor Drive, Third Floor, Stamford, CT 06902
EFFECTIVE DATE: December 28, 1999
The following is the Agreement of the Parties concerning the use of the infoUSA
Database and the infoUSA Content (defined below) by Licensee.
B. TERM ("TERM")
The term of this Agreement will be for three (3) years commencing from the
Effective Date, unless earlier terminated pursuant to Paragraph 5 of Section
III.
C. DATA TO BE DELIVERED BY infoUSA ("infoUSA DATABASE, infoUSA CONTENT")
infoUSA has created, and exclusively owns, a database of information on
approximately 11 million businesses in the United States and Canada, and
approximately 96 million individuals in the United States (the "infoUSA
Database").
APPROXIMATELY 11 MILLION BUSINESSES IN THE UNITED STATES AND CANADA (THE "US
BUSINESS FILE" AND THE "CANADIAN BUSINESS FILE") AND 96 MILLION INDIVIDUALS IN
THE UNITED STATES (THE "WHITE PAGE FILE") contained within the infoUSA Database
and that include the data elements described in Section IV (the "infoUSA
Content") are being licensed by infoUSA to Licensee pursuant to this Agreement.
D. LICENSED USE OF THE infoUSA DATABASE AND THE infoUSA CONTENT (THE
"SERVICE") AND THE infoUSA BRAND FEATURES
1) Subject to the terms and conditions of this Agreement, infoUSA
hereby grants Licensee a limited, non-exclusive,
non-transferable license for the Term to use the infoUSA
Database and the Codemaster (defined in Section III, paragraph
1) and to use, reproduce, distribute, display and transmit the
infoUSA Content.
Licensee may reproduce, distribute, display and transmit
(collectively, "Display") the infoUSA Content in electronic
form as a part of the Service (defined below) and may permit
Users (defined in Section III, paragraph 1) to search for,
locate and subsequently view (collectively "Access") such
infoUSA Content.
The method of delivery of the infoUSA Database and infoUSA
Content to Licensee by infoUSA is described in Section IV.
2) THE SERVICE: The Service is a wireless directory assistance
and call completion service Licensee provides to Co-Branders
(defined in (b) below) so that such Co-Branders can make
certain services available to Users via wireless devices and
to the extent that Users are required to implement certain
features of the Service, through Co-Branders web-sites on the
Internet, and which will use the infoUSA Content as follows:
a) WIRELESS TELEPHONE DIRECTORY ASSISTANCE AND CALL COMPLETION
SERVICE. Licensee will maintain and operate the Service during
the Term in order to enable Users to search for and locate the
infoUSA Content in the following manner and to subsequently
Access the infoUSA Content:
Intelligent Information, Incorporated. Page 1 03/06/00
<PAGE> 2
- The Service shall permit Users to search by one
business category, a business name or a person's
name in a User-defined geography.
- In response to such search, the Service will
display a Page of listings of businesses or
persons which show business (person) name, street
address and telephone number (no zip code)(a
"Listing").
- No page shall show more than 3 Listings at one
time
- Except as may be required in connection with the
permitted uses hereunder, there shall be no
downloading, electronically capturing or copying
of infoUSA data.
- Except as may be required in connection with the
permitted uses hereunder, the directory
assistance and call completion features will not
be made available to Users via the Internet.
From time to time, infoUSA may provide written notice to
Licensee regarding a change to the search and display
provisions described herein, and, upon mutual agreement by
both parties Licensee agrees to make such changes within
thirty (30) days of receipt of infoUSA's notice.
b) CO-BRANDING
Licensee shall be entitled to enable the Service through
either its own or any of its distributors' wireless services
("Co-Branding"), and as required to implement certain features
of the Service through Co-Branders web-sites . Co-Branding
shall mean that any such Licensee distributor (hereinafter
"Co-Brander") may offer directory assistance with infoUSA
Content, a hyperlinked logo (as described in section F1) on
such Co-Branded Site.
Licensee shall provide infoUSA with quarterly reports
identifying by name all Co-Branded sites which have access to
the infoUSA Database through the Service.
3) Subject to the terms and conditions of this Agreement, infoUSA
hereby grants Licensee a limited, non-exclusive,
non-transferable, worldwide, fully-paid license for the Term
to use, reproduce and display infoUSA's trademarks, service
marks, logos and other distinctive brand features that are
used in the infoUSA Content, and infoUSA's products to be
promoted by Licensee pursuant to Section F below (collectively
"infoUSA Brand Features"). The infoUSA Brand Features are set
forth on Appendix A, which is attached hereto and incorporated
herein by this reference.
Licensee may only use, reproduce and display the infoUSA Brand
Features as reasonably necessary in order to perform its
obligations under this Agreement. Licensee acknowledges that
infoUSA is the owner of the infoUSA Brand Features, and any
trademark applications and/or registrations thereto, and
agrees that it will do nothing inconsistent with such
ownership. Licensee may however distribute its Service
containing infoUSA brand features & infoUSA data via
web-Portals, Mobile Phone carriers (as described in Section
ID2)
4) Licensee will not pursue any infoUSA customers or licensees
for purposes of providing the Service incorporating the
infoUSA Content to such customers or licensees without the
prior written approval by infoUSA. However, distribution as
described in this Section ID2 and ID3 above will be permitted.
Intelligent Information, Incorporated. Page 2 03/06/00
<PAGE> 3
E. LEGAL, COPYRIGHT AND OTHER NOTICES
To the extent technically feasible, Licensee shall continuously display
the infoUSA logo and copyright notice ("Display Items") on all screens
where InfoUSA Content is displayed. Where applicable, the Display Items
will at all times conform to the specifications set forth in Appendix
A.
At such time as it becomes technically and economically feasible to do
so, License shall hyperlink the Display Items to infoUSA 's website to
permit Users to purchase infoUSA products such as sales leads and
mailing labels and business credit reports, and infoUSA will pay
Licensee a Revenue Share for sales of the products as described in
Section II, F5.
F. PROMOTION OF infoUSA PRODUCTS
In partial consideration of the licenses granted to Licensee in this
Agreement, Licensee shall make, to the extent it is both technically and
economically feasible to do so, commercially reasonable efforts to promote
infoUSA's products as follows:
1) BUTTONS: The Licensee will post on the screens of its Service the
following advertisements in the form of buttons ("Buttons"). Such Buttons will
provide a hyperlink to the infoUSA web site that will allow Users to link to the
infoUSA.com web site to purchase the following services:
a) SALES LEADS AND MAILING LABELS: Allows Users to purchase infoUSA
Content in a mailing list format through the Service. Licensee will
feature Button on the search results screen for every Category search
on the Service. The Button will be prominently placed on the search
results screen so those Users do not have to scroll to view on a
640x480 screen.
b) BUSINESS CREDIT REPORTS: Allows Users to purchase infoUSA Content in
a print report format through the Service. Licensee will feature a
Button on the search results screen beside every business Listing.
InfoUSA acknowledges that due to the constraints inherent in the design of
wireless small screen devices, it may not be possible for Licensee to promote
infoUSA's products in this manner.
SECTION II -- LICENSE FEES & ROYALTIES
G. LICENSE FEES & ROYALTIES
In partial consideration for the licenses granted pursuant to Section
1D above, Licensee shall pay infoUSA as follows:
1) MINIMUM CPM FEES:
Licensee shall pay infoUSA the greater of:
a) CPM Royalties as described in paragraph 2 below; or
b) An annual, nonrefundable Minimum CPM Fee as follows:
Year 1: $100,000.00
Year 2: $200,000.00
Year 3: $300,000.00
The Minimum CPM Fee shall be a credit against the CPM
Royalties.
Licensee shall pay infoUSA the annual Minimum CPM Fee as follows:
Year 1: $50,000.00 on the Effective Date and $50,000.00 within 90 days
of the Effective Date.
Year 2: $50,000.00 on the start date of the 2nd year; and $50,000.00
every three months thereafter during Year 2.
Year 3: $75,000.00 on the start date of the 3rd year; and $75,000.00
every three months thereafter during Year 3.
2) CPM ROYALTIES: CPM Royalties are based on the number of "Pages" viewed
by Users on the Service. "Page" is defined as any display of either a
Listing or a Record (as defined in
Intelligent Information, Incorporated. Page 3 03/06/00
<PAGE> 4
Section ID2). For 1000 Pages viewed, Licensee will pay infoUSA:
Year 1: $1.00/M (one dollar per thousand)
Year 2: $2.00/M (two dollars per thousand)
Year 3: $3.00/M (three dollars per thousand)
3) REPORTING: Within thirty (30) days following the close of each month
during the term of this Agreement, Licensee will supply infoUSA with a
CPM Report and once the Annual Minimum CPM is reached, all CPM
Royalties, Revenue Shares and all other fees due that month.
4) UPDATE FEE: There will be no additional fee for each infoUSA Update
(defined in Section IV).
5) BUTTONS REVENUE SHARE DUE TO LICENSEE: infoUSA will pay Licensee on a
quarterly basis, a royalty equal to thirty percent (30%) for net
revenues generated from the Buttons (described in Section II F1 above),
and which orders have been electronically fulfilled from infoUSA's
web-site.
6) WARRANTS PROPOSAL: Licensee will offer infoUSA warrants to acquire
Licensee's common stock. The provisions of these warrants will be
described in greater detail in a warrant agreement, which will be
mutually agreed to by infoUSA and Licensee and attached to this
Agreement through an amendment at a later date.
SECTION III - TERMS & CONDITIONS
1. DEFINITIONS.
1.1 User refers to any company, organization or individual, which has
access to the infoUSA Content for personal, noncommercial use through the
Service.
1.2 CODEMASTER refers to the Codemaster Data Table and Abbreviation Table.
The CODEMASTER is to be used by Licensee for internal purposes only, and is
provided by infoUSA so that Licensee is able to interpret the infoUSA Database
raw data.
1.3 "Direct Competitor(s)" shall mean Acxiom, Experian, The Polk Company,
Dun & Bradstreet, International Business Lists, Harte-Hanks and TransUnion, and
any other parties which directly compete, as a primary part of their business,
with infoUSA in the data compilation or direct marketing industry. From
time-to-time during the Term the infoUSA may revise the list of Direct
Competitors with Licensee's written consent, which consent shall not be
unreasonably withheld.
2. UNAUTHORIZED USE.
2.1 Any use by Licensee or any User of the infoUSA Database, the infoUSA
Content, the infoUSA Brand Features or any other item of infoUSA's proprietary
or intellectual property (together with the infoUSA Brand Features, collectively
the "infoUSA Intellectual Property") which is not expressly authorized in this
Agreement or reasonably contemplated thereby is strictly prohibited. Without
limiting the generality of the foregoing, unless specifically permitted by this
Agreement or unless authorized in writing by infoUSA (which authorization may be
withheld unreasonably), Licensee and the Users are expressly prohibited from (i)
Co-branding the Service with, or otherwise providing the Service on behalf of,
any third-party, (ii) sublicensing or reselling the infoUSA Database or any
infoUSA Content; (iii) using or allowing third parties to use any infoUSA
Content for the purpose of compiling, enhancing, verifying, supplementing,
adding to or deleting from any mailing list, geographic or trade directories,
business directories, classified directories, classified advertising, or other
compilation of information which is sold, rented, published, furnished or in any
manner provided to a third party; (iv) using the infoUSA Database, any infoUSA
Content or any infoUSA Intellectual Property in any service or product not
specifically authorized in this Agreement, offering it through any third party
or disclosing it to anyone other than a User; or (v) disassembling, decompiling,
reverse engineering, modifying or otherwise altering the infoUSA Database or any
infoUSA Content. Licensee agrees that it will notify infoUSA promptly in the
event it becomes aware of any use or disclosure of the infoUSA Database or any
infoUSA Content which is not permitted by this Agreement.
2.2 Licensee shall use reasonable efforts to notify Users that they are not
permitted to create mailing or telemarketing lists. Licensee will house the
infoUSA Content on the Internet behind firewalls and will use reasonable efforts
to prevent unauthorized usage or copying of the infoUSA Database or the infoUSA
Content. Without limiting the foregoing Licensee will take reasonable
precautions to: a) Protect the integrity of the infoUSA Database and the
Intelligent Information, Incorporated. Page 4 03/06/00
<PAGE> 5
infoUSA Content; b) Control access to the infoUSA Content; and, if applicable c)
Reasonably ensure that the amount of usage of the infoUSA Content is accurately
recorded.
2.3 Licensee acknowledges that any unauthorized use of the infoUSA
Database, any infoUSA Content or any infoUSA Intellectual Property will cause
irreparable harm and injury to infoUSA for which there is no adequate remedy at
law. In addition to all other remedies available under this Agreement, at law or
in equity, Licensee further agrees that infoUSA shall be entitled to injunctive
relief in the event Licensee uses the infoUSA Database, any infoUSA Content or
any infoUSA Intellectual Property in violation of the limited license granted
hereunder.
3. LICENSE FEES AND ROYALTIES.
3.1 Any royalties or fees payable under this Agreement by Licensee, which
are not paid when due, shall accrue interest at the rate of 1% per month, or the
highest percentage permitted by applicable state law, from the due date until
paid.
3.2 No more frequently than once in any twelve month period, Licensee shall
permit infoUSA to audit its accounts, books and records, as they relate to
Licensee's rights or obligations hereunder, at infoUSA's expense and at a
mutually agreed upon time upon reasonable notice. The right granted under this
Section 3.2 shall exist during the term of this Agreement and for one year
thereafter. Upon concluding any audit, infoUSA shall notify Licensee of the
results thereof. In the event that infoUSA notifies Licensee that an adjustment
must be made to the royalties and/or fees previously paid by Licensee hereunder,
the parties shall use their best efforts in good faith to agree upon the amount
of any such adjustment. Any such adjustment shall be paid within 5 business days
after such agreement is reached. In the event the parties agree that the total
amount of royalties and/or fees previously paid was less than the amount
required to be paid under this Agreement and such deficiency is 10% or more of
the amount previously paid, Licensee shall pay the reasonable audit costs
incurred by infoUSA, including all reasonable out-of-pocket expenses.
3.3 Unless otherwise specified in this Agreement, Licensee acknowledges
that termination of this Agreement shall not terminate, diminish or otherwise
affect Licensee's obligation to pay license fees or any fees or costs which have
accrued under this Agreement.
4. DELIVERY.
4.1 If Licensee should be in material default of the Agreement infoUSA may,
in its sole discretion, withhold infoUSA Updates.
4.2 Licensee shall make available to infoUSA access to the Service at no
charge, so that infoUSA can understand and monitor the use of the infoUSA
Content as incorporated into the Service, and to approve such use prior to its
release.
5 TERMINATION.
5.1 Either party may terminate this Agreement as follows: (a) if the other
party materially breaches any term or condition of this Agreement (except as
otherwise provided in paragraphs 5.2 or 5.3 of this Agreement) and fails to
remedy such breach within thirty (30) days after written notice of such breach;
or (b) if the other party becomes subject to any receivership, insolvency,
bankruptcy, moratorium or similar proceeding for more than thirty (30) days
5.2 infoUSA may terminate this Agreement immediately if (a) Licensee
participates in any unauthorized use of the infoUSA Database, the infoUSA
Content or the infoUSA Brand Features (including, without limitation,
participating in or allowing a third partie's unauthorized use thereof or
failing to maintain controls as outlined in paragraph 2.2 above; (b) Licensee
fails to pay any amount due hereunder within 10 days after receiving notice from
infoUSA that such payment is past due; (c) all or substantially all of the
assets of Licensee are sold, assigned or otherwise transferred to any Direct
Competitor; (d) 50% or more of the equity securities or voting interests of
Licensee or the ultimate parent of Licensee is sold, assigned or otherwise
transferred in a single transaction or a series of related transactions to a
Direct Competitor; (e) Licensee or its ultimate parent is a party to a merger,
consolidation or other similar transaction with a Direct Competitor; or (e)
Licensee has materially breached any term or condition of this Agreement on 3 or
more occasions, even if previous breaches were cured in accordance with the
provisions of Paragraph 5.1(a).
5.3 Upon termination of this Agreement for any reason, Licensee shall (i)
ensure that all copies of the infoUSA Database, the infoUSA Content and any
related data and information is deleted from its computers and, if applicable
Intelligent Information, Incorporated. Page 5 03/06/00
<PAGE> 6
the computers of a third-party Processor; (ii) cease any and all use of the
infoUSA Database, infoUSA Content and infoUSA Brand Features; (iii) return or
destroy all copies, whether in print, tape or other media, of any of the infoUSA
Database, infoUSA Content or infoUSA Brand Features in its possession to infoUSA
no later than five (5) days after termination of this Agreement; and, (iv)
certify in writing within ten (10) days after termination of this Agreement that
Licensee has deleted or returned to infoUSA all copies of the infoUSA Database,
infoUSA Content and infoUSA Brand Features.
6. PROPRIETARY RIGHTS. Licensee acknowledges that all rights, title and
interest to the infoUSA Database, the infoUSA Content and the infoUSA Brand
Features, regardless of the forms of media in which such may be contained, shall
be and are retained by infoUSA, subject to the license granted to Licensee under
this Agreement.
7. CONFIDENTIALITY. The Confidentiality, Non-Disclosure and
Non-Solicitation Agreement previously executed by the Parties is expressly
incorporated herein by this reference, and the terms thereof shall survive the
termination of this Agreement.
8. DISCLAIMER OF WARRANTY, LICENSEE'S WARRANTIES; LIMITATION OF REMEDY, AND
LIMITATION OF LIABILITY.
8.1 Except for its obligation to update the Database for the Term of the
Agreement, the infoUSA Content is licensed on an "AS IS" basis without
guarantee. infoUSA does not guarantee that the infoUSA Database or the infoUSA
Content will meet the Licensee's or any User's requirements; that it will
operate in the combinations, or in the equipment, selected by the Licensee or
any User; or that its operation will be error-free or without interruption.
infoUSA MAKES NO EXPRESS OR IMPLIED WARRANTIES OF ANY KIND WITH RESPECT TO THE
infoUSA DATABASE OR THE infoUSA CONTENT, INCLUDING, WITHOUT LIMITATION, ANY
EXPRESS OR IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF
MERCHANTABILITY.
InfoUSA warrants and represents that it (a) it has the necessary power and
authority to enter into and perform its obligations under this Agreement and has
properly authorized the same by all requisite action; (b) it has all necessary
rights to grant the license under this Agreement; and (c) the infoUSA Database
and associated trademarks do not infringe upon any Intellectual Property Rights
of any third party. Notwithstanding any other provision in this Agreement,
infoUSA shall defend or settle at its own expense any claim or suit against
Licensee arising out of or in connection with an assertion that the infoUSA
Database infringes any Intellectual Property Rights, and infoUSA shall indemnify
and hold harmless Licensee from damages, costs, and attorneys' fees, incurred in
such suit or in the defense or the settlement thereof.
Licensee warrants and represents that it (a) it has the necessary power and
authority to enter into and perform its obligations under this Agreement and has
properly authorized the same by all requisite action; (b) it has all necessary
rights to accept the license granted to Licensee under this Agreement; and (c)
the Service, including any other database content and software and associated
trademarks does not knowingly infringe upon any Intellectual Property Rights of
any third party. Notwithstanding any other provision in this Agreement, Licensee
shall defend or settle at its own expense any claim or suit against infoUSA
arising out of or in connection with an assertion that the Service or any
portion thereof infringes any Intellectual Property Rights, and Licensee shall
indemnify and hold harmless infoUSA from damages, costs, and attorneys' fees, if
any, finally awarded in such suit or the amount of the settlement thereof.
8.2 Following the delivery of the infoUSA Database or any infoUSA Update,
infoUSA shall not be liable to Licensee or any third party in any way whatsoever
due to, or as a result of, any modification or alteration of the infoUSA
Database or the infoUSA Content by Licensee or by any other Person.
8.3 EXCEPT FOR ANY LIABILITY ARISING PURSUANT TO 8.1(c) infoUSA'S ENTIRE
LIABILITY FOR DAMAGES ARISING OUT OF OR RELATING TO THIS AGREEMENT WILL IN NO
EVENT EXCEED THE AMOUNT OF FEES PAID BY LICENSEE IN THE YEAR IN WHICH infoUSA IS
FOUND TO BE LIABLE.
8.4 NEITHER PARTY SHALL NOT LIABLE FOR INDIRECT, SPECIAL CONSEQUENTIAL OR
INCIDENTAL DAMAGES OR FOR ANY LOST PROFITS OR ANY CLAIM OR DEMAND OF A SIMILAR
NATURE OR KIND, WHETHER ASSERTED BY A PARTY OR BY ANY OTHER PARTY, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Intelligent Information, Incorporated. Page 6 03/06/00
<PAGE> 7
9. FORCE MAJEURE. Except for the payment of money, neither party shall be
liable for delays or failures in performance resulting from acts beyond the
reasonable control of such party. Such acts shall include but not be limited to
acts of God, riots, acts of war, and other disasters. In the event such an act
occurs, the party whose performance is delayed or affected will give prompt
notice to the other party, stating the period of time the delay or failure is
expected to continue.
10. ASSIGNMENTS. Licensee shall not assign this Agreement, or delegate or
subcontract any of its obligations hereunder.
11. MODIFICATION. No modification of this Agreement shall be binding upon
the Licensee and infoUSA unless made in writing and signed by duly authorized
officers of both parties.
12. WHOLE AGREEMENT. This Agreement does not constitute an offer by infoUSA
and it shall not be effective until signed by both parties. This Agreement
constitutes the entire Agreement between the parties with respect to its subject
matter and supersedes all prior and contemporaneous communications, negotiations
and agreements with respect thereto.
13. WAIVERS. The failure of either party to require the performance of any
term or condition of this Agreement shall not prevent any subsequent
enforcement of this term or condition, nor shall it be deemed a waiver of any
other different or subsequent breach.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska, without regard to Nebraska's
conflicts of laws principles and both parties consent to the exclusive
jurisdiction of the state or federal courts located in Omaha, Douglas County,
Nebraska.
15. SEVERABILITY. A decision by any court of competent jurisdiction
invalidating or holding unenforceable any part of this Agreement will not
affect the validity and enforceability of any other part of this Agreement. If
any part of this Agreement is found to be invalid or unenforceable, that part
will be amended to achieve as nearly as possible the objectives of the original
provision within the limits of applicable law.
16. NO THIRD PARTY BENEFICIARIES. This Agreement is made solely and
specifically between and for the benefit of the parties signatory hereto, and
no other person or entity whatsoever shall have any rights, interests or claims
hereunder or be entitled to any benefits under or on account of this Agreement
as a third party beneficiary or otherwise.
17. RELATIONSHIP OF PARTIES. This Agreement does not create a joint
venture, agency relationship or partnership between infoUSA and Licensee, and
each will act independently of the other. Neither party is empowered to bind or
commit the other to any contract or other obligation.
18. COMPLIANCE. Licensee shall use, and shall ensure that its Users use,
the infoUSA Database and the infoUSA Content in strict compliance with all
applicable federal, state and local laws, rules and regulations, including but
not limited to those concerning fax and/or e-mail transmissions, direct
marketing. Licensee further covenants and agrees that it shall not use the
infoUSA Content in any combination, manner, apparatus, method, system or
process which directly or indirectly infringes or violates the copyright,
patent or other intellectual property rights of any other party.
19. TAXES. Licensee shall be responsible to pay all taxes of any type,
nature or description (including, but not limited to, sale, use, gross
receipts, excise, import or export) imposed on the transactions, products or
services described in this Agreement, except for taxes imposed on or measured
by infoUSA's corporate income.
20. HEADINGS. The title of each Exhibit or Appendix and the headings or
titles preceding the text of the Sections or Paragraphs are inserted solely for
convenience of reference, and shall not constitute a part of this Agreement,
nor shall they affect the meaning, construction or effect of this Agreement.
The parties have each participated in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
Intelligent Information, Incorporated. Page 7 03/06/00
<PAGE> 8
21. QUALITY STANDARDS. Each of infoUSA and Licensee shall at all times
conduct all aspects of its business which relate to this transaction in a
professional manner that will reflect favorably upon the other party, so as to
protect the reputation of the other party, its products and services.
22. INCLUSION OF NOTICES. Licensee will not alter or impair any
acknowledgment of copyright or other intellectual property right of infoUSA
that may appear in the infoUSA Database, the infoUSA Content or the infoUSA
Brand Features, and shall include all copyright, trademark and other similar
notices that infoUSA may reasonably request on the screens of the Service and
as a part of the promotional efforts described in Section 1F above.
23. ALTERATION OF BRAND FEATURES. infoUSA shall notify Licensee if it
changes or adds to its Brand Features, and Licensee shall, within 30 days after
receiving such notification, incorporate such changed or added Brand Features
into the Service, the Buttons, the Banner Ads or any other of infoUSA's
products to be promoted by Licensee pursuant to Section1 F above.
24. REMEDIES. Except as otherwise provided in this Agreement, the remedies
contained in this Agreement are cumulative and non-exclusive and may be
utilized in addition to all other remedies available to either party at law or
in equity.
SECTION IV - NOTICES/DATABASE SPECIFICATIONS
1) NOTICES.
Any notice required to be provided under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery, deposit in
the U.S. post office as certified or registered mail, deposit in a private next
day delivery service with written verification of receipt or when sent by
confirmed telefax to the following individuals:
If to Licensee:
Ms. Joan Dale
Manager, Content, Brands and Commerce
Intelligent Information Incorporated.
181 Harbor Drive
Third Floor
Stamford, CT 06902
Phone: 203-969-0020
Fax: 203-969-0018
E-mail: [email protected]
- - From time to time, infoUSA receives urgent requests to remove or modify
certain listings. In such cases, Licensee can be contacted via e-mail at
the following address:
E-mail: [email protected]
If to infoUSA: infoUSA Inc.
5711 S. 86 Circle
Omaha, NE 68127
Attn: Director, Internet License Division
Fax No.: (402) 331-4950
with a copy to:
infoUSA Inc.
5711 S.86 Circle
Omaha, NE 68127
Attn: Corporate Counsel
Fax No.: (402) 537-6197
Intelligent Information, Incorporated. Page 8 03/06/00
<PAGE> 9
2) DELIVERY Within 15 business days after the Effective Date, infoUSA
will deliver the most recent version of the infoUSA Database and the Codemaster
to Licensee at the following address:
Ms. Joan Dale
Manager, Content, Brands and Commerce
Intelligent Information Incorporated
181 Harbor Drive
Third Floor
Stamford, CT 06902
Phone: 203-969-0020
Fax: 203-969-0018
E-mail: [email protected]
3) UPDATES Each month thereafter, infoUSA will deliver to Licensee a
full-file White Page File, a full-file Canadian Business File, and a
transaction-file U.S. Business File updated version of the infoUSA
Content, as well as an updated CodeMaster ("infoUSA Update").
4) DATA ELEMENTS The infoUSA Content will contain data elements, where
available, as follows:
a) US FILE
<TABLE>
<CAPTION>
- ----------------------------------------------
DESCRIPTION LENGTH
- ----------------------------------------------
<S> <C>
- ----------------------------------------------
Business Name 30
- ----------------------------------------------
Address 30
- ----------------------------------------------
City 16
- ----------------------------------------------
State Abbreviation 2
- ----------------------------------------------
Zip Code 5
- ----------------------------------------------
Zip+4 Code 4
- ----------------------------------------------
FILLER 3
- ----------------------------------------------
FILLER 4
- ----------------------------------------------
Area Code & Phone Number 10
- ----------------------------------------------
Last Name 14
- ----------------------------------------------
First Name 11
- ----------------------------------------------
Professional Title 3
- ----------------------------------------------
Primary SIC Code 6
- ----------------------------------------------
Franchise/Specialty 6
- ----------------------------------------------
Industry Specific Code 1
- ----------------------------------------------
Transaction Code 1
- ----------------------------------------------
Yellow Page Code 5
- ----------------------------------------------
Secondary SIC Group #1 19
- ----------------------------------------------
Secondary SIC Group #2 19
- ----------------------------------------------
Secondary SIC Group #3 19
- ----------------------------------------------
Secondary SIC Group #4 19
- ----------------------------------------------
ABI Number 9
- ----------------------------------------------
Latitude 9
- ----------------------------------------------
Longitude 9
- ----------------------------------------------
Census Tract 6
- ----------------------------------------------
Block Group 1
- ----------------------------------------------
Match Level 1
- ----------------------------------------------
</TABLE>
Intelligent Information, Incorporated. Page 9 03/06/00
<PAGE> 10
'
b) US WHITE PAGE FILE
infoUSA WHITE PAGE COMPILATION
Record Layout
<TABLE>
<CAPTION>
POSITION LENGTH NAME DESCRIPTION
<S> <C> <C> <C>
1-20 20 Last Name Last Name of Resident
21-35 15 First Name First Name of Resident
36-50 15 Middle Name Middle Name of Resident
51-65 15 Nickname Nickname of Resident
66-68 3 Generational Generational of Resident
69-72 4 Title Title of Resident
73-76 4 Professional Suffix Professional Suffix of Resident
77-96 20 2nd person Last Name Last Name of 2nd person if Different from Resident
97-111 15 2nd person First Name First Name of 2nd person
112-126 15 2nd person Middle Name Middle Name of 2nd person
127-141 15 2nd person Nickname Nickname of 2nd person
142-144 3 2nd person Generational Generational of 2nd person
145-148 4 Title of 2nd person Title of 2nd person
149-152 4 2nd person Prof. Suffix Professional Suffix of 2nd person
153-162 10 House Number House Number
163-164 2 Pre-Directional Street Pre-directional
165-189 25 Street Name Street Name without Directional or Suffix
190-193 4 Street Suffix Street Name Suffix
194-195 2 Post-Directional Street Post-Directional
196-205 10 Apartment Number Apartment Number, Floor Number, etc.
206-206 1 High Rise High Rise Flag from Code 1
S = Normal Street Address
G = General Delivery
P = PO Box
R = Rural Route or HC Addresses
H = High Rise Apartment
F = Firm Record
Blank = Unable to ZIP+4
207-234 28 Suburban City City Abbreviation from Directory
235-262 28 Postal City Postal City Name
263-264 2 State State Abbreviation
265-269 5 ZIP Code ZIP Code
270-273 4 ZIP+4 ZIP+4
274-277 4 Carrier Route Carrier Route Code
278-279 2 State Code State Code
280-282 3 County Code County Code
283-285 3 Area Code Area Code
286-292 7 Phone Number Phone Number
293-295 3 DPB Delivery Point Bar Code
296-305 10 Record ID # Household ID #
306-309 4 Phone Type Flag Indicates Presence of Teenline, Fax, Modem
1 = Modem Number
2 = "TDD" appears with phone number
</TABLE>
Intelligent Information, Incorporated. Page 10 03/06/00
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
4 = "TTY" appears with phone number
8 = Cellular, Mobile or Car Phone
16 = No Solicitation Record
32 = Additional Phone listed
64 = Teenline, Teen Phone or Children's Phone
128 = Fax
512 = Probable Business
1024 = Pager
2048 = Unlisted or Blank Phone Number
310-318 9 Latt Latitude (6 decimal places)
319-327 9 Long Longitude (6decimal places)
328-328 1 Mtchl Match Level
329-334 6 Census Census Tract
335-335 1 Block Group Block Group
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
*SEE COMMENTS BELOW
336-336 1 No Solicitation* No Solicitation Flag
1 = "No Solicitation" flag in book
2 = Record in DMA Telephone File
3 = Record in DMA Mailing File
4 = Record in DMA Telephone and Mailing File
5 = Record in State Supplied Suppression File
6 = infoUSA suppression file, record must be
suppressed
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
*SEE COMMENTS BELOW
337-337 1 Deceased Flag* Records Flagged as Deceased
0 = Neither Party Deceased
1 = First Person Deceased
2 = Second Person Deceased
3 = Both Persons Deceased
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
338-341 4 MSA Code Metropolitan Statistical Area Code
</TABLE>
Unless noted, all fields will be left justified with trailing blanks.
Carriage return and line feed at the end of each record.
* NOTE: PLEASE REVIEW THE RECORD LAYOUT CAREFULLY.
THE LICENSED DATA PROVIDED UNDER THIS AGREEMENT MAY INCLUDE FIELDS POPULATED
WITH DATA WHOSE USE FOR CERTAIN PURPOSES IS LIMITED UNDER FEDERAL,
STATE OR OTHER APPLICABLE LAWS. UNDER THE TERMS OF THE AGREEMENT IT IS
SOLELY LICENSEE'S RESPONSIBILITY TO COMPLY WITH SUCH LAWS.
c) CANADIAN BUSINESS FILE (GEO-CODES NOT AVAILABLE AT THIS TIME)
Intelligent Information, Incorporated. Page 11 03/06/00
<PAGE> 12
<TABLE>
<S> <C>
- -----------------------------------------
COMPANY NAME 30
- -----------------------------------------
ADDRESS 30
- -----------------------------------------
CITY 30
- -----------------------------------------
PROVINCE 2
- -----------------------------------------
POSTAL CODE 7
- -----------------------------------------
SUITE # 6
- -----------------------------------------
PHONE 10
- -----------------------------------------
FIRST NAME 11
- -----------------------------------------
LAST NAME 20
- -----------------------------------------
PROFESSIONAL 3
- -----------------------------------------
PRMSIC 6
- -----------------------------------------
FRNCOD 6
- -----------------------------------------
INDUSTRY SPEC 1
- -----------------------------------------
FILLER 1
- -----------------------------------------
YPCODE 5
- -----------------------------------------
SSIC1 6
- -----------------------------------------
FRNCOD 6
- -----------------------------------------
INDUSTRY SPEC 1
- -----------------------------------------
FILLER 1
- -----------------------------------------
YPCOD1 5
- -----------------------------------------
SSIC2 6
- -----------------------------------------
FRNCOD 6
- -----------------------------------------
INDUSTRY SPEC 1
- -----------------------------------------
FILLER 1
- -----------------------------------------
YPCOD2 5
- -----------------------------------------
SSIC3 6
- -----------------------------------------
FRNCOD 6
- -----------------------------------------
INDUSTRY SPEC 1
- -----------------------------------------
FILLER 1
- -----------------------------------------
YPCOD3 5
- -----------------------------------------
SSIC4 6
- -----------------------------------------
FRNCOD 6
- -----------------------------------------
INDUSTRY SPEC 1
- -----------------------------------------
FILLER 1
- -----------------------------------------
YPCOD4 5
- -----------------------------------------
CBI NUMBER 9
- -----------------------------------------
</TABLE>
In the event that Licensee desires to license data elements which are included
on the infoUSA Database but are not part of the infoUSA Content, Licensee shall
notify infoUSA and the parties shall negotiate in good faith an additional,
commercially reasonable license fee for such additional data elements. Licensee
shall pay said license fee to infoUSA in the manner, and pursuant to terms and
conditions, agreed upon by the parties. Simultaneously with the payment of the
license fee, Section IV of this Agreement shall be amended to include such
additional data elements.
[SIGNATURE PAGE TO FOLLOW]
Intelligent Information, Incorporated. Page 12 03/06/00
<PAGE> 13
<TABLE>
<S> <C>
READ AND APPROVED
Intelligent Information, Inc., Licensee infoUSA Inc.
- ------------------------------- -------------------------------
Signature Signature
- ------------------------------- -------------------------------
Name Name
- ------------------------------- -------------------------------
Title Title
- ------------------------------- -------------------------------
Date Date
</TABLE>
APPENDIX A
infoUSA LOGO
COPYRIGHT NOTICES
BRAND FEATURES
DISPLAYING THE infoUSA LOGO ON THE SERVICE
Each Web search results page containing infoUSA Content will continuously
display the following logo and copyright notice:
[infoUSA LOGO]
On delivery to a mobile phone the following will be displayed at the bottom of
the displayed list: "Data by InfoUSA"
The infoUSA logo will provided by infoUSA on the Web, and will be approximately
the same size as Licensee's logo.
Listing: A Listing(s) will appear as follows in any order.:
XYZ Company
123 Main Street
(987)654-3210
Intelligent Information, Incorporated. Page 13 03/06/00
<PAGE> 1
EXHIBIT 10.28
DISTRIBUTOR AGREEMENT
This Distributor Agreement ("Agreement") is entered into by and between
Comtex Scientific Corporation ("COMTEX"), a New York corporation with its
principal offices at 4900 Seminary Road, Suite 800, Alexandria, Virginia 22311,
and Intelligent Information Incorporated (the "Distributor"), a Delaware
corporation with its principal offices at One Dock Street, Suite 500, Stamford,
Connecticut 06902.
1. DEFINITIONS
a. Service. The term "the Service" means the electronic
information services identified in Exhibit A to this Agreement.
b. Content. The term "Content" means all material, whether or not
protected by copyright, including but not limited to text, images, and other
multimedia data, provided or made available as part of the Service.
c. Information Providers. The term "Information Providers" means
third parties from whom COMTEX acquires the right to distribute Content provided
or made available as part of the Service.
d. Users. The term "Users" means all third parties to whom
Distributor, subject to the terms and conditions of this Agreement, may license,
sell, transfer, make available or otherwise distribute the Service.
2. DISTRIBUTION
a. Grant of Rights. Subject to the terms and conditions of this
Agreement, COMTEX grants Distributor a nonexclusive license and right to market
the Service, distribute the Service to Users, and license Users to use the
Service for their internal use.
b. Restrictions on Distribution
i. Unauthorized Entities. Distributor shall not knowingly
license, sell, transmit or otherwise distribute the Service or Content
to print or broadcast news media or any of their parents, subsidiaries,
and affiliates ("Unauthorized Entities"), without obtaining for each
such Unauthorized Entity the prior written consent of COMTEX. In the
event any such unauthorized distribution becomes known to Distributor,
Distributor immediately shall notify COMTEX and use its best efforts to
halt immediately such distribution.
ii. Redistribution. Distributor shall not license, sell,
transfer, make available or otherwise distribute the Service or Content
to any third party who, for the use or benefit of such third party's
Customers, licenses, purchases or otherwise obtains the Service or
Content from Distributor and then relicenses, resells, transfers, makes
available or otherwise redistributes such Service and Content to such
third party's Customers, without obtaining for each such third party
the prior written consent of COMTEX. For purposes of this subparagraph,
the term "Customer" shall include any individual, entity or other party
who licenses, purchases or otherwise obtains such Service or Content
from the third party.
1
<PAGE> 2
c. User Agreements. Distributor shall require that each User
enter into an agreement that contains the provisions set forth in Exhibit D or
provisions substantially equivalent thereto. Such agreement, which may be
obtained in an electronic or hard-copy format, shall be retained by Distributor
for the term of this Agreement and three (3) years thereafter. Upon the request
of COMTEX, Distributor shall provide COMTEX a copy of such user agreement.
d. Reservation. COMTEX reserves the right to add or withdraw
Information Providers, Content and items of coverage from the Service without
notice.
3. MARKETING
a. Promotion. Distributor agrees to use commercially reasonable
efforts to promote and market the Service to prospective Users and to enter into
licenses for use of the Service by Users.
b. Expenses. Distributor shall be responsible for all expenses
incurred by Distributor in promoting and marketing the Service.
c. Use of Name. Distributor shall name COMTEX as one of its
information services in its formal promotional and marketing materials relating
to the Service, including press releases and advertisements.
d. Prior Approval. COMTEX and Distributor each agrees to submit
to the other party for written approval all press releases, advertising or other
promotional materials that use Service names or a party's company name not less
than fifteen (15) days before the proposed use. Each party shall not
unreasonably withhold its approval. Unless notice of approval or disapproval is
received within ten (10) days of receipt of promotional materials, approval
shall be deemed granted. Either party, however, may identify the other in its
published listing of available services or Distributors without such written
approval.
4. DELIVERY OF THE SERVICE
a. Provision of the Service. Subject to the terms and conditions
of this Agreement, COMTEX shall provide the Service to Distributor and
Distributor shall receive the Service from COMTEX in conformance with the
Technical Specifications set forth in Exhibit A.
b. Timeliness. COMTEX shall use commercially reasonable efforts
to maintain the timeliness of the information contained in the Service.
Distributor acknowledges that COMTEX relies on the performance of Information
Providers outside the control of COMTEX in order to provide the Service.
c. Proprietary Notices. Where supplied as part of the Service by
COMTEX or its Information Providers, Distributor will cause to be displayed
appropriate copyright or other proprietary notices relating to the Service.
d. Modifications. Distributor shall not edit, abridge, rewrite or
in any other way alter the Content of the Service or create any work derived
from the Content of the Service; provided, however, that Distributor may choose
not to display every story or article.
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e. Remedies
i. Corrections. Upon receipt of written notice from
COMTEX of an error in the distribution of the Service and Content to a
User, Distributor shall use commercially reasonable efforts to promptly
correct such error.
ii. Withdrawal of Information Provider. Notwithstanding
Subparagraph 4.e.i., in the event that Distributor violates
Subparagraphs 2.b., 4.c. or 4.d., infringes any copyright of an
Information Provider, or otherwise violates the proprietary rights of
an Information Provider, COMTEX, at its sole discretion, immediately
may cease distribution of such Information Provider's Content to
Distributor until the violation or infringement is remedied by
Distributor, during which period Distributor acknowledges that such
actions by COMTEX shall not result in a breach of Subparagraphs 4.a.
and 4.b.
f. Review by COMTEX
i. Access. Throughout the term of this Agreement,
Distributor shall provide COMTEX reasonable access to Distributor's
system for distribution of the Service to Users for the sole purpose of
reviewing Distributor's implementation of the Service. This access
shall be provided by Distributor at no charge to COMTEX
ii. Opportunity to Review. Distributor shall provide
notice to COMTEX to allow COMTEX a reasonable opportunity to review
Distributor's implementation of the Service before or, if prior review
is impracticable, as soon as possible after Distributor implements the
Service or any substantial changes in its implementation of the
Service.
5. PAYMENT
a. Payment Schedule. Distributor shall pay COMTEX the Monthly
Fees and Royalties set forth in the Payment Schedule in Exhibit B.
b. Invoices and Due Date. Each month, COMTEX shall provide
Distributor an invoice setting forth the following:
(i) the Monthly Fees for the current month;
(ii) the Estimated Royalty for the current month, which
shall be equal to the prior month's actual Royalty; and
(iii) the Royalty Adjustment for the prior month, which
shall be the amount by which the prior month's Royalty, based on actual
usage, exceeds the prior month's Estimated Royalty, or Royalty Credit,
which shall be the amount by which the prior month's Estimated Royalty
exceeds the prior month's Royalty, based on actual usage. COMTEX shall
credit Distributor the amount of any Royalty Credit.
Distributor shall pay COMTEX the net amount shown on each invoice within thirty
(30) days of the date of the invoice (the "Due Date").
c. Fees Subject to Change. COMTEX may adjust the Fees set forth
in Exhibit B upon sixty (60) days prior written notice to Distributor.
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d. Reports. Within ten (10) days after the end of each month,
Distributor shall provide COMTEX a report, in the format set forth in Exhibit B
to this Agreement or as otherwise agreed to by the parties, setting forth all
information necessary to calculate the Monthly Fees and Royalties for the prior
month.
e. Taxes. Distributor shall be responsible for the payment of
all taxes, including sales, excise, and value-added taxes, which may be levied
upon the provision of the Service or on any payments by Distributor to COMTEX
hereunder, other than franchise and income taxes of COMTEX.
f. Interest. All amounts under Subparagraph a. above owed to
COMTEX by Distributor and not paid by the Due Date shall be deemed delinquent
and interest, calculated at the rate of one and one-half percent (1.5%) per
month, shall be paid by Distributor to COMTEX on such amounts. In addition,
COMTEX shall be entitled to reimbursement for all reasonable costs of
collection, including reasonable attorneys' fees. Nothing in this paragraph
shall limit COMTEX' right to terminate this Agreement in accordance with
Paragraph 6.b.
g. Audit. COMTEX or its representative may, during business
hours and upon reasonable notice, inspect and audit the relevant books and
records of Distributor for the sole purpose of verifying all information
related to payments under this Agreement. Such inspection and audit shall be at
the expense of COMTEX unless the audit shows an error of ten percent (10%) or
more in the calculation of Monthly Fees and Royalties, in which case
Distributor shall bear the expense of such inspection and audit. Any deficiency
discovered by the audit shall be paid by Distributor to COMTEX within thirty
(30) days of COMTEX notifying Distributor of the deficiency.
6. TERM AND TERMINATION
a. Term. This Agreement commences on the date of the last
signature hereto or the first commercial distribution of the Service, whichever
occurs first (the "Effective Date"), and shall remain in effect for the Initial
Term set forth in Exhibit A. This Agreement shall renew automatically for
successive periods of the duration of the Renewal Term set forth in Exhibit A,
unless either party notifies the other party in writing, at least ninety (90)
days before the end of the Initial Term or any Renewal Term, of its election
not to renew.
b. Termination. Either party may terminate this Agreement at any
time if the other party materially breaches any provision of this Agreement.
Such termination shall take effect (i) if the breach is incapable of cure, then
immediately upon the breaching party's receipt of a written notice of
termination which identifies the breach, or (ii) if the breach, capable of
being cured, has not been cured within sixty (60) days after receipt of written
notice from the non-breaching party identifying the breach, then immediately
upon receipt of a written notice of termination received within thirty (30)
days of the end of such sixty (60) day period. For purposes of this paragraph,
a breach of Subparagraphs 2.b. or 4.e.i. shall be deemed a breach that is
incapable of cure.
c. Insolvency. Either party may terminate this Agreement by
written notice to the other if the other party becomes insolvent, makes a
general assignment for the benefit of creditors, permits the appointment of a
receiver for its business or assets, or takes steps to wind up or terminate its
business.
d. Obligations upon Termination. Effective upon termination of
the Agreement, Distributor shall not license, sell, transfer, make available or
otherwise distribute the Service or Content nor access, use or retransmit the
Service or Content. Within thirty (30) days of termination, Distributor shall
(i) pay to COMTEX all amounts owed under Paragraph 5 of this Agreement, and
(ii) for all Content, either (A) erase and purge the Content from any on-line
and off-line storage media and certify, in writing, to COMTEX that such erasure
and purge has been completed, or (B) certify, in writing, to COMTEX that
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<PAGE> 5
certain Content has been retained in creating back-ups during the normal course
of business and that such Content shall not be used in any manner whatsoever
without the prior consent of COMTEX.
e. Remedies upon Breach. Upon termination under Subparagraphs b.
and c. above, COMTEX shall terminate the Service and shall be entitled to
recover from Distributor (i) any payments due hereunder, (ii) the total of
Distributor's Monthly Fee multiplied by the number of months between such
termination and the date of expiration of the then current term, less savings
realized by COMTEX, (iii) all costs and expenses of collection, including
attorneys' fees, and (iv) any and all direct damages under law.
f. Survival. The provisions of Paragraphs 5, 6, 7, 8, 9, 13, 14,
15, 16 and 17 of this Agreement shall survive termination of this Agreement.
7. CONFIDENTIAL INFORMATION
a. Definition. "Confidential Information" shall mean information
which is designated as Confidential Information by the party disclosing such
information (the "Disclosing Party") (i) in Exhibit C to this Agreement, (ii)
with respect to information provided on paper, by facsimile or electronic mail,
on magnetic media, electronically or by any other medium (collectively "in
writing"), by labeling such information as "CONFIDENTIAL INFORMATION" before
the information is provided to the other party (the "Receiving Party"), or
(iii) with respect to information disclosed either verbally or in writing, by
notifying the Receiving Party, in writing within thirty (30) days of the
disclosure, that the information identified in such notice is designated
Confidential Information effective as of the Receiving Party's receipt of such
written notice.
b. Exclusions. "Confidential Information" shall not include
information that (i) is or shall become generally available without fault of
the Receiving Party, (ii) is in the Receiving Party's possession prior to its
disclosure by the Disclosing Party, (iii) is independently developed by the
Receiving Party, or (iv) is rightfully obtained by the Receiving Party from
third parties without similar restrictions.
c. Restrictions. The Receiving Party shall not disclose or
otherwise transfer Confidential Information of the Disclosing Party to any
third party, without first obtaining the Disclosing Party's consent, and shall
take all reasonable precautions to prevent inadvertent disclosure of such
Confidential Information. Except as necessary to perform under this Agreement,
the Receiving Party shall not use or copy Confidential Information of the
Disclosing Party, without first obtaining the Disclosing Party's consent, and
will take all reasonable precautions to prevent inadvertent use and copying of
such Confidential Information.
d. Injunctive Relief Exclusion of Liability Limitation. The
parties agree that damages shall be an inadequate remedy in the event of a
breach by either party of this paragraph and that any such breach by a
Receiving Party will cause the Disclosing Party great and irreparable injury
and damage. Accordingly, a party shall be entitled, without waiving any
additional rights or remedies otherwise available at law or in equity or by
statute, to injunctive and other equitable relief in the event of a breach or
intended or threatened breach of this paragraph. The provisions of Paragraph 13
shall not apply to any breach of this Paragraph 7.
8. CONTENT
a. Ownership. Distributor acknowledges that this Agreement does
not transfer to Distributor
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<PAGE> 6
or Users any proprietary right, title or interest, including copyright, in the
Content made available as part of the Service.
b. Representation. COMTEX shall use commercially reasonable
efforts to prevent the Service from distributing any Content which would
infringe any copyright or other right of any third party. Distributor
understands that COMTEX is a distributor of information services and material
licensed from Information Providers and agrees that COMTEX does not warrant
that the Content will not infringe any copyright or other right of any third
party.
9. TRADEMARKS
Distributor agrees that COMTEX' trademarks are the sole and exclusive property
of COMTEX. Pursuant to Paragraph 3.d., COMTEX shall have the right to approve
the use of its trademarks by Distributor to identify and promote use of the
Service. Upon compliance with this provision, use of such marks by Distributor
for such purposes shall be deemed approved during the term of this Agreement
unless COMTEX specifically notifies Distributor to the contrary.
10. LIMITED WARRANTIES OF COMTEX
a. Agreement. COMTEX warrants that its entry into this Agreement
does not violate any agreement between COMTEX and any third party.
b. Laws and Regulations. COMTEX warrants that its performance
under this Agreement and the use of the Service conforms to all applicable laws
and government rules and regulations, subject to the terms of this Agreement.
c. The Service and Content. Distributor agrees that the Service
and Content are provided by COMTEX "AS IS". COMTEX does not warrant the
accuracy, completeness or timeliness of the Service and Content.
11. LIMITED WARRANTIES OF DISTRIBUTOR
a. Agreement. Distributor warrants that its entry into this
Agreement does not violate any agreement between Distributor and any third
party.
b. Laws and Regulations. Distributor warrants that its
Performance under this Agreement and the use of the Service shall conform to
all applicable laws and government rules and regulations, subject to the terms
of this Agreement.
12. DISCLAIMER OF ALL OTHER WARRANTIES
THE PARTIES AGREE THAT (a) THE LIMITED WARRANTIES SET FORTH IN
PARAGRAPHS 10 AND 11 OF THIS AGREEMENT ARE THE SOLE AND EXCLUSIVE WARRANTIES
PROVIDED BY EACH PARTY, AND (b) EACH PARTY DISCLAIMS ALL OTHER WARRANTIES
INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE RELATING TO THIS AGREEMENT, PERFORMANCE UNDER
THIS AGREEMENT, THE SERVICE AND CONTENT, AND EACH PARTY'S COMPUTING AND
DISTRIBUTION SYSTEM.
13. LIMITATION OF LIABILITY
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In no event shall COMTEX or its Information Providers be liable to
Distributor and its Users for any direct, indirect, special, exemplary or
consequential damages, including lost profits, whether or not foreseeable or
alleged to be based on breach of warranty, contract, negligence or strict
liability, arising under this Agreement or any performance under this Agreement.
14. INDEMNIFICATION
Distributor shall indemnify and hold harmless COMTEX and its
Information Providers from and against any claims, losses, expenses,
liabilities, and damages, including reasonable legal fees and expenses, arising
out of Distributor's or its Users' breach of any provision of this Agreement,
including without limitation the restrictions, obligations and warranties set
forth in Paragraphs 2, 3, 4 and 11 of this Agreement. COMTEX agrees to notify
Distributor of any such claim promptly in writing. The parties agree to
cooperate fully during such proceedings. Distributor shall defend and settle at
its sole expense all proceedings arising out of the foregoing.
15. NON-SOLICITATION
Distributor agrees that for the duration of this Agreement and for one
(1) year after expiration or termination of this Agreement, Distributor shall
not, directly or indirectly, solicit or attempt to solicit to obtain a direct
feed from any Information Provider which is providing Content made available to
Distributor as part of the Service provided by COMTEX.
16. FORCE MAJEURE
Neither party shall be liable for any delay or failure to perform under
this Agreement if caused by conditions beyond its control, including but not
limited to fire, flood, accident, storm, acts of war, riot, government
interference, strikes or walkouts; provided, however, no such event shall excuse
any delay or failure to perform by Distributor of its obligations to make
payment to COMTEX under Paragraph 5 of this Agreement. The affected performing
party shall promptly notify the other party of the nature and anticipated length
of continuance of such force majeure. Should any such failure or suspension of
performance by COMTEX continue for more than six (6) months, then either party
shall have the right to terminate this Agreement without further liability or
obligation on the part of either party.
17. NOTICES
All notices and demands hereunder shall be in writing and delivered by
hand delivery, certified or registered mail, return receipt requested, or
confirmed facsimile transmission at the addresses set forth below (or at such
different address as may be designated by either party by written notice to the
other party). Delivery shall be deemed to occur (i) if by hand delivery, upon
such delivery, (ii) if by mail, four (4) days after deposit with the U.S. Postal
Service, and (iii) if by facsimile transmission, upon receipt of confirmation.
If to COMTEX:
Debbie Woolum Ikins, Vice President, Sales
Comtex Scientific Corporation
4900 Seminary Road
Suite 800
Alexandria, Virginia 22311
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Facsimile transmission: (703) 820-2005
If to Distributor:
Robert Coletti, Controller
Intelligent Information Incorporated
One Dock Street
Suite 500
Stamford, CT 06902
18. GENERAL TERMS AND CONDITIONS
a. Not Agent. Neither party shall be considered an agent of the
other party nor shall either party have the authority to bind the other party.
b. No Assignment. Neither party may assign this Agreement without
the written consent of the other party; provided, however, that COMTEX may
assign this Agreement as part of a transaction in which substantially all of the
assets related to its rights and obligations under this Agreement are assigned
to a third party.
c. Governing Law. This Agreement and performance hereunder shall
be construed and governed by the laws of the Commonwealth of Virginia.
d. Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such provision(s) had never been contained herein,
provided that such provision(s) shall be curtailed, limited or eliminated only
to the extent necessary to remove the invalidity, illegality or
unenforceability.
e. Waiver. No waiver of any breach of any of the provisions of
this Agreement shall be deemed a waiver of any preceding or succeeding breach
of the same or any other provisions hereof. No such waiver shall be effective
unless in writing and then only to the extent expressly set forth in writing.
f. Complete Agreement. The parties agree that this Agreement is
the complete and exclusive statement of the agreement between the parties,
which supersedes and merges all prior proposals, understandings and other
agreements, oral or written, between the parties relating to this Agreement.
g. Amendment. This Agreement may not be modified, altered or
amended except by written instrument duly executed by both parties.
h. Attorneys' Fees. Should any action be brought by either party
to enforce the provisions of this Agreement, the prevailing party, whether by
settlement, adjudication or arbitration, shall have the right to collect
reasonable attorneys' fees, expenses and costs from the nonprevailing party.
i. No Inference Against Author. No provision of this Agreement
shall be interpreted against any party because such party or its legal
representative drafted such provision.
j. Headings. The headings used in this Agreement are for
convenience only and are not to be construed to have a legal significance.
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k. Read and Understood. Each party acknowledges that it has read
and understands this Agreement and agrees to be bound by its terms.
AGREED:
<TABLE>
<S> <C>
INTELLIGENT INFORMATION INC.
Distributor, by: COMTEX SCIENTIFIC CORPORATION, by:
/s/ Stephen G. Maloney /s/ Charles W. Terry
- -------------------------------------- --------------------
Signature Signature
Stephen G. Maloney Charles W. Terry
- -------------------------------------- --------------------
Printed Name Printed Name
President President
- -------------------------------------- --------------------
Title Title
Date:June 9, 1995 Date:June 13, 1995
--------------------------------- ---------------
</TABLE>
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EXHIBIT A
THE SERVICE; TERM
1. The term "the Service" means five (5) of the following electronic
information services as selected by the Distributor:
Business CustomWire
Newswire that focuses on the activities of organizations involved with
supplying and distributing of goods and services. Features real-time
news coverage specifically in the areas of corporate performance,
executive activities, mergers and acquisitions, and new product
launches.
Community CustomWire
Newswire that focuses on the activities and events that affect people
and the quality of life in the United States. Features real-time news
coverage on safety and social services programs, regional politics,
infrastructure issues, and employment trends. Includes reports on
crime/police activities, children and education, and the effects of
natural and man-made disasters.
Entertainment CustomWire
Newswire that focuses exclusively on the world of entertainment.
Features real-time news coverage on the people and events that
captivate the imagination of the public. Includes reports on upcoming
programs, schedules, previews, and reviews in the performing, visual,
and literary arts including dance, drama, literature, film, music, and
television.
Environment CustomWire
Newswire that focuses on the events that advocate the preservation and
improvement of our natural environment. Features real-time news
coverage on the causes of air, water, and land contamination and the
effects on human health and the environment. Includes reports on
individual and industrial recycling and resource recovery efforts.
Finance CustomWire
Newswire that focuses on the events that advocate the preservation and
improvement of our natural environment. Features real-time news
coverage on the causes of air, water, and land contamination and the
effects on human health and the environment. Includes reports on
individual and industrial recycling and resource recovery efforts.
Government CustomWire
Newswire that focuses on the activities of the U.S. Federal Government.
Features real-time news coverage on our system of creating, enforcing,
and interpreting the laws of our nation. Includes reports from
Congress, the Executive Branch and its agencies, the Supreme Court,
Capitol Hill offices, labor unions, trade and industry associations,
and special-interest groups.
Healthcare CustomWire
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Newswire that focuses on actions taken to improve and maintain the
general health of the public. Features real-time news coverage on
programs supporting the prevention and control of disease, the results
of clinical trials and tests that ensure the safety and effectiveness
of drugs and medical devices, developments in biotechnology, and
activities to improve access to healthcare services.
High Technology CustomWire
Newswire that focuses on the production and use of advanced
technologies, specifically computers and telecommunications. Features
real-time news coverage and market data reports highlighting on-line
services, CD-ROM, electronic publishing, interactive multi-media
services, software and database applications, telecommunications, and
news and information services.
International CustomWire
Newswire that focuses on news about other countries around the world.
Features a global perspective of local and international issues
generated from eight distinct regions of the world -- Africa, Asia,
Central Eurasia, China, Eastern Europe, Latin America, Russia, and
Western Europe. Includes real-time news coverage on the activities of
international organizations, trade, changing political and economic
environments, and rising conflicts and wars in other countries.
Sports CustomWire
Newswire that focuses exclusively on the world of sports competition.
Features real-time news coverage on all professional and collegiate
sporting events in the U.S., international games and events originating
in other countries, and all reported worldwide competition. Includes
score updates, team statistics, and late breaking reports on the
players, owners, and fans.
2. Technical Specifications: Delivery will be via Mainstream FM sideband
or satellite delivery. The data format will be the standard COMTEX
proprietary format.
3. The Initial Term shall be one (1) year beginning July 1, 1995.
4. Each Renewal Term shall be one (1) year.
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EXHIBIT B
Payment Schedule
A. Monthly Fees: Distributor shall pay COMTEX the following monthly
minimum fees:
Months 1-3 $2,500
Months 4-6 $2,900
Months 7-9 $3,300
Months 10-12 $3,700
B. Royalties: The following royalties shall be applied against the monthly
minimum fees:
FOR HEADLINES ONLY:
Distributor shall pay COMTEX a minimum of $0.30 per subscriber per
month. Distributor shall pay COMTEX $0.015 per headline transmitted
to a subscriber.
Definition: Includes Headlines from five (5) COMTEX Custom Wires.
FOR SUMMARIES/BRIEFS:
Distributor shall pay COMTEX a minimum of $0.50 per subscriber per
month. Distributor shall pay COMTEX $0.025 per summary/brief
transmitted to a subscriber.
Definition: A summary/brief is not to exceed two hundred forty (240)
characters, or two sentences, in the event that either of these are not
separately reported in the Comtex feed.
FOR FULL-TEXT ARTICLES:
Distributor shall pay COMTEX fifty percent (50%) of the full-text
article charge, as agreed in writing by both Distributor and COMTEX.
Definition: Full-text article as provided in the COMTEX feed.
C. Royalty Reporting: Monthly reports should include the following
information, in spreadsheet format:
1. Number of paid users/subscribers
2. Total number of headlines transmitted
3. Total number of summaries/briefs transmitted
4. Total number of full-text articles transmitted
5. Minimum fees paid to COMTEX
6. Net royalty due COMTEX
7. Number of trial users
D. Pricing Exceptions: Discounts for large volume accounts may be agreed
to by both parties with an Amendment to the Agreement.
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EXHIBIT C
Confidential Information
1. This Agreement and all Exhibits thereto, except for Exhibit D.
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EXHIBIT D
User Agreement Provisions
1. Ownership. User agrees that Comtex Scientific Corporation
("COMTEX") and its information providers retain all rights, title and
interests, including copyright and other proprietary rights, in the Service and
all material, including but not limited to text, images, and other multimedia
data, provided or made available as part of the Service ("Content").
2. Restrictions on Use. User agrees that it will not copy nor
license, sell, transfer, make available or otherwise distribute the Service or
Content to any entity or person, except that User may (a) make available to its
employees electronic copies of Content, (b) allow its employees to store,
manipulate, and reformat Content, and (c) allow its employees to make paper
copies of Content, provided that such electronic and paper copies are used
solely internally and are not distributed to any third parties. User shall use
its best efforts to stop any unauthorized copying or distribution immediately
after such unauthorized use becomes known. The provisions of this paragraph are
for the benefit of COMTEX and its information providers, each of which shall
have the right to enforce its rights hereunder directly and on its own behalf.
3. No Warranty. The Service is provided on an "AS IS" basis.
COMTEX DISCLAIMS ANY AND ALL WARRANTIES, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
RELATING TO THIS AGREEMENT, PERFORMANCE UNDER THIS AGREEMENT, THE SERVICE AND
CONTENT. COMTEX makes no warranties regarding the completeness, accuracy or
availability of the Service or Content.
4. Limitation of Liability. In no event shall COMTEX or its
information providers be liable to User or any other person or entity for any
direct, indirect, special, exemplary or consequential damages, including lost
profits, based on breach of warranty, contract, negligence, strict liability or
otherwise, arising under this Agreement or any performance under this
Agreement, whether or not they or it had any knowledge, actual or constructive,
that such damages might be incurred.
5. Indemnification. User shall indemnify and hold harmless
COMTEX against any claim, damages, loss, liability or expense arising out of
User's use of the Service or Content in any way contrary to this Agreement.
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EXHIBIT E
Information products and services that are individualized and delivered
to and received from wireless devices such as pagers, smr, cellular telephones,
laptop and palmtop personal computers, personal data assistants, PCMCIA
messaging cards, etc. over numerous wireless networks throughout the United
States and abroad.
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EXHIBIT 10.29
DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is entered into by and between Press
News LTD ("Provider"), incorporated under the Canada Business Corporation Act
with its principal offices at 36 King Street East, Toronto, Ontario M5C 2L9, and
Intelligent Information Incorporated ( the Distributor"), a Delaware corporation
with its principle offices at One Dock Street, Suite 500, Stamford, Connecticut
06902.
1. DEFINITIONS
a. Information Providers. The term "Information Providers" means third
parties from whom the Provider acquires the right to distribute Content provided
or made available as part of the Service.
b. Service. The term "Service" means the electronic information
services identified in Exhibit A to this Agreement.
c. Content. The term "Content" means all information and material,
whether or not protected by copyright, including but not limited to text,
images, and other multimedia data, provided or made available as part of the
Service.
d. Resellers. The term "Resellers" means third parties through which
Distributor distributes the Service to Users, subject to the terms of this
Agreement.
e. Users. The term "Users" means all third parties to whom Distributor
may license, sell, transfer, make available or otherwise distribute the Service.
2. DISTRIBUTION
a. Grant of Rights. Subject to the terms and conditions of this
Agreement, Provider grants Distributor a nonexclusive license, except as
provided for in this Agreement, and right to distribute the Service as described
in Exhibit E. Resellers shall have the right to market the Service and
distribute the Service to Users in Canada and British Commonwealth countries
only and to use the Service for their internal use subject to the terms of this
Agreement.
b. User Agreements. Distributor shall require that each User enter into
an agreement that contains the provisions set forth in Exhibit D or provisions
substantially equivalent thereto. Such agreement may be obtained by acquiring a
signature thereon, by providing a electronic acceptance thereto, or by delivery
to the User.
c. Reservation. Provider reserves the right to add or withdraw
Information Providers, Content and items of coverage from the Service with
thirty (30) days written notice to Distributor.
<TABLE>
<S> <C>
Intelligent Information Incorporated & Press News LTD - CONFIDENTIAL INFORMATION (cp1198)
</TABLE>
<PAGE> 2
3. MARKETING
a. Promotion. Distributor agrees to use commercially reasonable efforts
to promote and market the Service to prospective Resellers and Users, and to
enter into agreements for the use of the Service by Resellers and Users.
b. Expenses. Distributor shall be responsible for all expenses incurred
by Distributor in promoting and marketing the Service, unless such expenses have
been agreed to be paid by the Provider in advance.
c. Use of Name. Distributor shall use reasonable efforts to name
Provider as one of its information services in its formal promotional and
marketing materials relating to the Service.
d. Prior Approval. Provider and Distributor each agrees to submit to
the other party for written approval all press releases, advertising or other
promotional materials that use Service names or a party's company name not less
than fifteen (15) days before the proposed use. Each party shall not
unreasonably withhold its approval. Unless notice of approval or disapproval is
received within (10) days of receipt of promotional materials, approval shall be
deemed granted. Either party, however, may identify the other in its published
listing of available services or Distributors without such written approval.
4. DELIVERY OF THE SERVICE
a. Provision of the Service. Subject to the terms and conditions of
this Agreement, Provider shall provide the Service to Distributor and
Distributor shall receive the Service from Provider in conformance with the
Technical Specifications set forth in Exhibit F.
b. Timeliness. Provider shall use commercially reasonable efforts to
maintain the timeliness of the content. Distributor acknowledges that, in part,
Provider relies on the performance of Information Providers outside the control
of Provider in order to provide the Service.
c. Proprietary Notices. Where supplied as part of the Service by
Provider or its Information Providers, Distributor will cause to be displayed
appropriate copyright or other propriety notices relating to the Service.
d. Modifications. Distributor shall not edit, abridge, rewrite or in
any way alter the Content of the Service or create any work derived from the
Content of the Service, that changes its meaning or tone. Provider agrees that
Distributor may make changes to the content to meet wireless display equipment
formats.
e. Review by Provider. Throughout the term of this Agreement,
Distributor shall provide Provider reasonable access to Distributor's system for
distribution of the Service to Users for the sole purpose of reviewing
Distributor's implementation of the Service.
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f. Audit. Provider or its representative may, during business hours and
upon reasonable notice, inspect and audit the relevant books and records of
Distributor for the sole purpose of verifying all information related to
payments under this Agreement. Such inspection and audit shall be at the expense
of the Provider.
5. REPORTING AND PAYMENT
a. Reporting. Distributor shall provide to Provider by the 15th of each
month a report indicating the number of Users of the Service for the prior
calendar month and any such additional information as may reasonably be
requested by Provider.
b. Payment Schedule. Distributor shall pay Provider the Monthly Fees
set forth in the Payment Schedule in Exhibit B.
6. TERM AND TERMINATION
a. Term. This Agreement commences on the date of the last signature
hereto or the first commercial distribution of the Service, whichever occurs
first (the "Effective Date"), and shall remain in effect for an Initial Term of
two (2) years. This Agreement shall renew automatically for successive one year
Renewal Terms unless either party notifies the other party in writing, at least
ninety (90) days before the end of the Initial Term or any Renewal Term, of its
election not to renew. If this contract rolls over the fee per User per month
shall increase as outlined in Exhibit B.
b. Termination. Either party may terminate this Agreement at any time
if the other party materially breaches any provision of this Agreement. Such
termination shall take effect (i) if the breach is incapable of cure, then
immediately upon the breaching party's receipt of a written notice of
termination which identifies the breach, or (ii) if the breach, capable of being
cured, has not been cured within sixty thirty (30) days after receipt of written
notice from the non-breaching party identifying the breach, then immediately
upon receipt of a written notice of termination received within thirty (30) days
of the end or such thirty (30) day period.
c. Insolvency. Either party may terminate this Agreement with thirty
(30) days written notice to the other if either party becomes insolvent, makes a
general assignment for the benefit of creditors, permits the appointment of a
receiver for its business or assets, or takes steps to wind up or terminate its
business.
d. Obligations upon Termination. Effective upon termination of the
Agreement, Distributor shall not license, sell, transfer, make available or
otherwise distribute the Service or Content nor access, use or retransmit the
Service or Content. Within thirty (30) days of termination, Distributor shall
(i) pay to Provider all amounts owed under this Agreement, and (ii) for all
Content, either (A) erase and purge the Content from any on-line and off-line
storage media and certify, in writing to Provider that such eraser and purge has
been completed, or (B) certify, in writing, to Provider that
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certain Content has been retained in creating back-ups during the normal course
of business and that such Content shall not be used in any manner whatsoever
without the prior consent of the Provider.
7. CONFIDENTIAL INFORMATION
a. Definition. "Confidential Information" shall mean information which
is designated as Confidential Information by the party disclosing such
information (the "Disclosing Party") (i) in Exhibit C to this Agreement, (ii)
with respect to information provided on paper, by facsimile or electronic mail,
on magnetic media, electronically or by any other medium (collectively "in
writing"), by labeling such information as "CONFIDENTIAL INFORMATION" before the
information is provided to the other party (the "Receiving Party"), or (iii)
with respect to information disclosed either verbally or in writing, by
notifying the Receiving Party, in writing within thirty (30) days of the
disclosure, that the information identified in such notice is designated
Confidential Information effective as of the Receiving Party's receipt of such
written notice.
b. Exclusions. "Confidential Information" shall not include information
that (i) is or shall become generally available without fault of the Receiving
Party, (ii) is in the Receiving Party's possession prior to its disclosure by
the Disclosing Party, (iii) is independently developed by the Receiving Party,
or (iv) is rightfully obtained by the Receiving Party from third parties without
similar restrictions.
c. Restrictions. The Receiving Party shall not disclose or otherwise
transfer Confidential Information of the Disclosing Party to any third party,
without first obtaining the Disclosing Party's consent, and shall take all
reasonable precautions to prevent inadvertent disclosure of such Confidential
Information.
8. CONTENT
a. Ownership. Distributor acknowledges that this Agreement does not
transfer to Distributor, Resellers or Users any proprietary right, title or
interest, including copyright, in the Content made available as part of the
Service.
9. TRADEMARKS
Distributor agrees that Provider's trademarks are the sole and
exclusive property of Provider. Pursuant to Paragraph 3.d., Provider shall have
the right to approve the use of its trademarks by Distributor to identify and
promote use of the Service. Upon compliance with this provision, use of such
marks by Distributor for such purposes shall be deemed approved during the term
of this Agreement unless Provider specifically notifies Distributor to the
contrary.
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10. LIMITED WARRANTIES OF PROVIDER
a. Agreement. Provider warrants that its entry into this Agreement
does not violate any agreement between Provider and any third party.
b. Laws and Regulations. Provider warrants that its performance under
this Agreement and the use of the Service conforms to all applicable laws and
government rules and regulations, subject to the terms of this Agreement.
c. The Service and Content. Distributor agrees that the Service and
Content are provided by Provider "AS IS". Provider does not warrant the
accuracy, completeness or timeliness of the Service and Content. Provider
warrants that it has the right to provide the Service to Distributor.
11. LIMITED WARRANTIES OF DISTRIBUTOR
a. Agreement. Distributor warrants that its entry into this Agreement
does not violate any agreement between Distributor and any third party.
b. Laws and Regulations. Distributor warrants that its performance
under this Agreement and the use of the Service shall conform to all applicable
laws and government rules and regulations, subject to the terms of this
Agreement.
12. DISCLAIMER OF ALL OTHER WARRANTIES
THE PARTIES AGREE THAT (a) THE LIMITED WARRANTIES SET FORTH IN
PARAGRAPHS 10 AND 11 OF THIS AGREEMENT ARE THE SOLE AND EXCLUSIVE WARRANTIES
PROVIDED BY EACH PARTY, AND (b) EACH PARTY DISCLAIMS ALL OTHER WARRANTIES,
INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, RELATING TO THIS AGREEMENT, PERFORMANCE UNDER
THIS AGREEMENT, THE SERVICE AND CONTENT, AND EACH PARTY'S COMPUTING AND
DISTRIBUTION SYSTEM.
13. LIMITATION OF LIABILITY
In no event shall Provider or its Information Providers be liable to
Distributor, Resellers and its Users for any direct, indirect, special,
exemplary or consequential damages, including lost profits, whether or not
foreseeable or alleged to be based on breach of warranty, contract, negligence
or strict liability, arising under this Agreement or any performance under this
Agreement.
14. INDEMNIFICATION
Distributor shall indemnify and hold harmless Provider and its
Information Providers from and against any claims, losses, expenses,
liabilities, and damages, including reasonable legal fees and
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expenses, arising out of Distributor's, Resellers' or Users' breach of any
provision of this Agreement, including without limitation the restrictions,
obligations and warranties set forth in Paragraphs 2,3,4 and 11 of this
Agreement. Provider agrees to notify Distributor of any such claim promptly in
writing. The parties agree to cooperate fully during such proceedings.
Distributor shall defend and settle at its sole expense all proceedings arising
out of the foregoing.
15. FORCE MAJEURE
Neither party shall be liable for any delay or failure to perform under
this Agreement if caused by conditions beyond its control, including but not
limited to fire, flood, accident, storm, acts of war, riot, government
interference, strikes or walkouts; provided, however, no such event shall excuse
any delay or failure to perform by Distributor of its obligations to make
payment to Provider under Paragraph 5 of this Agreement. The affected performing
party shall promptly notify the other party of the nature and anticipated length
of continuance of such force majeure. Should any such failure or suspension of
performance by Provider continue for more than one (1) month, then either party
shall have the right to terminate this Agreement without further liability or
obligation on the part of either party.
16. NOTICES
All notices and demands hereunder shall be in writing and delivered by
hand delivery, certified or registered mail, return receipt requested, express
delivery service or confirmed facsimile transmission at the addresses set forth
below (or at such different address as may be designated by either party by
written notice to the other party). Delivery shall be deemed to occur (i) if by
hand delivery, upon such delivery, (ii) if by mail, express delivery service
upon such delivery, and (iii) if by facsimile transmission, upon receipt of
confirmation.
If to Provider:
Jerry Fairbridge
The Canadian Press
36 King Street East
Toronto, Ontario M5C 2L9
If to Distributor:
Stephen Maloney, President
Intelligent Information Incorporated
One Dock Street, Suite 500
Stamford, CT 06902
Facsimile: 203.969.0018
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17. GENERAL TERMS AND CONDITIONS
a. Not Agent. Neither party shall be considered an agent of the other
party nor shall either party have the authority to bind the other party.
b. No Assignment. Neither party may assign this Agreement without the
written consent of the other party; provided, however, that either party may
assign this Agreement as part of a transaction in which substantially all of the
assets related to its rights and obligations under this Agreement are assigned
to a third party.
c. Governing Law and Forum. This Agreement shall be governed and
construed in accordance with the laws of the state/province chosen by the party
defending any action brought hereunder. The parties hereby elect to institute
any such legal proceedings in the judicial district where the defending party is
domiciled.
d. Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if such provision(s) had never been contained herein, provided that such
provision(s) shall be curtailed, limited or eliminated only to the extent
necessary to remove the invalidity, illegality or unenforceability.
e. Waiver. No waiver of any breach of any of the provisions of this
Agreement shall be deemed a waiver of any preceding or succeeding breach of the
same or any other provisions hereof. No such waiver shall be effective unless in
writing and then only to the extent expressly set forth in writing.
f. Complete Agreement. The parties agree that this Agreement is the
complete and exclusive statement of the agreement between the parties, which
supersedes and merges all prior proposals, understandings and other agreements,
oral or written, between the parties relating to this Agreement.
g. Amendment. This Agreement may not be modified, altered or amended
except by written instrument duly executed by both parties.
h. Attorney's Fees. Should any action be brought by either party to
enforce the provision of this Agreement, the prevailing party, whether by
settlement, adjudication or arbitration, shall have the right to collect
reasonable attorneys' fees, expenses and costs form the nonprevailing party.
i. Not Inference Against Author. No provision of this Agreement shall
be interpreted against any party because such party or its legal representative
drafted such provision.
j. Headings. The headings used in this Agreement are for convenience
only and are not to be construed to have a legal significance.
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k. Read and Understood. Each party acknowledges that it has read and
understands this Agreement and agrees to be bound by its terms.
AGREED:
Distributor, by: Provider, by:
/s/ Stephen G. Maloney /s/ David Ross
- --------------------------- ---------------------------
Signature Signature
Stephen G. Maloney David Ross
- --------------------------- ---------------------------
Printed Name, Title Printed Name, Title
Date: 12/2/98 Date: 12/14/98
------------------ ------------------
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EXHIBIT A
The Service
CP Online is a product of The Canadian Press, the national news co-operative of
Canada's daily newspapers. CP Online service includes major national stories,
lottery numbers on Wednesday & Saturday nights, calendars of daily events across
Canada, a nightly scorecard with up-to-date scores in pro sports stories from a
variety of sports, all major business stories including a 3-4 times-a-day wrap
up of the world markets, entertainment news from Canada along with world news
headlines. All these topics are updated frequently. Today in History and Thought
for the Day will be delivered on a weekly basis via email. All services are
deliverable in English with a similar product in Canadian French.
EXHIBIT B
Payment Schedule
a. Monthly Fees. Distributor shall pay Provider the greater of the monthly
minimum or the User fee ($0.10 per User per month). The monthly minimum is as
follows:
The first 30 days of this contract, Provider will make their feed free
of charge for development purposes for III. After such time, the
monthly minimum is $500. On April 30, 1999 the monthly minimum
increases to $1,000 per month; on July 31, 1999 the monthly minimum
increases to $1,500; and on December 31, 1999 the monthly minimum
increases to $2,000 per month for the remainder of this contract.
At renewal, the Provider will send the Distributor notification that
the User fee shall increase based on the Canadian Consumer Price Index
plus 2. Until such notification is received by Distributor User fees
will remain as is.
b. Distributor shall pay Provider fifty percent (50%) of the full-text article
charge, if a full-text article product has been requested by Reseller and
provided Provider and Distributor have signed an agreement setting out terms and
fees for such full-text article products
c. Demo Units. Distributor may set up free demonstration accounts for sales and
marketing purposes, but will use its best efforts to minimize the number and
duration of such accounts.
d. Payment. Distributor will pay to Provider the required payment by check, by
the 15th day of the month following the month of Service.
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EXHIBIT C
Confidential Information
a. This Agreement and all Exhibits thereto, except for exhibit D.
EXHIBIT D
SUBSCRIBER AGREEMENT (SHORT FORM)
YOUR USE OF THE SERVICE CONSTITUTES YOUR ACCEPTANCE OF THE FOLLOWING TERMS.
1. Information obtainable through the Service has been provided by various
independent sources believed to be reliable. However, the accuracy, completeness
and/or timeliness of the Information is not guaranteed by any Provider selling,
transmitting, processing, consolidating or originating the Information, and the
Providers shall not be liable for any loss or damage arising from any inaccuracy
or error in delivering the Information.
2. EXCEPT AS SPECIFICALLY STATED HEREIN, NO PROVIDER MAKES ANY EXPRESS OR
IMPLIED WARRANTIES REGARDING THE SERVICE OR THE INFORMATION, INCLUDING ANY
EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
3. THE PROVIDERS' ENTIRE LIABILITY FOR DAMAGES IN CONNECTION WITH THE
SERVICE OR THE INFORMATION SHALL NOT EXCEED THE AMOUNTS PAID FOR SUBSCRIBING TO
THE SERVICE. IN NO EVENT WILL ANY PROVIDER BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES OR FOR ANY LOST PROFITS, EVEN
IF SUCH PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.
4. You acknowledge that the Providers have proprietary interests in the
Information and agree not to reproduce, retransmit, sell, publish or
commercially exploit the Information in any manner.
5. The Providers reserve the right to terminate the Service at any time,
for any or no reason and without notice and shall have no liability to you upon
such termination other than to refund a pro rated portion of the fee for the
Service if such termination is without cause.
6. You represent that you are entering into this Agreement in your
individual capacity and not on behalf of any firm, corporation, partnership,
trust or association.
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7. You understand that the Service may include advertising messages and
e-commerce opportunities and agree to receive such messages and opportunities.
8. You acknowledge that no Provider has made any representation to you
regarding the Service or the Information that is not expressly stated in this
Agreement. If any provision of this Agreement is invalid or unenforceable under
applicable law, it shall, to that extent, be deemed omitted, and the remaining
provisions will continue in full force and effect. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
EXHIBIT E
Distribution of Service
Information products and services that are individualized and delivered
to and received by wireless devices such as pagers, smr telephones, cellular
telephones, narrowband and broadband pcs telephones, laptop and palmtop personal
computers, personal data assistants, PCMIA messaging cards, etc. over numerous
wireless networks in Canada and other British Commonwealth countries.
EXHIBIT F
Provision of the Service
Technical Specifications
Delivery of the Service will be accomplished using FTP and the Internet. The
Distributor's site will require an FTP server and a continuous Internet
connection.
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EXHIBIT 10.30
CURRENT NEWS LICENSE AGREEMENT
AGREEMENT dated as of February 1, 1999, and made in New York,
New York, between PRESS ASSOCIATION, INC. ("PA"), a wholly owned subsidiary of
The Associated Press, a New York corporation with offices at 50 Rockefeller
Plaza, New York, New York 10020, and INTELLIGENT INFORMATION INCORPORATED
("SUBSCRIBER"), a Delaware corporation with offices at One Dock Street, Suite
500, Stamford, Connecticut 06902.
I. Grant
PA hereby grants to SUBSCRIBER a non-exclusive license to
electronically market only within North America news distributed by The
Associated Press and its subsidiary, PA, through AP NEWS, as defined in
Attachment A (the "Service"). This grant is to market information supplied on
the Service to "Resellers", as defined in Attachment B, of SUBSCRIBER's
electronic news delivery system called Intelligent Information Systems (the
"System"), as defined in Attachment B, and upon the terms contained in this
Agreement, except that PA reserves to itself the exclusive right to permit such
use by, and SUBSCRIBER shall be prohibited from distributing to, news
organizations. For this purpose, the term, "news organization" shall include The
Associated Press, United Press International, Reuters, Agence France Presse, its
and their employees, subsidiaries and affiliates and any other person or entity
engaged in distribution of news and information principally to subscribers which
are engaged in whole or in part in the business of publication or broadcasting.
II. PA Representations and Warranties
A. The Service to be utilized by SUBSCRIBER shall be
delivered to SUBSCRIBER's computer center at One Dock Street, Suite 500,
Stamford, Connecticut 06902 and to 1237 South Ridge Court, Suite 100, Hurst,
Texas 76053. SUBSCRIBER shall be responsible for obtaining, installing and
maintaining at SUBSCRIBER's expense such equipment as may be required for it to
make use of the Service and distribute that information to Resellers. SUBSCRIBER
may employ contract services to supplement its ability to parse and format
messages for its products provided that PA is notified in advance in writing and
approves of the contract service provider.
B. When supplied to SUBSCRIBER, the information shall be
correct and complete to the best of PA's knowledge and belief;
C. PA has the rights and licenses necessary to transmit
to SUBSCRIBER the information contained in the Service; and
D. PA agrees that all promotion and advertising of its
services in which there is reference to SUBSCRIBER or Subscriber's System shall
be subject to the review and written approval of SUBSCRIBER before release.
III. SUBSCRIBER Representations, Warranties and Covenants for
Resellers
A. SUBSCRIBER acknowledges that The Associated Press or
PA has the proprietary right in all information in the Service and owns the
copyright, trade secret, trade name and all other proprietary rights in and to
the Service. Information provided by PA and used by SUBSCRIBER shall bear the
Associated Press (AP) logotype and a copyright (as provided by PA in Attachment
A-1
<PAGE> 2
2
hereto) when the information is released by SUBSCRIBER which shall be displayed
when Resellers' subscribers access the PA information. SUBSCRIBER shall deliver
the Service to Resellers who have purchased the enabling system from SUBSCRIBER
only according to the terms of this Agreement;
B. Neither SUBSCRIBER nor Resellers shall alter the
editorial content or substance of the PA Service without the specific authority
of PA and all material supplied by PA hereunder shall reside only in computers
owned or leased by SUBSCRIBER and located within the continental United States;
C. SUBSCRIBER shall not furnish the Service to any
Reseller for any purpose without prior written permission from PA. SUBSCRIBER
shall submit to PA Form A (Attachment D) when requesting approval to furnish the
Service to any Reseller;
D. Resellers shall not furnish the Service to any person
or entity which has not agreed in writing to the following limitations and
exclusions of liability:
(i) that such a person or entity shall
not, directly or indirectly, publish, broadcast or distribute PA
information in any medium, except that corporate, governmental and
institutional subscribers may use portions of the Service for internal
printed communications and memoranda;
(ii) that such person or entity shall not
store all or any portion of the Service in any permanent form, whether
archival files, computer-readable files or any other medium;
(iii) that neither The Associated Press
nor PA shall be liable in any way to the SUBSCRIBER or to any Reseller
or any third party or to any other person who may receive information
in the Service, or to any other person whatsoever, for any delays,
inaccuracies, errors or omissions therefrom or in the transmission or
delivery of all or any part thereof or for any damage arising therefrom
or occasioned thereby; and
(iv) that, in no event, shall PA or The
Associated Press be liable for any direct, consequential, punitive,
special or any other damages arising in any way from the availability
of the Service regardless of the form of action, whether contract or
tort;
E. SUBSCRIBER and Resellers agree that all promotion and
advertising of its services in which there is reference to the Service or The
Associated Press or PA shall be subject to the review and written approval of PA
before release, such approval not to be unreasonably withheld. If within ten
(10) business days after delivery of samples of such material, PA has not
notified the sending SUBSCRIBER of its disapproval, such material shall be
deemed approved;
F. No individual portion of the Service, or the entire
Service, shall be held in SUBSCRIBER's or Resellers' computers or stored in
another medium for more than fourteen (14) days, except that SUBSCRIBER may
create archives of the Service for the purpose of data analysis to establish
customer search profiles for internal use only. Archives of the Service shall
not be available to Resellers, and shall be purged immediately from the System
upon termination of this Agreement;
G. SUBSCRIBER shall, upon receipt from PA or The
Associated Press of a "kill" "elimination," "withheld," or "correction"
directive, purge and, if applicable, replace affected material and notify
Resellers of the changed status of the affected material. Any materials subject
to a "corrective"
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from PA or The Associated Press shall be prominently noted as subject to a
corrective (with instructions as to access to the applicable corrective article)
or shall be linked electronically to the corrective article itself when
Resellers' subscribers access material subject to a corrective;
H. Information from the Service shall be used only in
SUBSCRIBER's System and released only to authorized Resellers within North
America and only in accordance with the terms of this Agreement. Should
SUBSCRIBER expand or otherwise modify the System, use of materials in the
Service in such expanded or modified System must have prior written approval
from PA. For the purpose of this paragraph, expansion and modification shall not
include routine bug fixes and enhancements which do not materially affect the
Service or violate provisions of this Agreement;
I. SUBSCRIBER shall offer the Service to all of its
Resellers and shall offer it to its potential Resellers except where prohibited
herein;
IV. Payment
A. SUBSCRIBER shall pay PA the greater of a monthly
Information Availability Fee (the "Fee") as follows:
Month Monthly Minimum Fee
1-2 $3000/month
3-5 $3625/month
6-24 $4250/month
or i) monthly royalties (the "Royalties") per Reseller as defined in Attachment
C, or fifty (55%) percent of SUBSCRIBER's gross monthly charges to Reseller for
Group Products (the "Group Products), as defined in Attachment C or ii)
Royalties earned for Individual Products (the "Individual Products), defined in
Attachment C, based on the Royalty structure specified below:
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0-5,000 $0.00/month/Handheld Wireless Device
5,001-30,000 $0.25/month/Handheld Wireless Device
30,001-50,000 $0.20/month/Handheld Wireless Device
50,001-80,000 $0.15/month/Handheld Wireless Device
80,001 and beyond $0.10/month/Handheld Wireless Device
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Resellers listed in Attachment E, shall be considered already approved and
in-house and not subject to the monthly minimum of $500 as set forth below.
However, beginning with the first newly approved Reseller of Group Products and
for each Reseller of Group Products thereafter, SUBSCRIBER shall pay PA the
greater of a minimum monthly Fee per Reseller of $500 or Royalties for Group
Products as follows:
(a) monthly Royalties of fifty five (55) percent of SUBSCRIBER's gross
monthly charges per Reseller licensed by SUBSCRIBER.
In addition, Royalties for Individual Products shall be payable as herein
defined.
All Fee versus Royalty calculations for Group Products shall be figured on a
per-Reseller basis rather than a cumulative basis.
A handheld wireless device is a product delivered over public networks including
paging, two-way radio
<PAGE> 4
4
and specialized mobile radio, and can be received using an alphanumeric pager,
PC card with a personal digital assistant or a laptop/palmtop personal computer,
specialized two-way devices, narrowband PCS, broadband PCS and Cellular.
B. If, at the end of the first year of this Agreement or
during any subsequent year of this Agreement, SUBSCRIBER's Intelligent
Information Systems ceases to exist as a System, SUBSCRIBER may terminate the
balance of this Agreement by paying PA an amount equal to six (6) months' total
of the monthly Fee as calculated for the six-month period just ended;
C. The Fee shall be due and payable by the fifteenth
(15th) day of the month for which the Fee is charged, and Royalties shall be due
and payable by the fifteenth (15th) day after the close of the month in which
the Royalties are earned. SUBSCRIBER shall deliver to PA with each Royalty
payment a list of Resellers and monthly usage figures for access to the Service.
Any payment which is late shall be subject to an interest charge of the lower of
one percent per month or the maximum rate permitted by law. All payments shall
be exclusive of taxes required to be charged SUBSCRIBER except taxes based upon
PA's net income;
D. The monthly invoiced Fee shall be increased by each
General Assessment Increase ordered by The Associated Press Board of Directors.
Notice of such increases shall be given to SUBSCRIBER no later than 45 days
before such increases are to take effect and will not exceed 25% in any two-year
period. A history of General Assessment Increases is shown in the Appendix of
this Agreement for reference;
E. SUBSCRIBER shall maintain books and records accurately
reflecting all matters affecting Royalties due to PA. PA, by its duly authorized
representative, shall have the right, at reasonable times and upon reasonable
notice to SUBSCRIBER, to inspect and audit such books and records to verify the
accuracy of any statement. If any inspection shall disclose any error of
whatever amount, the parties shall promptly adjust the same.
V. PA Password
SUBSCRIBER shell provide to PA products based on the Service,
at PA's request when such products are technically available in the New York
City area.
VI. Term and Termination
A. Unless earlier terminated as hereinafter provided,
this Agreement shall take effect on February 1, 1998, or the first date upon
which PA provides the Service to SUBSCRIBER under this Agreement, and shall
continue for a period of two (2) years thereafter. It shall automatically
continue thereafter for further terms of one (1) year each, until either party
delivers to the other written notice of termination not less than sixty (60)
days prior to the end of the then-current term.
B. In addition, PA, at its sole discretion, may terminate
this Agreement at any time upon sixty(60) days written termination notice to
SUBSCRIBER;
C. Upon any material breach or material default of this
Agreement by either party, the other party may give notice of such breach or
default and, unless such breach or default shall be cured within thirty (30)
days after delivery of such notice (or ten (10) days in the case of the failure
of SUBSCRIBER to pay Fees and Royalties described in paragraph IV on the dates
set forth therein), then, without limiting any other remedy available at law or
equity to the non-breaching party consistent with
<PAGE> 5
5
the terms of the Agreement particularly paragraph VII, that party may terminate
this Agreement by delivery of a notice of termination at any time thereafter
before such breach or default has been cured;
D. If either party hereto files a petition under any
chapter of the Bankruptcy Code, as amended, or for the appointment of a
receiver, or if an involuntary petition in bankruptcy is filed against such
party and said petition is not discharged within thirty (30) days, or if either
party ceases to pay its debts as they fall due or becomes insolvent or makes a
general assignment for the benefit of its creditors, or if the business or
property of either party shall come into the possession of its creditors or of
any governmental agency or of a receiver, then, in any such case and
notwithstanding any other provisions of this Agreement, the other party hereto
may at its option terminate this Agreement upon written notice to the other
party;
E. Upon termination, SUBSCRIBER shall immediately cease
all use of information provided hereunder and shall remove said information
from its computer data base. In addition, SUBSCRIBER shall be responsible for
assuring the use of PA material immediately ceases by any and all Resellers.
F. In the event that SUBSCRIBER issues a purchase order
to PA for purposes related to this Agreement, such purchase order will be
supplementary to this Agreement and in all instances this Agreement shall be
the controlling document in defining the terms and conditions agreed to by the
parties.
VII. Limitation of Liability; Indemnities
A. PA shall use its best efforts to insure the accuracy
of its information. PA does not, however, guarantee the sequence, accuracy or
completeness of any such material and shall not be liable in any way to
SUBSCRIBER, Resellers, or any third parties or to any other person who may use
the information or to whom the information may be furnished, or to any other
person whatsoever, for any delays, inaccuracies, errors or omissions therefrom
or in the transmission or delivery of all or any part thereof or for any damage
arising therefrom or occasioned thereby. EXCEPT AS STATED IN PARAGRAPH VII B
BELOW, IN NO EVENT SHALL PA OR THE ASSOCIATED PRESS BE LIABLE TO SUBSCRIBER FOR
ANY DIRECT, CONSEQUENTIAL, PUNITIVE, SPECIAL, OR ANY OTHER DAMAGES ARISING FROM
THE AVAILABILITY OF THE INFORMATION, REGARDLESS OF THE FORM OF ACTION WHETHER
CONTRACT OR TORT.
B. (I) Either party, at its expense, will defend any
action brought against the other based on a claim that the information or the
software supplied hereunder by the indemnifying party, infringes a United
States patent, trademark or copyright, or constitutes appropriation of a United
States based trade secret, and the indemnifying party will pay costs of the
action (including reasonable attorney's fees) and any damages finally awarded
against the other party or any users in such action; provided, however, that
such defense and payments are conditioned upon the following: (I) the
Indemnifying party shall be notified promptly in writing by the other or any
end user of the existence of any such claim; (ii) the indemnifying party have
sole control of the defense of any action on such claim and all negotiations
for its settlement or compromise; and (iii) no settlement or compromise may be
finally executed without the prior written consent of the indemnifying party.
If in the opinion of the indemnifying party, the material or software described
herein is likely to become the subject of a claim of infringement of a United
States patent, trademark or copyright, or appropriation of a United States
trade secret, the other party or the end user shall permit the indemnifying
party, at its option and expense, either (I) to procure the right to continue
use of the information or software at issue; (ii) replace or modify such
material so
<PAGE> 6
6
that it becomes non-infringing; or (iii) if (I) or (ii) cannot reasonably be
accomplished, to terminate this Agreement without further liability.
(ii) In no event shall either party have any
liability to the other or to any end user under any claim described in this
paragraph based upon the sale or use of information or any software supplied
hereunder in combination with any other product, machine, software, device or
equipment which is not approved by the indemnifying party, or results from any
modifications or attempted modifications by the other party or the end user or
failure by the other party or the end user to permit the indemnifying party to
implement modifications, unless the indemnifying party shall have expressly
consented to such action in writing.
C. SUBSCRIBER shall, and hereby does, indemnify and hold
harmless PA and The Associated Press from and against all claims, losses,
liabilities and expenses arising out of or in connection with any acts of
SUBSCRIBER, its agents, contractors or employees.
VIII. Warranty Disclaimer
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PA NOR
THE ASSOCIATED PRESS MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING NO
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.
IX. Unauthorized Use
If either party shall learn of an unauthorized transmission or
receipt of items of information included in the Service, it shall by notice
promptly and fully inform the other party of all facts known to it with respect
to such unauthorized transmission or receipt. In any such case, SUBSCRIBER shall
promptly conduct an investigation and shall keep PA fully and timely apprized of
all facts learned by it and of all interim and final findings and conclusions it
makes, as well as all steps SUBSCRIBER proposes to take to prevent recurrence of
such unauthorized transmissions or receipts. Either party may, at its own
expense, institute an action or proceeding to obtain any relief permitted in law
or equity, or both, against any person so transmitting or receiving such
information and, if any such action or proceeding be instituted, the other party
shall cooperate in all respects reasonably requested by the party maintaining
the suit.
X. Confidentiality
A. During the term of this contract and for three years
after termination, PA and SUBSCRIBER shall maintain in confidence and not
disclose to third parties without the other's prior written consent, the
information concerning Royalty Payments and Reports outlined in Paragraph IV of
this Agreement or any other information labeled "Confidential" except for
normal reporting to each party's parent corporation, if any. PA and SUBSCRIBER
shall not disclose to unaffiliated third parties the specific terms of this
Agreement.
B. Notwithstanding the restrictions set forth in this Paragraph
X. neither party hereto shall have any duty of confidentiality with respect to
information or materials disclosed to it by the other party to the extent such
information:
i) is or comes into the public domain through no fault of
the receiving party hereunder;
<PAGE> 7
7
ii) is legally obtained from third parties without binder
of secrecy;
iii) was previously known to the party to whom such
information is disclosed without binder of secrecy or is independently developed
by such party; or
iv) is required to be disclosed by valid legal process.
XI. General Provisions
A. Neither party will be liable to the other for any
delay or default in performing its respective obligations under this Agreement
due to causes beyond its reasonable control. So long as any such failure
continues, the party affected by conditions beyond its control will keep the
other party fully informed at all times concerning the matters causing such
delay or default and the prospects for their termination.
B. Nothing in this Agreement shall be construed to
constitute or appoint either party as the agent or representative of the other
party for any purpose whatsoever, or to grant to either party any rights or
authority to assume or create any obligation or responsibility, express or
implied, for or on behalf of or in the name of the other, or to bind the other
in any way or manner whatsoever.
C. All notices required by this Agreement shall be sent
in writing (by certified or registered mail, telex, overnight courier,
facsimile or telegram) to PA and SUBSCRIBER at the following addresses:
If to PA:
Press Association, Inc.
50 Rockefeller Plaza
New York, New York 10020
Attention:
Treasurer
and
Press Association, Inc.
50 Rockefeller Plaza
New York, New York 10020
Attention:
Director,
Information Services
If to SUBSCRIBER:
One Dock Street
Suite 500
Stamford, Connecticut 06902
Attention:
President
All notices shall be effective upon receipt. Either party may from time to time
change its address as set forth above by notifying the other party of its new
address in writing.
<PAGE> 8
8
D. No forbearance by either party in enforcing any of
the provisions of this Agreement and no course of dealing between the parties
shall operate to prejudice either party's rights to enforce such provisions or
operate as a waiver of any of either party's rights hereunder.
E. This Agreement shall be subject to all applicable
present and future federal, state and local laws and regulations of the Federal
Communications Commission and any other federal or state agency. Neither party
shall be liable to the other for any failure to perform its obligations
hereunder, except for payment of charges already owing, which results directly
from such laws or regulations.
F. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Each party consents to the
personal jurisdiction and venue of the State and Federal courts sitting in The
City of New York.
G. This Agreement may not be assigned by either party
without the prior written consent of the other but shall, in the case of any
permitted assignment, be binding upon the successors and assigns of both
parties.
H. The provisions hereof, including the attachments, and
any written supplemental agreements hereto signed as of the date hereof
constitute the entire agreement between the parties relating to the
transactions contemplated herein and merge and supersede all prior discussions,
agreements, and understandings of every kind and nature between them. No oral
modifications or additions hereto shall be binding. Neither party shall be
bound by any condition, definition, warranty or representation other than as
expressly provided for in this Agreement or as may be duly set forth in a
writing signed by an authorized officer of the party hereto which is to be
bound thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
INTELLIGENT INFORMATION, INC. PRESS ASSOCIATION INC.
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
1/26/99 1/29/99
- ---------------------------- ----------------------------
<PAGE> 9
9
ATTACHMENT A
(Service Description)
AP ONLINE
AP Online is a news service tailored specifically for use in data base or
similar online or computer-supported environments. The report typically consists
of approximately 500 stories, or 120,000 words total, comprised of the top
national, international, Washington, financial and sports news on a given day.
AP Online is compiled and transmitted 24 hours a day, seven days a week.
LATAM
LATAM or Latin American Service is written in Spanish and covers developments in
Latin America as well as major US and international stories. The news is
provided directly from our Spanish speaking bureaus worldwide and averages 170
stories per day.
<PAGE> 10
10
ATTACHMENT A-1
SUBSCRIBER shall attach to the top of each piece of the Service delivered to
Resellers' subscribers the Associated Press (AP) logotype and a copyright and
reservation-of-rights notice. Such notice shall read:
c. AP 1996 All Rights Reserved.
"19XX" shall denote the current year
<PAGE> 11
11
ATTACHMENT B
(Description of SUBSCRIBER's service)
Intelligent Information Incorporated offers a range of information products for
personal and business solutions to users of electric handheld devices. Its
product lines include financial, leisure, travel, sports, weather and news
information. The company markets its products to Resellers ("the Reseller"),
defined for purposes of this Agreement as redistributors of wireless information
to business users and consumers who have agreed in writing with SUBSCRIBER to
uphold all terms and conditions of this Agreement on behalf of PA. The products
are delivered over public networks, including paging, wireless email, narrowband
and broadband PCs, specialized mobile radio and two-way radio. A subscriber can
utilize an alphanumeric pager, PC card with a personal digital assistant or
palmtop, and specialized two-way communicators.
Resellers are charged a fixed monthly rate for Group Products and a monthly
Subscriber fee per Subscriber for Individual Products. A Reseller has the option
to buy both types of products. Under no circumstances will SUBSCRIBER offer the
Service to Resellers without charging for the opportunity to distribute the
Service.
<PAGE> 12
12
ATTACHMENT C
ROYALTIES
For purposes of this Agreement, a "Reseller" shall be defined as a redistributor
of wireless information to business users and consumers who has agreed in
writing with SUBSCRIBER to uphold all terms and conditions of this Agreement on
behalf of PA.
Royalties shall be payable in each of two ways as follows dependent on the
nature of the Reseller:
GROUP PRODUCTS
A Group Product is sold when SUBSCRIBER provides a limited number of messages
each day to a common address (sometimes referred to as PIN or CAP code or
Sub-address, depending on the network and hardware being employed for the
delivery of the messages) so that each wireless paging device receives the same
information from the Reseller. Typically the Reseller offers this type of
product free, or at a minimal charge to its subscribers.
INDIVIDUAL PRODUCTS
An individual product is sold when SUBSCRIBER provides Resellers' subscribers
with profiled messages via the System that the subscriber has pre-established.
Each of these subscribers are registered on SUBSCRIBER's System and tracked
individually. These subscribers typically receive 50 to 100 messages a month.
<PAGE> 13
13
ATTACHMENT D
FORM A
Date: _________________
Intelligent Information Inc. hereby requests permission from The Associated
Press to provide Associated Press News Services, according to the Agreement
dated May 29, 1996 to (Reseller Name) _________________________ located In
(City, State)_______________________.
Number of Subscribers on Reseller's Service:______________
Associated Press service(s) to be purchased:_____________________________
Group Product ______ individual Product _______ Both _______
Description of Reseller's Service ______________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Reseller's charging structure___________________________________________________
________________________________________________________________________________
Target audience ________________________________________________________________
Approved:
- ----------------------------
(Date)
- ----------------------------
Associated Press
<PAGE> 14
14
APPENDIX
AP RATES
Associated Press is a cooperative, owned by member newspapers and broadcast
stations. The board of directors is elected from newspaper membership ranks or
appointed from broadcast membership. The board is responsible for voting the
yearly general rate increase. The increase is applied unilaterally to all
members and corporate customers of the Associated Press.
Rate increases take effect on February 1 each year. General increase
notification letters are sent to each AP customer in early December, no less
than forty-five days before the increase takes effect.
HISTORY OF GENERAL RATE INCREASES
1978 6.5 percent
1979 7.7
1980 11.4
1981 10.7
1982 10.8*
1983 9.5
1984 5.5
1985 4.7
1986 4.6
1987 2.5
1988 3.5
1989 4.4
1990 4.9
1991 3.9
1992 3.0
1993 2.5
1994 3.2
1995 2.9
1996 2.9
In the early 1980's, AP invested in developing the industry's first
satellite news, photo and graphics delivery systems and has installed 4000
satellite dishes, the news industry's largest network of receivers. In 1984, AP
became the first news organization to own a satellite transponder. These
innovations in news delivery have enabled AP to deliver news more quickly, and
more cost efficiently.
<PAGE> 15
15
ATTACHMENT E
(LIST OF EXISTING APPROVED RESELLERS)
- -- AirTouch Paging
- -- American Paging (Group)
- -- Flower City Paging
- -- National Dispatch Center
- -- PageMart (Group)
- -- Telewaves
- -- Electronic Engineering
- -- TelePage Communication
- -- NationPage
- -- US Cellular
- -- Vanguard Cellular
- -- SBC Communications
- -- Pacific Bell Mobile
- -- PrimeCo Personal Comm L.P.
- -- Omnipoint (Group)
- -- U.S. Healthcare
- -- MetroCall
- -- SkyTel
- -- USA Mobile
- -- CompuServe
- -- Ram
- -- Ameritech
Should any of these approved Resellers who sell Individual Service subsequently
opt to sell Group Service, they will then be subject to the $500.00 monthly fee.
<PAGE> 1
EXHIBIT 10.31
DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement"), dated as of March 13,
2000, is entered into by and between CNBC.com LLC ("CNBC.com"), a Delaware
limited liability company with its principal offices at 2200 Fletcher Ave., Fort
Lee, New Jersey 07084, and i3 Mobile, Inc. ("i3"), a Delaware corporation, with
its principal offices at 181 Harbor Drive, 3rd Floor, Stamford, Connecticut
06902.
1. DEFINITIONS.
(a) "Content" means all information and material, whether or not
protected by copyright, including but not limited to text, images, and other
multimedia data, provided or made available to i3 by third parties as part of
the Service.
(b) "Content Provider" means a third party from whom i3 acquires the
right to distribute Content provided or made available as part of the Service.
(c) "Designated Resellers" means AT&T Wireless Services, SBC
Communications and such other third parties approved in writing by CNBC.com
through which i3 distributes the Headlines to Users, subject to the terms of
this Agreement.
(d) "Headlines" means brief text headlines of articles, each of which
may include a synopsis of such article, consisting of no more than 100
characters each, which are selected by CNBC.com from stock and/or market related
articles appearing on the CNBC.com site.
(e) "Service" means i3's delivery of personalized information to
users of wireless devices such as mobile phones, pagers and personal digital
assistants through our distribution relationships with wireless network
operators.
(f) "Users" means all third parties to whom i3 may license, sell,
transfer, make available or otherwise distribute the Service.
2. GRANTS OF LICENSE.
(a) Headlines. Subject to the terms and conditions of this Agreement,
CNBC.com grants i3 a non-exclusive, non-transferable license to distribute the
Headlines to the Designated Resellers and Users in North America solely for the
purpose of being viewed on cellular telephones. Each Designated Reseller shall
have the right to market and distribute the Headlines solely to such Designated
Reseller's subscribers.
(b) Trademarks. Subject to the terms and conditions of this
Agreement, CNBC.com grants i3 a non-exclusive, non-transferable license to use
and display the CNBC.com Marks solely in connection with the marketing and
promotion of the distribution of the Headlines through the Service; provided,
that CNBC.com shall have final right of approval over any use of the CNBC.com
Marks in connection with such marketing and promotion. i3 agrees that the
CNBC.com Marks are and will remain the sole property of CNBC.com and/or its
affiliates and agrees to do nothing inconsistent with such ownership and that
all use of the CNBC.com Marks, including all goodwill generated by i3's use
thereof, shall accrue and inure to the benefit of and be on behalf of CNBC.com,
(ii) not to register or apply for registration of any element of the CNBC.com
Marks, (iii) not to assert any adverse claim against CNBC.com based upon its use
of the CNBC.com Marks, (iv) not to challenge or contest CNBC.com's ownership of
the CNBC.com Marks, the validity of the CNBC.com Marks, or any element of the
CNBC.com Marks, or the validity of the license granted herein; and (v) to assist
CNBC.com in recording this Agreement with appropriate government authorities and
in procuring any desired registration for the CNBC.com Marks as may be requested
by CNBC.com (at CNBC.com's sole expense). CNBC.com reserves all rights to
control the use of the CNBC.com Marks, and i3 shall not use, change, or modify
the CNBC.com Marks in any manner without prior written authorization from
CNBC.com. i3 shall (1) cause the appropriate designation "TM" or the
registration symbol "(R)" to be placed adjacent to CNBC.com Marks in connection
with each use or display thereof and to indicate such additional information as
CNBC.com shall reasonably specify from time to time concerning the use of
CNBC.com Marks, and (2) comply with all applicable laws pertaining to trademarks
in force. Except as expressly granted in this Agreement, i3 shall have no other
rights of any kind in the CNBC.com Marks. Under no circumstances will anything
in this Agreement be construed as granting, by implication, estoppel or
otherwise, a license to any of CNBC.com's intellectual property other than the
use of the CNBC.com Marks and the Headlines in
1
<PAGE> 2
accordance with the terms of this Agreement. i3 acknowledges that the CNBC.com
Marks are the sole property of CNBC.com and/or its affiliates, and this
Agreement only grants i3 a limited right to use the CNBC.com Marks under the
terms and conditions of this Agreement.
2
<PAGE> 3
3. OBLIGATIONS OF i3.
(a) Grant of Warrant. In consideration of the execution and delivery
of this Agreement, and in advance of a second phase content distribution
arrangement between the parties, simultaneously with the execution and delivery
of this Agreement, and as a condition to CNBC.com's obligations hereunder, i3
is issuing to CNBC.com a Warrant to Purchase Common Stock of i3 Mobile, Inc.
(the "Warrant") which shall entitle CNBC.com to purchase Ten Thousand (10,000)
shares of the Common Stock, par value $0.01 per share at an exercise price of
Ten Dollars ($10.00) per share.
(b) Additional Warrant. Pursuant to Section 4 of the letter
agreement, dated December 29, 1999, between i3 (formerly Intelligent Information
Incorporated) and NBC Interactive Media, Inc. (the "Letter Agreement"), each NBC
Entity (as defined in the Letter Agreement) which enters into a Distribution
Agreement (as defined in the Letter Agreement) with i3 shall receive a fully
vested warrant to purchase up to 20,000 shares of i3's common stock. In
addition, in the event the first Distribution Agreement is executed on or before
March 31, 2000, such warrant shall be for 30,000 shares. In the interest of
accelerating the deployment of CNBC.com content on i3's wireless platform, the
parties have agreed that CNBC.com shall provide a more limited amount of content
than originally contemplated, and in return receive a warrant to purchase only
10,000 shares of i3's common stock, rather than the 30,000 shares provided for
in the Letter Agreement. Notwithstanding the foregoing, if this Agreement is the
first distribution agreement executed between i3 and an NBC Entity, and CNBC.com
and i3 enter into a second Distribution Agreement on or before April 30, 2000,
then CNBC.com shall receive an additional warrant to purchase 20,000 shares of
common stock of i3 on the terms specified in the Letter Agreement. If this
Agreement is not the first distribution agreement executed between i3 and an NBC
Entity, and CNBC.com and i3 enter into a second Distribution Agreement at any
time after the date hereof, then CNBC.com shall receive an additional warrant to
purchase 10,000 shares of common stock of i3 on the terms specified in the
Letter Agreement. i3 shall provide written notification to CNBC.com, immediately
after receiving CNBC.com's executed copy of this Agreement, as to whether this
Agreement is the first Distribution Agreement so as to enable CNBC.com to
receive a warrant to purchase 20,000 additional shares of i3 upon execution and
delivery of a subsequent Distribution Agreement.
(c) Attribution to CNBC.com. i3 shall include attribution to CNBC.com
with respect to each Headline made available to Users hereunder. Such
attribution shall consist of the phrase "CNBC.com Market Update - ", or such
other similar lead-in as may be selected by CNBC.com, if feasible in bold
lettering, at the beginning of each Headline, with such attribution appearing as
text that is of a point size equal to that of the related Headline. I3 shall
require that all Designated Resellers pass through such attribution to Users
without alteration.
(d) Preferred Placement. i3 guarantees that the Headlines provided by
CNBC.com hereunder shall be the exclusive business and finance content appearing
on each Designated Reseller's free tier of wireless data. To the extent
technically feasible within i3's wireless platform, the Headlines shall be
accorded Preferred Placement (as defined below) in the business and finance
categories on all other platforms on which the Headlines are placed; provided,
that such Preferred Placement shall not be subject to any exclusivity or
Preferred Placement for such type of content which has been contracted for prior
to the Effective Date by a third party not affiliated with i3. Preferred
Placement shall mean (i) where a link to or display of content appears on a
list, such link or content is in the default, top-most and left-most position;
or (b) when a link to or display of content appears in a format other than a
list, the link or content is more visually prominent, or at a higher rate of
exposure, than other content partners.
(e) Technology and Back-end Processing. i3 shall be responsible for
all hosting and delivery of the Headlines, technical support, contractual
arrangements with Designated Resellers and other necessary parties, customer
service and all other issues involved in managing the relationship with
Designated Resellers and Users. i3 shall ensure that all Headlines are delivered
to Designated Resellers on a timely basis, but in any event within five (5)
minutes of their receipt by i3. i3 shall use all reasonable efforts to ensure
that all Headlines are then promptly delivered to Users by the Designated
Resellers.
(f) Marketing. i3 will ensure that CNBC.com receives (i) marketing
support equal to that of any other content provider appearing within AT&T
Wireless' and SBC Communications' free tier of wireless data, and (ii) marketing
support equal to that made available to any other similarly situated provider on
each additional platform on which the Headlines appear. At any time during the
Term (as defined below), CNBC.com may request, and i3 shall promptly provide, an
officer's certificate certifying that i3 has been and remains in compliance with
this Section.
(g) Promotion. Subject to the provisions of the Letter Agreement, i3
will make an aggregate of five percent (5%) of its unused inventory of wireless
advertising taglines available to CNBC.com without charge. The value of this
inventory for purposes of calculating the number of taglines allocated to CNBC
under this Section shall be calculated at the i3's rate card for run of service
taglines in effect at the time such taglines are ordered. The taglines shall
promote the products and services of CNBC.com and its affiliates, and may not
advertise, promote or mention any other product, service, web site or third
party whatsoever without the prior written consent of i3. In addition, with
respect to the placement or delivery of such taglines on any particular wireless
network, i3 may reject such taglines if they would
3
<PAGE> 4
compete with or violate the rights of any other advertiser, sponsor or i3
distribution partner, as determined by i3 in its sole discretion and in good
faith.
(h) Review by CNBC.com. i3 shall provide CNBC.com with reasonable
access to i3's technology and systems for distribution of the Headlines to Users
for the purpose of reviewing i3's compliance with the terms and conditions of
this Agreement. In addition, i3 shall provide CNBC.com with up to six (6) full
subscriptions to receive wireless data from the Designated Resellers (as
selected by CNBC.com) at no charge.
(i) Reporting. i3 shall provide CNBC.com with monthly reports regarding user
data that is collected or otherwise received by i3 in connection with the
delivery of the Headlines to Designated Resellers and Users, including without
limitation the number of Users that elect to receive Headlines, the percentage
of all eligible Users that elect to receive Headlines, the number of Users that
receive Headlines for free versus on a subscription basis, the names and e-mail
addresses of Users who elect to receive Headlines, and any other usable data or
information that is reasonably requested by CNBC.com (the "User Data"). i3 shall
also provide CNBC.com with aggregate data as to the number of click-throughs for
the advertising campaign described in the third sentence of Section 3(i) below
that are converted to receive CNBC.com complimentary services. All User Data
shall be provided on both an aggregate basis and broken down by Designated
Reseller. Such User Data shall be delivered to CNBC.com via e-mail or FTP in a
machine readable format as reasonably specified by CNBC.com. CNBC.com may use
the User Data for its own internal purposes, and may sell, distribute or share
such User Data with its affiliates and partners; provided, that CNBC.com shall
be required to comply with the privacy policy of each applicable Designated
Reseller. Neither i3 nor any Designated Reseller may license, sell, distribute
or share such User Data with third parties unless such User Data is (i)
aggregated with data collected with respect to other Content Providers, it being
understood that the User Data collected hereunder shall never constitute a
majority of any aggregated pool of data licensed, sold, distributed or shared by
i3 or any Designated Reseller, and (ii) in no way traceable to or identifiable
as information of, or directly related to, CNBC.com or its affiliates.
(j) In consideration of both the execution of this Agreement, and in advance
of a second phase content distribution arrangement between the parties,
simultaneously with the execution and delivery of this Agreement, and as a
further condition to CNBC.com's obligations hereunder, i3 is entering into a
CNBC.com Confirmation Contract pursuant to which it shall purchase $200,000 in
advertising on CNBC.com. CNBC.com, the National Broadcasting Company, Inc.
("NBC") and i3 agree that such purchase shall be paid for by i3 by a reduction
of $200,000 in the Total Spot Value (as defined in the Advertising Letter (as
defined below)) to be provided to be provided to i3 by NBC pursuant to the
Letter Agreement Regarding Purchase of NBC-TV Advertising Inventory (the
"Advertising Letter"), dated December 22, 1999, between i3 and NBC. i3 shall use
the advertising purchased pursuant to this Section to promote sign-ups for the
CNBC.com complimentary services with i3's Designated Resellers. i3 shall use its
best commercial efforts to design an advertising campaign and click-through
pathway that will enable users to easily and efficiently sign-up for the
CNBC.com complimentary services.
4. OBLIGATIONS OF CNBC.COM. Subject to the terms and conditions of this
Agreement, CNBC.com shall provide i3 with three (3) Headlines on each day that
the New York Stock Exchange is open for trading, with one (1) Headline being
made available by 7:45 a.m. Eastern time, one (1) headline being made available
at 12:45 p.m. Eastern time, and one (1) headline being made available at 4:45
p.m. Eastern time. The Headlines shall be made available to i3 via e-mail or
other mutually agreed upon electronic means. CNBC.com shall use commercially
reasonable efforts to maintain the timeliness of the Content; provided, that i3
acknowledges that, in part, CNBC.com relies on the performance of Content
Providers and technology providers outside the control of CNBC.com in order to
provide the Headlines.
5. EDITORIAL CONTROL. CNBC.com shall retain sole editorial control over the
content and presentation of the Headlines; provided, that i3 may make changes to
the formatting of the Headlines, subject to consultation with CNBC.com, in order
to meet wireless display equipment formats. i3 shall not edit, abridge, rewrite
or in any way alter the Headlines, or create any work derived from the
Headlines, without the prior written consent of CNBC.com.
6. PROPERTY AND PROPRIETARY RIGHTS. All rights in and to any and all
Headlines furnished by CNBC.com in connection with this Agreement, shall remain
in CNBC.com, and no right, title or interest in or to any of the same is
granted, transferred or assigned to i3 by this Agreement.
7. PAYMENT. Neither party shall be required to pay in fees to the other
party in connection with the services contemplated by this Agreement.
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<PAGE> 5
8. TERM AND TERMINATION.
(a) Term. This term of this Agreement shall commence on the Effective
Date and shall end on March 13, 2002 (the "Term").
(b) Termination.
(i) Breach. Either party may terminate this Agreement at any
time if the other party breaches any material provision of this Agreement. Such
termination shall take effect (i) if the breach is incapable of cure, then
immediately upon the breaching party's receipt of a written notice of
termination which identifies the breach, or (ii) if the breach, capable of being
cured, has not been cured within thirty (30) days after receipt of written
notice from the non-breaching party identifying the breach, then immediately
upon receipt of a written notice of termination received within thirty (30) days
of the end or such thirty (30) day period.
(ii) Termination of AT&T or SBC Contracts. If at any time
i3's principal agreement with either AT&T Wireless Services or SBC
Communications is terminated or expires, then i3 shall promptly notify CNBC.com
of such event, and CNBC.com may terminate this Agreement at any time thereafter
upon written notice to i3.
(iii) Insolvency. Either party may terminate this Agreement
by written notice to the other if the other party becomes insolvent, makes a
general assignment for the benefit of creditors, permits the appointment of a
receiver for its business or assets, or takes steps to wind up or terminate its
business.
(iv) Obligations Upon Termination. Effective upon
termination of the Agreement, i3 shall immediately cease (A) licensing, selling,
transferring, making available or otherwise distributing the Headlines, and (B)
accessing, using or re-transmitting the Headlines. Within thirty (30) days of
termination, i3 shall either (X) erase and purge the Headlines from any on-line
and off-line storage media and certify in writing to CNBC.com that such erasure
and purge has been completed, or (Y) certify in writing to CNBC.com that certain
Content has been retained in creating back-ups during the normal course of
business and that such Content shall not be used in any manner whatsoever
without the prior consent of CNBC.com.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CNBC.COM. CNBC.com
represents and warrants to i3, and covenants and agrees with i3, that (a) it has
the right and authority to enter into this Agreement, (b) its performance
hereunder it shall obey all applicable laws, regulations and rules of any
government body or agency or other competent authority, (c) it has the right and
authority to grant to i3 the rights in the Headlines granted hereunder, and (d)
it is under no obligation or restriction, nor will it assume any such obligation
or restriction, that does or would interfere or conflict with its obligations
under this Agreement.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF i3. I3 represents and
warrants to CNBC.com, and covenants and agrees with CNBC.com, that (a) it has
the right and authority to enter into this Agreement and to execute, deliver and
issue the Warrant, and to carry out and perform its obligations hereunder and
under the Warrant (b) all corporate action on the part of i3, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the Warrant, the authorization, sale, issuance
(or reservation for issuance) and delivery of the Warrant issued hereunder and
the common stock issuable upon exercise thereof have been taken, (c) its
performance hereunder it shall obey all applicable laws, regulations and rules
of any government body or agency or other competent authority, (d) it is under
no obligation or restriction, nor will it assume any such obligation or
restriction, that does or would interfere or conflict with its obligations under
this Agreement or under the Warrant, (e) it is a party to an agreement with each
of AT&T Wireless and SBC Communications that permits i3 to distribute the
Headlines to users of AT&T Wireless' and SBC Communications' mobile phone
services, and (f) each Designated Reseller shall require each of its Users to
agree to affirmatively agree to terms and conditions embodying the provisions
set forth in Exhibit A attached hereto.
11. DISCLAIMER OF WARRANTIES. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, EACH
PARTY DISCLAIMS ALL OTHER WARRANTIES, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, RELATING TO
THIS AGREEMENT, PERFORMANCE UNDER THIS AGREEMENT, THE HEADLINES AND CONTENT, AND
EACH PARTY'S COMPUTING AND DISTRIBUTION SYSTEM.
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<PAGE> 6
12. LIMITATION OF LIABILITY. EXCEPT WITH RESPECT TO EACH PARTY'S
INDEMNIFICATION OBLIGATIONS HEREUNDER, TO THE MAXIMUM EXTENT PERMITTED BY LAW,
NEITHER PARTY, NOR THEIR RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS, AFFILIATES,
AGENGS OR SUPPLIERS, SHALL BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL,
OR INDIRECT DAMAGES, OR LOST OR IMPUTED PROFITS OR ROYALTIES, LOST DATA OR COST
OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER FOR BREACH OF WARRANTY
OR ANY OBLIGATION ARISING THEREFROM OR OTHERWISE, HOWEVER CAUSED AND ON ANY
THEORY OF LIABILITY (INCLUDING NEGLIGENCE OR STRICT LIABILITY), AND IRRESPECTIVE
OF WHETHER THE PARTY HAS ADVISED OR BEEN ADVISED OF THE POSSIBLITY OF ANY SUCH
LOSS OR DAMAGE. BOTH PARTIES ACKNOWLEDGE AND AGREE THAT THE AMOUNTS PAYABLE
HEREUNDER ARE BASED IN PART UPON THESE LIMITATIONS, AND FURTHER AGREE THAT THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.
13. INDEMNIFICATION.
(a) Infringement Indemnification. CNBC.com shall indemnify, defend
and hold harmless i3 from and against any and all losses, claims, liabilities,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or incurred by i3 as a result of any actual
claim, action, proceeding or suit (each, a "Claim") alleging that the licensing,
use, reproduction, display, publishing or distribution of the Headlines by i3 in
accordance with the terms and conditions of this Agreement constitutes an
infringement of any patent, copyright, trademark, trade secret, or other
proprietary right of any third party.
(b) Cross Indemnity. Each party (the "Indemnifying Party") shall
indemnify and hold harmless the other party, its affiliates, and their
respective officers, directors, members, employees and agents (the "Indemnified
Party") from and against any and all Claims instituted by third parties, as well
as any and all losses, liabilities, damages, costs and expenses (including
reasonable attorneys fees) arising out of or accruing from (a) any
misrepresentation or breach of the Indemnifying Party's representations and
warranties set forth in this Agreement; and (b) any non-compliance by the
Indemnifying Party with any covenants, agreements or undertakings of such party
contained in or made pursuant to this Agreement.
14. CONFIDENTIALITY.
(a) General. During the Term and for a period of two (2) years
thereafter, each party shall treat as confidential all Confidential Information
of the other party, shall not use such Confidential Information except as set
forth herein, and shall not disclose such Confidential Information to any third
party. Without limiting the foregoing, each of the parties shall use at least
the same degree of care which it uses to prevent the disclosure of its own
confidential information of like importance to prevent the disclosure of
Confidential Information disclosed to it by the other party under this
Agreement, but in no event less than reasonable care. Each party shall promptly
notify the other party of any actual or suspected misuse or unauthorized
disclosure of the other party's Confidential Information. Upon expiration or
termination of this Agreement, each party shall return all Confidential
Information received from the other party. Any breach of the restrictions
contained in this Section is a breach of this Agreement that may cause
irreparable harm to the non-breaching party. Any such breach shall entitle the
non-breaching party to injunctive relief in addition to all legal remedies.
(b) Exclusions. Notwithstanding the above, neither party shall have
liability to the other with regard to any Confidential Information of the other
which (i) was in the public domain at the time it was disclosed or has entered
the public domain through no fault of the receiving party, (ii) was known to the
receiving party, without restriction, at the time of disclosure, (iii) is
disclosed with the prior written approval of the disclosing party, (iv) was
independently developed by the receiving party without any use of the
Confidential Information, as reasonably demonstrated by the receiving party, (v)
becomes known to the receiving party, without restriction, from a source other
than the disclosing party without breach of this Agreement by the receiving
party and otherwise not in violation of the disclosing party's rights, (vi) is
disclosed generally to third parties by the disclosing party without
restrictions similar to those contained in this Agreement, or (vii) is disclosed
pursuant to the order or requirement of a court, administrative agency, or other
governmental body; provided, that the receiving party shall provide prompt
notice thereof to the disclosing party to enable the disclosing party to seek a
protective order or otherwise prevent or restrict such disclosure. Each party
shall be entitled to disclose the existence of this Agreement, but agrees that
the terms and conditions of this Agreement shall be treated as Confidential
Information and shall not be disclosed to any third party; provided, that each
party may disclose the terms and conditions of this Agreement (A) as required by
any court or other governmental body, (B) as otherwise required by law, (C) to
legal counsel of the parties, (D) in confidence, to accountants, banks and
financing
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<PAGE> 7
sources and their respective advisors, (E) if necessary in connection
with the enforcement of this Agreement or rights under this Agreement, or (F) in
confidence, in connection with an actual or proposed merger, acquisition or
similar transaction.
15. MISCELLANEOUS.
(a) Binding Nature and Assignment. This Agreement shall be binding on
the parties hereto and their respective successors and assigns, but neither
party may assign this Agreement without the prior written consent of the other,
such consent not to be unreasonably withheld; provided, however, that this
Agreement may be assigned by CNBC.com to a direct or indirect parent, subsidiary
or affiliate without consent of i3.
(b) Compliance with Law. Each party shall comply with all applicable
laws, codes, ordinances, rules and regulations of the federal, state and local
governments, and of any and all political subdivisions and regulatory
authorities thereof. Each party shall obtain all necessary permits and licenses
required in connection with the performance of it obligations hereunder.
(c) Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier or overnight delivery service, or forty-eight (48)
hours after being deposited in the regular mail as certified or registered mail
with postage prepaid, if such notice is addressed to the party to be notified at
such party's address as set forth in the preamble of this Agreement. Either
party hereto may from time to time change its address for notification purposes
by giving the other prior written notice of the new address and the date upon
which it will become effective.
(d) Headings. The article and section headings used herein are for
reference and convenience only and shall not enter into the interpretation
hereof.
(e) Relationship of Parties. i3, in furnishing services to CNBC.com
hereunder, is acting only as an independent contractor and assumes full
responsibilities for each of its employees and shall be solely responsible for
the payment of compensation to its personnel. This Agreement does not constitute
either party as the agent or legal representative of the other party and does
not create a partnership or joint venture between them.
(f) Severability. If any provision of this Agreement is declared or
found to be illegal, unenforceable or void, then both parties shall be relieved
of all obligations arising under such provision, but only to the extent that
such provision is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objective. If the remainder of this Agreement shall not be
affected by such declaration or finding and is capable of substantial
performance, then, each provision not so affected shall be enforced to the
extent permitted by law.
(g) Press Releases. Except to the extent required by applicable law
or as otherwise specified herein, any use by one party of the other party's
name, trademarks or service marks in any press releases, customer lists,
marketing materials or other announcements concerning the matters covered by
this Agreement, or for promotional, advertising or other purposes, shall require
the other party's prior written approval; provided, that CNBC.com shall have the
right to approve any description of CNBC.com and the transactions contemplated
by this Agreement which are included in any documents filed by i3 with the
Securities and Exchange Commission, such approval not to be unreasonably
withheld.
(h) Waivers. No delay or omission by either party hereto to exercise
any right or power hereunder shall impair such right or power or be construed to
be a waiver thereof. A waiver by either of the parties hereto of any of the
covenants to be performed by the other or any breach thereof shall not be
construed to be a waiver of any succeeding breach thereof or of any other
covenant herein contained. All remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available to
either party at law, in equity or otherwise.
(i) Force Majeure. If the performance of this Agreement or any
obligation hereunder is prevented, restricted or interfered with by reason of
fire or other casualty or accident, acts of God, severe weather conditions, war
or other violence, any law, order, proclamation, regulation, ordinance, demand
or requirement of any governmental
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<PAGE> 8
agency, or any other act or condition beyond the reasonable control of the
parties hereto, the party whose performance is so affected shall be excused from
such performance; provided, that if either party invokes this Section for any
consecutive period of thirty (30) days or longer, then the other party may
immediately terminate this Agreement without penalty, upon written notice to
such invoking party.
(j) Survival of Terms. Termination or expiration of this Agreement
for any reason shall not terminate any rights, liabilities or obligations that
have either accrued prior to the effective date of termination of this Agreement
or which the parties have expressly agreed shall survive any such termination or
expiration.
(k) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and there
are no written or oral representations, understandings or agreements relative
hereto which are not fully expressed herein. This Agreement is intended to be
the sole and exclusive statement of the agreement between the parties hereto
with respect to the subject matter hereof and any other terms or conditions
included in any forms utilized or exchanged by the parties hereto shall be of no
force or effect and shall not be incorporated herein or be binding unless
expressly agreed to in writing by both parties hereto. No change, amendment,
waiver or discharge hereof shall be valid unless in writing and signed by an
authorized representative of the party against which such change, amendment,
waiver or discharge is sought to be enforced.
(l) Governing Law; Jurisdiction. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of New York, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the state and federal courts of New York County, New
York.
(m) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, i3 and CNBC.com have each caused this Distribution
Agreement to be executed and delivered by its duly authorized officer, to be
effective as of the Effective Date.
i3 MOBILE, INC. CNBC.COM LLC
- ------------------------------ -------------------------------
Signature Signature
- ------------------------------ -------------------------------
Printed Name Printed Name
- ------------------------------ -------------------------------
Title Title
Solely with respect to Section 3(j):
NATIONAL BROADCASTING COMPANY, INC.
- ------------------------------
Signature
- ------------------------------
Printed Name
- ------------------------------
Title
8
<PAGE> 1
EXHIBIT 10.32
March 29, 2000
Mr. Kris Cone
Director, Business Development
AT&T Wireless Services, Inc.
P.O. Box 97061
Redmond, WA 98073-9761
Re: i3 Mobile, Inc.
Dear Kris:
This letter sets forth the understanding between i3 Mobile, Inc. (the "Company")
and AT&T Wireless Services, Inc. ("AT&T") pursuant to which the Company will
provide incentives for AT&T should they choose (a) to develop and implement with
the Company a program for tagging messages with advertising and (b) to increase
penetration for the Company's services with AT&T's new and existing customer
base. The terms of our understanding are as follows. If AT&T decides to develop
a program it will have the following characteristics:
1. The program will be designed to tag messages with advertisements. The
program will be implemented on a test basis in markets defined by AT&T and
expanded to all markets as may be determined in good faith by AT&T based on
its analysis of the success and viability of the test program.
2. The program will be designed to send "welcome" messages for Personal News
Complimentary Service to all subscribers that are new to AT&T Wireless and
to all existing subscribers that have not previously had SMS provisioned on
his or her phone (collectively, "new subscribers").
3. The program will be designed to send a "reminder" message for Personal News
Complimentary Service to at least fifty percent (50%) of the existing
customer base that is provisioned with SMS capabilities but has not
subscribed to any Personal News service (collectively, "existing
subscribers"). Under the program, AT&T and Company will work to identify
qualifying target customers. The Company will prepare a reminder broadcast
message acceptable to AT&T informing the subscribers that their
complimentary services are activated and may be accessed through the AT&T
Wireless Netcare site.
4. In consideration of AT&T's services set forth in paragraphs 1, 2 and 3
hereof, the Company agrees to issue to AT&T warrants (the "Warrant") to
purchase up to 200,000 shares of the Company's Common Stock at an exercise
price equal to fifteen ($15.00) dollars per share. The Warrant shall vest
as follows:
(a) 10,000 shares upon the performance of AT&T's obligations under
paragraph 1 hereof;
<PAGE> 2
AT&T Wireless Services, Inc.
March 29, 2000
Page 2
(b) 20,000 shares for every 200,000 new subscribers that are sent
"welcome" messages for Personal News Complimentary Service and become registered
subscribers to the Personal News Complimentary Service provided by the Company,
up to a maximum of 140,000 shares; and
(c) 10,000 shares for every 200,000 existing text-messaging subscribers
that are pre-provisioned to subscribe to the Personal News Complimentary Service
and become registered subscribers to the Personal News Complimentary Service
provided by the Company, up to a maximum of 50,000 shares.
5. Full terms and conditions of the warrants will be included in a separate
Warrant Agreement to be negotiated by the parties.
Should the foregoing accurately reflect our understanding, then kindly
countersign and return the enclosed copy of this letter to my attention.
Very truly yours,
i3 MOBILE, INC.
By: /s/ Stephen G. Maloney
----------------------
Name: Stephen G. Maloney
Title: President and Chief Executive Officer
AGREED AND ACCEPTED:
AT&T WIRELESS SERVICES, INC.
By: /s/ Kristopher Cone
----------------------
Director of Business Development
<PAGE> 1
EXHIBIT 10.33
[i3 Mobile (TM) LOGO]
March 30, 2000
Mr. Mark Evans
Director, Online and Partner Marketing
SportsLine.com, Inc.
6340 NW 5th Way
Ft. Lauderdale, FL 33309
Re: i3 Mobile, Inc. - Letter of Intent
Dear Mark:
This letter sets forth a proposal to pursue further negotiations and discussions
leading to a definitive agreement between SPORTSLINE.COM, INC.
("SPORTSLINE.COM") and i3 Mobile, Inc. ("i3"). The proposed arrangement will
require further documentation and approvals, including the preparation and
approval of a definitive agreement setting forth the terms and conditions of the
business relationship (the "Agreement"). Nevertheless, i3 and SPORTSLINE.COM, by
signing below, execute this letter to evidence their intentions to proceed in
mutual good faith to complete the work required to negotiate the Agreement on
terms that are consistent with this letter.
In our view, i3 is uniquely positioned to work with SPORTSLINE.COM to develop
the value of SPORTSLINE.COM wireless information and product offerings. The
proposed terms and conditions include, but are not limited to, the following:
1. LICENSE GRANT: During the term of the Agreement, i3 shall serve as the
exclusive integrator of SPORTSLINE.COM's wireless information services from
the CBS SportsLine site. The Agreement will define the exclusivity
contemplated. The exclusivity language will not require SPORTSLINE.COM to
utilize the services of i3 should a carrier or OEM require that
SPORTSLINE.COM utilize a select ASP that is not i3 to deliver content to
that carrier or OEM. SPORTSLINE.COM will first request that any such
carrier or OEM company utilize i3. Furthermore, nothing contained in the
Agreement will restrict SPORTSLINE.COM's right to license content to other
entities for distribution in any medium, including other wireless
platforms.
2. TERM: The term of the Agreement shall be three (3) years beginning on the
Effective Date. The Effective Date of the Agreement shall be either (a) the
date the Agreement is fully signed by the parties; or (b) the date of the
first wireless service launch contemplated hereunder, whichever is later
provided that any delay is not caused by i3. SPORTSLINE.COM shall have the
right, in its sole discretion, to terminate the Agreement on the 18 month
anniversary of the Effective Date by paying i3 $375,000. The parties agree
to translate the terms of this letter into the Agreement within 30 days of
the signing of this letter.
3. GEOGRAPHIC SCOPE: The Agreement shall cover the CBS SportsLine Web Site for
distribution within the US and Canada only. In any other geographic areas
covered by companies with whom SPORTSLINE.COM has an affiliated company,
SPORTSLINE.COM will exercise all reasonable
<PAGE> 2
efforts to introduce i3 to that affiliated company so that i3 can negotiate
an agreement on terms agreeable by all parties.
4. DEVELOPMENT FEE: Immediately upon execution of the Agreement, i3 shall work
with SPORTSLINE.COM to design the Wireless Portals for the SPORTSLINE.COM
service. Wireless Portal(s) will be defined as the presentation of content
and advertising displayed on a wireless devise and does not include any
pages on the SPORTSLINE.COM Web Site, including, but not limited to, pages
dedicated to promotion and personalization/activation of the wireless
devices. SPORTSLINE.COM shall pay i3 the sum of $100,000 for the
development of this web site. For the $100,000 payment, the following
services will be included:
- Technical design, development, testing and implementation of the
wireless portal (including all provisioning pages which will include
the ability to access audio content) pursuant to the proposed product
plan attached as Exhibit I. In addition, i3 will develop additional
products requested by SPORTSLINE.COM and approved by i3 (which
approval shall not be unreasonably withheld) at a mutually agreed upon
cost. To the extent i3 will not agree to develop such product,
SPORTSLINE.COM will be relieved of its exclusivity obligations to i3
with respect to such product.
- I3 will provide best efforts to ensure that the Wireless Portal is
maintained in accordance with the highest industry standards on a
24/7/365 basis - i3 Mobile Wireless Customer Care Set-Up
- In-house training of SPORTSLINE.COM's staff relating to customer
service procedures and policies
- FAQ (Frequently Asked Questions) online document
- Second level customer support including access to i3 staff on a 24/7
basis, at SPORTSLINE.COM's election, i3 will handle first level
customer support and/or assist SPORTSLINE.COM in such first level
customer support.
5. PAYMENTS BY i3: In consideration of the rights granted by SPORTSLINE.COM to
i3 in Paragraph 1, i3 agrees to pay SPORTSLINE.COM as follows: $300,000
upon execution of the Agreement and an additional $200,000 on the
anniversary of the second year of this Agreement.
6. WARRANTS: In consideration of the rights granted by SPORTSLINE.COM to i3 in
Paragraph 1, i3 shall issue to SPORTSLINE.COM warrants (the "Warrant") to
purchase 20,000 shares of i3's Common Stock at an exercise price equal to
fifteen ($15.00) dollars per share. The Warrant shall vest 50% upon
execution and 50% on the 18 month anniversary of the deal (provided SPLN
does not exercise it's termination right) and shall expire three (3) years
following its issuance and shall not terminate upon an initial public
offering or change of control of the Company. Subject to any relevant
securities laws, rules and regulations, the Warrant, as well as the Common
Stock acquired through exercise thereof, will be freely transferable by
SPORTSLINE.COM and may be exercised in whole or in part. When exercising
the Warrant, SPORTSLINE.COM shall have the right to either (a) purchase the
total number of shares of Common Stock which such Warrant entitles
SPORTSLINE.COM to purchase at the exercise price described above or (b)
receive the net number of shares of Common Stock arising from the
difference between the market price of such Common Stock at the date of
exercise and the exercise price of the Warrant. Prior to the grant of the
Warrant hereunder, i3 will provide SPORTSLINE.COM with an opportunity to
review i3's standard Warrant form prior to execution. I3 and SPORTSLINE.COM
will mutually agree upon the registration rights of the Warrant among other
things currently contemplated to be piggyback rights.
7. MARKETING FUNDS: In consideration of the rights granted by SPORTSLINE.COM
to i3 in Paragraph 1, i3 shall pay SPORTSLINE.COM $200,000 upon the launch
of the Wireless Portal during Year 1 of the Agreement, $225,000 on the
anniversary date for Year 2 of the Agreement and $275,000 on the
anniversary date for Year 3 of the Agreement. A marketing plan will be
developed to use these funds to promote the wireless products on
SPORTSLINE.COM and the funds will be released in accordance with this plan.
In order to match i3's contribution to the marketing of said products,
SPORTSLINE.COM will charge i3 a rate of $15 CPM that is half the normal
rate for said advertising.
<PAGE> 3
It is agreed that SPORTSLINE.COM will have final approval of all creative
subject to i3's right to consult with SPORTSLINE.COM. .
8. WIRELESS SUBSCRIPTION PACKAGES: Immediately upon signing the Agreement,
both parties will work to develop wireless products based on
SPORTSLINE.COM's products and based upon the product plan set forth in
Exhibit I. The net revenue from such subscription-based products will be
divided equally between the two parties. SPORTSLINE.COM will use
commercially reasonable efforts to promote and advertise the wireless
portals and products and to encourage subscription growth through the
various media sources it has access to.
9. CONTENT LICENSING: During the term of the Agreement, i3 shall have the
right to distribute the SPORTSLINE.COM content to create additional
wireless products that will be branded with a SportsLine.com brand and will
be approved by SPORTSLINE.COM in advance (including the financial terms of
such distribution). It is also agreed that i3 and SPORTSLINE.COM will share
revenue equally through the licensing of SPORTSLINE.COM content after
deducting the cost of any third party content license fees incurred by
either party and/or any third party advertising sales commissions incurred
by either party (all such third party fees shall be mutually agreed by the
parties).
10. ADVERTISING REVENUE: SPORTSLINE.COM and i3 will share Net Revenue from the
sale of advertising and sponsorship from within the Wireless Portal on a
50/50 basis. Net Revenue shall be defined as revenue generated from the
sale of advertising and sponsorship less any agency fees and commissions
not to exceed forty percent (40%). Should i3 be interested in selling any
of the inventory generated on the Wireless Portal, the parties will
mutually agree upon the process for i3 to sell this inventory.
11. E-COMMERCE REVENUE: SPORTSLINE.COM will create (i) e-commerce (e.g. sale of
sports merchandise via the mvp.sportsline.com web site) within the Wireless
Portal. SPORTSLINE.COM and i3 will share equally (50/50 basis) the Net
Merchandising Revenue derived from e-commerce sold or subscribed to on the
SPORTSLINE.COM Wireless Portal. Net Merchandising Revenue is defined as the
gross retail price (excluding shipping and handling and applicable sales
taxes) LESS cost of goods sold, credit card processing costs, returns,
fraudulent transactions, charge-backs and other direct costs (including any
third party revenue sharing) associated with the sale.
12. OTHER SERVICES: SPORTSLINE.COM (or it's e-commerce partner) will be
responsible for any credit card billing for any e-commerce or subscription
services.
13. WIRELESS PORTAL: SPORTSLINE.COM and i3 agree to have the Wireless Portal
operational by a mutually agreeable date, which in no case will be later
than July 30, 2000.
14. WIND-DOWN PLAN: SPORTSLINE.COM will mutually agree upon a wind-down plan
upon termination.
15. DATABASE: All user information generated shall be the exclusive property of
SPLN.
This transaction is subject to the negotiation and execution of the Agreement
with terms satisfactory to i3 and SPORTSLINE.COM. No press release or other
announcement concerning the proposed transaction will be issued except by the
mutual written consent of the parties and except as may be required by
applicable securities laws in connection with i3's initial public offering. This
letter and all negotiations and discussions between the parties shall be
strictly confidential and will not be disclosed in any manner except to
employees and agents of the parties on a need to know basis.
Each of the parties will use its best efforts to complete and execute the
Agreement on or before April 30, 2000. This letter sets forth the intent of the
parties only, is not binding on the parties and may not be relied on as the
basis for a contract or be the basis for a claim based on detrimental reliance
or any other theory; provided that the confidentiality provisions are
enforceable in accordance with their terms. The
<PAGE> 4
parties understand that no party shall be bound until the Agreement has been
negotiated, executed and delivered.
This letter may be terminated at any time by either party giving written notice
to the other. This letter will terminate automatically on April 30, 2000 if the
Agreement has not been executed by that date. If this letter accurately reflects
your understanding of our agreement, then kindly countersign and return the
enclosed copy of this letter to my attention.
Sincerely,
i3 Mobile, Inc.
/s/ Kevin D. Rockoff
- --------------------
National Account Manager
<PAGE> 5
ACCEPTED AND AGREED TO:
SPORTSLINE.COM, INC.
By: /s/ Michael Levy
-----------------------------
President
<PAGE> 6
Exhibit I
(see attached Spreadsheets)
<PAGE> 1
EXHIBIT 10.34
[i3 MOBILE LOGO]
March 30, 2000
Mr. Eric Aledort
Vice President Corporate Business Development
GO.com
610 Circle Seven
Glendale, CA 91201
Re: i3 Mobile, Inc. - Letter of Intent
Dear Eric:
This letter sets forth a proposal to pursue further negotiations and discussions
leading to a definitive agreement between GO.Com ("GO.Com") and i3 Mobile, Inc.
("i3 Mobile"). The proposed arrangement will require further documentation and
approvals, including the preparation and approval of a definitive agreement
setting forth the terms and conditions of the business relationship (the
"Agreement"). Nevertheless, i3 Mobile and GO.com, by signing below, execute this
letter to evidence their intentions to proceed in mutual good faith to complete
the work required to negotiate the Agreement on terms that are consistent with
this letter.
In our view, i3 Mobile is uniquely positioned to work with GO.com to develop the
value of GO.com wireless information and product offerings. The proposed terms
and conditions include, but are not limited to, the following:
1. LICENSE GRANT: During the term of the Agreement, i3 Mobile will provide
Short Messaging Service ("SMS") integration services, including content
delivery, wireless advertising and M-commerce transactions, to GO.com's
affiliated web sites that consist of, for purposes of the Agreement,
ESPN.COM, GO.COM, and ABCNEWS.COM ("GO Network Partners"). GO.com will not
use any other third party to provide SMS integration services for delivery
of content, wireless advertising or wireless e-commerce transactions for
any of its GO Network Partners nor to AT&T, SBC Communications, or AirTouch
Vodafone. i3 Mobile will be authorized to extend the ESPN and ABC NEWS
brand names and logos to existing and/or future business partners of either
ESPN, ABC NEWS or i3 Mobile. Additionally, i3 Mobile shall have the right
of first negotiation for all other wireless platforms, other than WAP, to
be used by GO.com and the GO Network Partners.
2. TERM: The term of the Agreement shall be two (2) years beginning on the
Effective Date and will automatically renew for a third year unless GO.com
provides i3 Mobile with written notice of its intention to not renew the
Agreement at least 90 days prior to the second anniversary of the Effective
Date. The Effective Date of the Agreement shall be either (a) the date the
Agreement is fully signed by the parties; or (b) the date of the first
wireless service launch contemplated hereunder, whichever is later provided
that any delay is not caused by i3. The parties agree to translate the
terms of this letter into the Agreement within 30 days of the signing of
this letter.
<PAGE> 2
3. GEOGRAPHIC SCOPE: This agreement shall cover all U.S territory covered by
Go.com and the GO Network Partners and other mutually agreed upon
territories.
4. DEVELOPMENT FEE: Immediately upon execution of the Agreement, i3 Mobile
shall work with GO.com and the GO Network Partners to develop
specifications to enable the GO Network Partners to deliver customizable
content, data and transactional services to their customers wireless
devices. GO.com shall pay i3 Mobile the base sum of $150,000 for the
development of these three (3) web sites. The $150,000 payment shall
include the following services:
- Technical design, development, testing and implementation of the
wireless portal (including all provisioning pages).
- i3 Mobile Wireless Customer Care and on-line provisioning Set-Up
- In-house training of staff relating to customer service procedures and
policies
- FAQ (Frequently Asked Questions) online document
- Second level customer support including access to i3 Mobile staff on a
24/7 basis.
Costs for additional development services for these web sites or
development of additional affiliated GO.com web sites will be mutually
agreed upon by the parties at such time.
5. PAYMENTS BY i3: In consideration of the rights granted by GO.com to i3
Mobile in Paragraph 1, i3 Mobile agrees to pay GO.com as follows: $350,000
upon the Effective Date and an additional $400,000 on the first anniversary
of the Effective Date of this Agreement. Unless terminated pursuant to
paragraph 2, above, i3 Mobile agrees to pay GO.com $450,000 on the third
anniversary of the Effective Date of this Agreement.
6. WARRANTS: In consideration of the rights granted by GO.com to i3 Mobile in
Paragraph 1, i3 Mobile shall issue to GO.com warrants (the "Warrant") to
purchase up to 40,000 shares of i3's Common Stock at an exercise price
equal to fifteen ($15.00) dollars per share. The Warrant shall vest (a) 13,
333 upon the launch of the first wireless GO Network Partner web site (b)
13,333 upon the first anniversary of the Effective Date and, if no notice
of termination has been given per Paragraph 1, (c) 13,334 upon the second
anniversary of the Effective Date, and shall expire three (3) years
following issuance and shall not terminate upon an initial public offering
or change of control of the Company. Subject to any relevant securities
laws, rules and regulations, the Warrant, as well as the Common Stock
acquired through exercise thereof, will be freely transferable by GO.com
and may be exercised in whole or in part. When exercising the Warrant,
GO.com shall have the right to either (a) purchase the total number of
shares of Common Stock which such Warrant entitles GO.com to purchase at
the exercise price described above or (b) receive the net number of shares
of Common Stock arising from the difference between the market price of
such Common Stock at the date of exercise and the exercise price of the
Warrant. Prior to the grant of the Warrant hereunder, i3 will provide
GO.com with an opportunity to review i3's standard Warrant form prior to
execution.
7. MARKETING FUNDS: i3 Mobile shall contribute $75,000 during the first six
(6) months of this Agreement. These funds will be used to purchase
advertising on the ESPN and/or ABCNEWS.com web sites at mutually agreed
upon CPMs in order to promote participation and increase awareness of the
wireless portal products in accordance with a marketing plan and the funds
will be released in accordance with this plan.
8. MONTHLY DATABASE/PROFILE MANAGEMENT FEE: Starting with the Effective Date
of the Agreement, i3 Mobile shall charge a monthly fee based on the total
number of users of the GO Network Partners according to the schedule
outlined below. These charges are to cover i3 Mobile's costs of database
infrastructure and maintenance, communication, file management, etc.:
< 10,000 subscribers - $4000 per month
10k - 25k subscribers - $0.30 per subscriber per month
<PAGE> 3
25k - 50k subscribers - $0.25 per subscriber per month
50k + subscribers - $0.15 per subscriber per month.
9. CONTENT LICENSING: During the term of the Agreement, i3 Mobile shall have
the right to distribute content belonging to the GO Network Partners to
create additional wireless products which may be branded with a GO brand or
privately labeled by a wireless network operator and, in each instance,
will be approved by GO.com in advance (including the financial terms of
such distribution). It is also agreed that i3 Mobile will pay GO.com a fee
for the licensing of GO.com content. These fees shall be mutually agreed
upon by the parties in each instance.
10. ADVERTISING/E-COMMERCE REVENUE: GO.com and i3 Mobile will share equally any
advertising revenues (net of any third party advertising sales commissions,
if any) and profit derived from mobile e-commerce transactions on the GO
Network Partners sites (less any third party revenue sharing). GO.com and
i3 will mutually agree upon the level of services to be provided.
11. SUBSCRIPTION SERVICES: GO.com and i3 Mobile shall equally share all
subscription revenues, net of management fees paid to i3 Mobile pursuant to
paragraph 8. The parties shall mutually agree upon the retail cost of all
subscription services.
12. GO.COM OBLIGATIONS: Go.com will use its best commercially reasonable
efforts to promote and advertise the wireless portal services, i.e. Fantasy
League, ESPN.com, ABCNEWS.com, and Go.com etc. to encourage subscription
growth through various media sources. Each GO Network Partner that offers
wireless services will promote their wireless services on the home page of
each site and shall hot link to a portal page offering all wireless
services including the SMS Services.
13. GO.COM RIGHT OF FIRST REFUSAL: i3 Mobile will grant to GO.com the right of
first refusal to provide content to any distribution arrangement entered
into by i3 Mobile with a North American wireless network operator any time
during the Term of this Agreement. In the event that i3 Mobile reasonably
believes that it will need to provide content to a carrier that is subject
to this provision and is under no pre-existing contractual obligation,
entered into prior to the date of this letter, to the contrary, i3 Mobile
shall provide GO.com with a right to present an offer ("Offer") to i3
Mobile to provide content necessary for such service prior to i3 Mobile's
search for any other content provider. The written notice to exercise the
right to present an Offer must be received by i3 Mobile within five (5)
business days of GO.com's receipt of the initial notice hereunder. In the
event the parties do not reach agreement as of the end of such period, the
Company shall be permitted to enter into an agreement with another content
provider.
14. i3 MOBILE RIGHT OF FIRST REFUSAL: GO.com will grant to i3 Mobile the right
of first refusal to provide GO.com and the GO Network Partners enhanced SMS
Services (such as text to voice) for any of the wireless sites enabled
hereunder.
This transaction is subject to the negotiation and execution of the Agreement
with terms satisfactory to i3 and GO.com. No press release or other announcement
concerning the proposed transaction will be issued except by the mutual written
consent of the parties and except as may be required by applicable securities
laws in connection with i3 Mobile's initial public offering. This letter and all
negotiations and discussions between the parties shall be strictly confidential
and will not be disclosed in any manner except to employees and agents of the
parties on a need to know basis.
Each of the parties will use its best efforts to complete and execute the
Agreement on or before April 15, 2000. This letter sets forth the intent of the
parties only, is not binding on the parties and may not be relied on as the
basis for a contract or be the basis for a claim based on detrimental reliance
or any other theory; provided that the confidentiality provisions are
enforceable in accordance with their terms. The parties understand that no party
shall be bound until the Agreement has been negotiated, executed and delivered.
<PAGE> 4
This letter may be terminated at any time by either party giving written notice
to the other. This letter will terminate automatically on April 15, 2000 if the
Agreement has not been executed by that date. If this letter accurately reflects
your understanding of our agreement, then kindly countersign and return the
enclosed copy of this letter to my attention.
Sincerely,
i3 Mobile, Inc.
/s/ Kevin D. Rockoff
- --------------------
National Account Manager
<PAGE> 5
ACCEPTED AND AGREED TO:
GO.com, INC.
By: /s/ Lawrence J. Shapiro
-------------------------
Executive Vice President
<PAGE> 6
Exhibit I
(see attached Spreadsheets)
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of our
reports dated February 14, 2000 relating to the financial statements and the
financial statement schedule of i3 Mobile, Inc., which appear in such
Registration Statement. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Stamford, Connecticut
April 2, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM i3 MOBILE
INC. FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 28,241
<SECURITIES> 0
<RECEIVABLES> 397
<ALLOWANCES> 143
<INVENTORY> 0
<CURRENT-ASSETS> 33,067
<PP&E> 2,085
<DEPRECIATION> 143
<TOTAL-ASSETS> 36,241
<CURRENT-LIABILITIES> 3,599
<BONDS> 0
55,338
0
<COMMON> 77
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 36,241
<SALES> 0
<TOTAL-REVENUES> 1,734
<CGS> 0
<TOTAL-COSTS> 1,302
<OTHER-EXPENSES> 6,962
<LOSS-PROVISION> 131
<INTEREST-EXPENSE> 539
<INCOME-PRETAX> (6,856)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (3,434)
<CHANGES> 0
<NET-INCOME> (10,290)
<EPS-BASIC> (6.43)
<EPS-DILUTED> 0
</TABLE>
